On March 24, senators Scott Wiener and Jesse Arreguín substantially amended Senate Bill 63, their proposed measure to authorize placement of a future multicounty tax measure on the ballot to raise funding for transit. The introduction of the new language marks a significant step forward in what has been a complex and difficult effort to develop a regional funding approach for transit in the Bay Area. While the details of the bill will continue to develop over the course of the current legislative session, the immense urgency of new transit funding prompted SPUR’s board to take a preliminary “support” position on SB 63 at its March meeting — a position expressed via a formal position letter on the bill.
Why Is Transit on the Brink of a Fiscal Cliff?
California recently marked the five-year anniversary of the initial COVID-19 shelter-in-place orders, and while the imprint of the pandemic has faded in many areas of life, the lingering effects on our region’s transit system remain. The combined impacts of severe ridership loss, workers’ sluggish return to office, and depressed parking and tax revenues have resulted in a fiscal cliff for many transit operators. Successive rounds of relief funding from the federal government and the state have forestalled the day these operators would have to make drastic service cuts. This relief funding is now largely exhausted, and despite cost control efforts and steady ridership recovery, the Bay Area’s largest transit operators face operating deficits that collectively total more than $700 million annually as soon as 2026. Without new funding, operators will have to make drastic service cuts, leaving hundreds of thousands of riders stranded.
SPUR has spent the past two years working with stakeholders, transit operators, and policymakers across the region and state to seek funding needed to avoid catastrophic cuts to BART, Muni, Caltrain, AC Transit, and other large transit systems. A regional revenue measure to raise funds across counties is an essential part of any transit funding solution in the Bay Area. Senators Wiener and Wahab attempted to authorize such a revenue measure last year with SB 1031, but they paused the bill in mid-2024 as local support faltered. Now, following months of additional work to reach consensus among local stakeholders, senators Wiener and Arreguín have introduced SB 63, a more focused and streamlined bill that would enable a multicounty transportation revenue measure to go to the ballot in November 2026.
What Does SB 63 Do?
Current language in SB 63 authorizes the placement of a 10- to 15-year regional tax to fund transit on the November 2026 ballot in Alameda, Contra Costa, and San Francisco counties. The levy is set at half a cent in Alameda and Contra Costa counties; San Francisco County has the option to elect a higher rate (between half a cent and one cent). The bill also includes language allowing San Mateo and Santa Clara counties to opt into the tax at a to-be-determined rate by July 31, 2025. SB 63 would create a special district made up of participating counties that would be governed by the Metropolitan Transportation Commission (MTC). The bill would allow for the tax to be placed on the ballot either through an action of the commission or through a qualified citizens’ initiative. Critically, a tax placed on the ballot through a citizens’ initiative signature-gathering campaign would require only a 50% plus one majority vote to pass; the tax would require a two-thirds vote if placed on the ballot by a government body, in this case, MTC.
SB 63 stipulates that revenues collected via the tax would first be used to fund the operating needs of BART, Muni, AC Transit, and Caltrain as well as investments in regional transit transformation programs administered by MTC. The bill requires exact contributions to be determined through development of the Transit Operations Financial Responsibility and Implementation Plan (T-FRIP), an expenditure plan agreement that identifies the total amount of funding going to each operator and program throughout the life of the measure, along with the share of funding sourced from each participating county. Funds that are not needed to meet T-FRIP obligations would be returned to counties and could be used for local transit operations. The bill directs MTC, counties, and transit operators to work collaboratively to finalize the T-FRIP by July 31, 2025, so that it can be reflected in the bill.
In addition to authorizing a tax mechanism and specifying how an expenditure plan should be developed, SB 63 includes language advancing important policy reforms. First, the bill would require that any operator receiving funding from the measure comply with the policies and programs adopted by MTC through its Regional Network Management framework. This strengthens the Bay Area’s largest operators’ commitment to regional coordination and improvements, such as free and discounted transfers between operators, schedule coordination, better wayfinding, and coordinated transit priority improvements.
