Negotiations over a $750 million loan meant to keep Bay Area transportation systems afloat amid major budget deficits hit roadblocks this week in the state Legislature, panicking transit advocates who say the funding is critical to prevent major service cuts.
“I think it will cost us severely if this loan doesn’t come through,” said Laura Tolkoff, transportation policy director at the Bay Area urbanist nonprofit SPUR.
In June, State Sen. Scott Wiener (D-San Francisco) and other legislators negotiated with Gov. Gavin Newsom’s office to include the $750 million in the state budget as a loan, intended to serve as an emergency fund for regional transit systems before voters have the chance in November 2026 to consider a ballot measure to shore up funding.
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While transit advocates support that effort, they say tax revenue would not start flowing until 2027, leaving a gap in funding without the state loan.
But this week, with only days left to finalize the loan before the Legislature recesses for the year, negotiations with the governor’s office reached a standstill, sources say. Lawmakers have until Tuesday to introduce legislation that would implement the funding, before a Sept. 12 deadline to vote on bills.
“This is coming down to the wire,” said Seamless Bay Area’s executive director, Adina Levin.
In a statement, Newsom’s spokesperson, Daniel Villaseñor, said the initial agreement on the monetary lifeline “could only be made if subsequent legislation outlining the terms of the loans is passed.”
“The administration supports our local transit agencies and remains open to reviewing proposals as we finalize the remaining budget items,” he added.
The loan would prop up the cash-thirsty transit agencies after ridership plummeted during the pandemic and federal funding dried up. Muni is in the red by $320 million, a gap expected to grow to $434 million by 2030. BART faces a deficit that could reach $400 million by 2027.
On Friday, the possibility of drastic cuts to the city’s transit services became a temporary reality after BART was forced to shut down for several hours in response to a systemwide computer equipment failure following a network upgrade.
“The Bay Area doesn’t function without transit. We relearn this every time BART goes down. BART, Muni, Caltrain & AC Transit will unravel unless we step in with funding,” Wiener wrote Friday on social media, with an image of the Bay Bridge’s snarled morning traffic.
Advocates warn that reducing transit services could hurt the fragile recovery of the city's downtown core, which faces a myriad of financial hurdles due to pandemic-era remote-work policies that emptied office buildings and forced businesses and restaurants to shutter.
“If you think downtown recovery is precarious now, imagine what it will be if BART is forced to cut 80% of its service,” said Tolkoff.
This week, Mayor Daniel Lurie proposed a November 2026 ballot measure for a parcel tax to boost Muni. The agency has already made serious cuts this year, including removing some routes to save $7 million and curtailing technology contracts worth $6 million. Muni has also limited how often drivers can take bathroom breaks, in an effort to save $1 million.
In a statement about the $750 million loan, Lurie said Sacramento needs to "follow through on this commitment."
"Every working family, senior, student and business leader knows that safe, affordable and reliable public transit is key to powering our comeback," said Lurie. "I’m talking to the governor and I know he understands the importance of transit to our entire economy."