Caltrain’s fiscal cliff - starting as soon as this coming budget year

Caltrain is likely to be the first major agency in the Bay Area to face a fiscal cliff, as federal relief funding runs out and ridership is growing back more gradually. This could result in cuts to service and/or maintenance starting as soon as this coming year. Caltrain presented a report to the board Workplan Committee in November and its board in December showing a fiscal cliff looming in 2024.

In October, BART presented its Short Range Transit Plan report indicating that its fiscal cliff would likely hit in 2025. BART’s report showed that in order to save 20-40% on its operating budget, there would need to be service cuts of 65-85%, further depressing ridership and revenue.

To address the fiscal cliff as a region, the MTC has requested that agencies assess the level of service they would provide at three different levels of ridership recovery and revenue.

Caltrain’s fiscal cliff and electrification funding

The MTC report format turned out to be not a perfect fit for Caltrain. Therefore, Caltrain created a fourth scenario. Regardless of the “square peg / round hole” issue with MTC’s reporting template, it is clear that Caltrain is facing a budget gap starting as soon as this coming fiscal year, and anticipating deficits continuing into the future.

One of the Caltrain-specific budget challenges is interdependency with funding to complete the project to electrify the line. Caltrain needs an additional $400 million for the project which is scheduled to be complete in 2024. If Caltrain gets the full amount from state and federal sources, that would extend the fiscal cliff by 1-2 years. The state funding decision will be announced at the end of January.

Caltrain will continue to grapple with its 2024 budget at a board budget workshop in February.

Solutions - operating funding, ridership regrowth and transformation

MTC is working with BART, Caltrain, SFMTA and other agencies on state advocacy for a multi-year fiscal gap funding for transit, while laying the groundwork for a regional funding measure to support frequent, well-integrated service.
In dealing with the post-pandemic budget challenges, Caltrain faces an existential opportunity to transform its service.
Caltrain’s service has historically been designed as US-style commuter rail, focusing on white collar commuting. Before the pandemic, Caltrain conducted a business plan creating a service vision to transform to a more international model of all-day, all-week, well-connected frequent service, attracting more kinds of riders and more kinds of trips.
Before the pandemic, Caltrain trains were uncomfortably packed at peak periods. Since the pandemic, the white collar commute pattern that was Caltrain’s bread and butter before the pandemic has significantly diminished, with many people working from home all or part of the time. Ridership has been regrowing gradually.

The transformation to service more kinds of riderships and trips is now existential. By contrast, in Vancouver Canada, ridership is back to 80% of pre-pandemic levels. Transit consultant Jarret Walker explains that Vancouver has created a network optimized for the all-day, all-direction, all-purpose trips that people are making now.
Providing frequent, all-day, well-connected, affordable service would make Caltrain much more like BART, which had also depended on peak commuting but significantly less than Caltrain. It would be helpful to have a coordinated strategy for both major parts of the rail system to regrow ridership by serving more kinds of trips and riders.
For rail services with high fixed costs, cutting service and increasing fares in an attempt to close a revenue gap could lead to a “death spiral” where ridership and fare revenue shrink even further, making it even harder for agencies to recover and regrow ridership.