Second, SB 63 would require operators and programs receiving funding to undergo a financial efficiency review. This review would be undertaken by a third party under the guidance of a select committee and MTC, and it would seek to identify a menu of specific cost savings that operators and MTC could implement to reduce deficits or improve the financial performance of their services. Based on the results of the review, operators would be asked to develop and submit to MTC a plan documenting their commitment to follow through on identified efficiency actions.
Why Is SPUR Supporting SB 63?
SB 63 will evolve over the coming months. The T-FRIP expenditure plan needs to be developed, San Mateo and Santa Clara counties must decide whether to opt in to the tax, the levy rate in some counties must be finalized, and key policy language will need to be refined and further negotiated. While we know there will be changes to the bill, SPUR is supporting SB 63 and actively working to ensure its passage for two reasons.
Reason 1. The Need for New Funding Is Dire, and the Region Is Running Out of Time to Keep Transit Alive.
Without significant new revenues in 2026, BART, Muni, Caltrain, and AC Transit — systems that account for more than 80% of all riders in the Bay Area (and 30% of riders statewide) — will enter a downward spiral of severe service cuts and ridership loss. How severe might these service cuts be?
- BART may have to cut up to 90% of its service, which equates to completely shutting down two of its five lines and reducing the number of trains it runs from 4,200 trains to just 500 trains per week.
- SFMTA may have to cut up to 30% of Muni service, which equates to eliminating 20 routes entirely, reducing evening and weekend service, and shrinking the streets division, which provides critical services like sidewalk and sign repairs.
While SPUR is advocating for additional funding from this year’s state budget as a necessary bridge to the regional measure, that funding would not give operators the certainty they need to plan service, much less meet long-term needs. This regional tax is the only financial mechanism that can credibly supply the kind of funding required to staunch BART’s nearly $400 million projected annual deficit, let alone meet the needs of Muni, AC Transit, and Caltrain. Any path to a regional tax requires authorizing legislation, and the current session of the California Legislature is the last opportunity for such legislation to pass.
Reason 2. SB 63 Represents a Practical and Politically Realistic Framework to Address the Daunting Challenge of Funding Transit.
Other options to meet transit’s funding needs simply have not mustered enough political support. In 2023, for example, SPUR co-sponsored SB 532 (2023), a bill that proposed to increase bridge tolls to support transit operations, but it failed to move forward in the legislature. Over the past two years, SPUR has closely followed the development of both SB 63 and its predecessor bill, SB 1031, and has worked across levels of government and with stakeholder groups to understand the issues raised by a regional tax for transit. Regional taxation politics are tremendously complex, and round after round of polling has shown that voters have, at best, a tepid attitude toward any new taxes. SB 63 represents a thoughtful evolution from SB 1031 and makes major strides in addressing the key issues that caused the prior bill to falter.
SPUR typically prefers a regional measure that generates enough revenue to significantly expand transit services or one that includes more far-reaching policy transformations. But the last two years’ discussions and voter polling have clearly shown that there’s no consensus on these issues, and it’s unclear that a more expansive geography and a larger expenditure plan could successfully pass through the legislature and be approved by voters. Similarly, many stakeholders, including SPUR, have deep-seated reservations about the regressive nature of a sales tax, and some people may be frustrated to see the region turning yet again to this mechanism. But in this instance, measure revenues would be used almost entirely to fund transit operations, services that are heavily used by lower-income riders and people of color. Furthermore, there’s currently little evidence to suggest that other revenue options, such as a parcel or payroll tax, would be acceptable to the legislature, appealing to voters, and able to withstand a funded opposition campaign. Thus, a sales tax remains the most practical path forward to raise funding before the clock runs out.
SPUR believes that SB 63 addresses the near-term financial crisis transit faces while balancing local control and regional action and advancing important reforms for both riders and taxpayers. And most importantly, we believe that a measure authorized by SB 63 can be successful at the ballot. SPUR is proud to support SB 63, and we will continue our work to ensure its passage.