Muni needs money, but with San Francisco still stuck in work-from-home patterns, the necessary cash won’t come anytime soon from public transit’s traditional base of downtown commuters.
For months, officials pinned hopes on a massive regional tax measure in 2026, which would raise $1.5 billion to fund public transit. That effort died in May. Now officials need to find new revenue sources and possibly spending cuts as quickly as possible.
The agency’s budget deficit could hit $322 million in 2026, the same year that Muni could drive off a “fiscal cliff.”
“People want to gravitate towards one single idea that’s going to solve the whole problem, but we’re really going to have to build a sandwich of ideas that pile on top of one another to solve a gap this large,” said SFMTA chief financial officer Bree Mawhorter during a briefing at Tuesday’s county transportation authority board meeting. (SF’s supervisors also serve as the board.)
The range of the deficit will depend on some factors out of SFMTA’s control, including the economic health of the city and state, Mawhorter said.
At the same hearing, the county’s principal transportation planner Martin Reyes said recovery for transit agencies remains slow due to work from home and different travel behaviors post-pandemic.
Federal and state funding that closed SFMTA’s previous shortfalls will run dry in the 2026-2027 fiscal year. To help brainstorm its way out of the fiscal crisis, SFMTA has quietly formed the Muni Funding Working Group with help from the city controller.
The group is an admission that pandemic fallout has created problems too large for a single agency to handle. (A similar call for help came this weekend from the city’s public school district.)
The 22-member group includes elected officials – SF Sups. Myrna Melgar and Rafael Mandelman – transit experts, union members, and advocates. They will meet twice a month for the rest of the year and recommend solutions to shrink the deficit. “We have enough time, if we do this work now and come to a consensus in early 2025,” SFMTA’s top executive Jeffrey Tumlin said at the group’s first meeting on Sept. 16.
The working group will focus on options in four different categories: efficiency improvements, service cuts, revenue enhancements, and service enhancements.
SFMTA ridership is back up to 70 percent of its pre-pandemic level, better than some of its sister agencies. But its largest source of funding is shaky: San Francisco’s general fund, which provides 39 percent of SFMTA’s $1.4 billion operating budget. (There’s a separate budget for capital projects like the Twin Peaks tunnel upgrade.)
Service cuts? Higher fees? Both?
For most of this century, SFMTA enjoyed annual revenue growth from SF’s general fund of 8 to 12 percent a year. The pandemic cut that pace to something akin to a Muni train crawling through a backed-up tunnel: only 3 percent growth since 2019, thanks to the city’s slow economic recovery.
The new working group will consider eliminating Muni lines or scaling back service, which could mean buses and trains coming less often or service ending earlier in the evening. SFMTA is also in charge of streets, and the working group will ponder cuts to street safety programs, such as quick-build and traffic calming projects.
Ideas to raise revenue could include higher parking fees (SFMTA is in charge of meters and garages) as well as Muni fares, or even reviving fares for youth, low- and moderate-income seniors, and people with disabilities, all of whom ride Muni for free.
Enforcement is part of the strategy too. The agency recently hired 36 more inspectors to write tickets to riders who don’t pay a fare. “Fair compliance has a revenue impact, but it also has an impact on the perception of the value of Muni and the value of transportation,” Mawhorter said.
On Tuesday, Sup. Dean Preston pushed back on the idea of raising fares, fines, and fees. He said they would have a huge economic impact on residents, particularly Muni riders who can’t pay a $130 citation for fare-dodging.
“There needs to be an examination of the equity issues in how big those are,” Preston said, “and how they are sending the wrong message around transit ridership.”
Mandelman said he supported SFMTA taking “aggressive” steps to curb fare evasion: “It has gotten kind of out of control.”
Taxes and bonds
Bonds or taxes are also an option. Grassroots advocates have put a measure on this fall’s ballot to raise taxes on Uber, Lyft, and Waymo rides to fund public transit. They project revenue of $25 million per year.
SFMTA last tried a bond measure in 2022 to fund street and transit improvements. It did not get the required two-thirds majority to pass, which sent a shocking message to city agencies that are accustomed to voters greenlighting revenues.
The idea of a regional measure seems even cloudier. State Sen. Scott Wiener and allies pushed earlier this year for a Bay Area tax measure to fund regional transit operations. The goal was to put it to voters across the Bay counties in November 2026. But Wiener pulled the bill in May, citing the need to work out differences within the region. (Santa Clara County wanted to promote its own transit tax, for example.)
Wiener also stumped in 2023 for a bump in Bay Area bridge tolls to fund transit, but he couldn’t convince enough local lawmakers to join him.
Mawhorter said Tuesday that SFMTA must also bring riders back by making transit reliable, clean, and safe. There have been bright spots.In a survey earlier this year, 72 percent of passengers rated Muni as either “excellent” or “good,” the highest since customer satisfaction tracking began in 2001.
While ridership isn’t back to pre-COVID levels – and likely won’t be unless downtown offices fill again with commuters – some Muni routes, including the 22 Fillmore, are now beyond pre-pandemic levels. Changes to make routes “rapid” – such as dedicated lanes for the 49 Van Ness/Mission and 14 Mission lines – have also been successful.
SFMTA says it has also reduced subway delays of more than 20 minutes by 70 to 85 percent since 2019, thanks to quarterly weekend shutdowns for maintenance work.
Summer boost
SFMTA director of transit Julie Kirschbaum said at a board meeting this month that summer events to boost neighborhoods and downtown, such as night markets in Chinatown and outdoor concerts, have helped Muni’s numbers. The Chinatown/Rose Pak subway station had a 50 percent increase in rider traffic year over year in July, for example.
But the glimmers of good news can’t hide the fact that transit systems designed to move masses of people to and from work are in a quandary. BART and Caltrain rely heavily on rider fares to fund operations, which makes their situation all the more dire. Of all major Bay Area agencies, BART and Caltrain have the lowest rate of ridership compared with pre-COVID levels.
BART officials said this week that fare revenue, which once funded more than 60 percent of its operating costs, had dropped to 22 percent of operating costs. Caltrain has suffered an even dizzier drop, from 73 percent of ticket sales funding operations down to 22 percent.
San Francisco cannot fulfill its pledges of being a transit-first, climate-friendly city without robust public transit from neighborhood to neighborhood and to and from the suburbs. With SFMTA, BART and Caltrain projecting combined deficits of $700 million in the 2026-2027 fiscal year, the entire Bay needs a boost.
That’s why officials are still determined to put a regional measure to voters. But it’s a long process. It first must pass the state legislature, a journey that won’t begin until next year.
As for the Muni Funding Working Group, recommendations from the group will be published early next year.