(The following article by Michael Manekin was posted on the Inside Bay Area website on February 3.)
BELMONT, Calif. — Since Caltrain launched its Baby Bullet service, the transit agency has boasted soaring ridership and rising revenues, beyond projections and even expectations. But there’s a major problem: Every year, despite all the success, the commuter rail’s ledgers glow red.
After months of self-congratulation and optimism, this thorny economic detail sprung to life at Caltrain’s board meeting Thursday, following a presentation of the “mini-short-range transit plan,” an outline of future projects and financing for the next decade.
Despite the higher-than-expected revenue and ridership, Caltrain concludes every financial year by creatively scavenging enough funds to temporarily balance its budget.
“That’s the elephant in the room,” said Caltrain CEO Mike Scanlon, who asked the board for “comments, complaints, advice,” even “scolding” regarding a structural deficit that would continue in the foreseeable future.
“We’re just going to have to bite the bullet and talk about money,” said San Francisco Supervisor Sophie Maxwell, who sits on the agency’s three-county Joint Powers Board.
No one seemed particularly surprised, because the problem was hardly a revelation.
Every board member understands the basics: Like all Bay Area transit agencies, Caltrain does not earn enough money from fare-box revenue to balance its budget. However, unlike many other agencies, Caltrain lacks a “dedicated funding source” — in other words, a reliable income stream from taxes. So, Caltrain receives the biggest chunk of its operating budget from the three agencies which own and operate the rail line: San Mateo County’s SamTrans, San Francisco County’s Muni and Santa Clara County’s Valley Transportation Authority (VTA).
The agency’s annual contributions to keep Caltrain afloat are capped at an increase of 3 percent a year, agency spokesman Jonah Weinberg said.
Between contributions from the above agencies and fare revenue — its two largest funding sources — Caltrain does not earn enough annually to emerge from the red. That leaves the agency struggling to balance its budget with one-time funding sources, such as state tax windfalls (like this year’s unexpected revenue from California’s gas tax).
While the strategy keeps the agency afloat, “it’s not a long-term approach,” Weinberg said. This year, for example, the deficit is $5.3 million — much larger than the agency’s financial reserves of $3.4 million. Caltrain’s total expenses in 2007 are projected at nearly $87 million. With operating expenses projected to increase 4 to 41/2 percent every year, board members seemed unanimous on one major point: Caltrain needs a new, reliable source of money.
But without any firm ideas, officials resorted to brainstorming — and finger-pointing.
“The things that cause us to be in this situation are automobiles,” said Forrest Williams of the Valley Transportation Authority. “They are the culprits. They are the source of all our grief.”
“We need to go back to the cities to start funding this railroad,” said Don Gage, also of the VTA. “If they don’t do that, they’re going to cut their own throats, because we’re going to shut this railroad down.”
Jerry Hill of the San Mateo County Board of Supervisors suggested that Caltrain could benefit if the state legislature passes a resolution to tax carbon emissions and pass the revenue on to transit agencies.
While other board members supported the need to look toward new taxes, consensus was that the agency would have to petition larger governing bodies to rally around the cause.
Many on the board spoke against the service cuts and fare increases which transit agencies turn to — often unsuccessfully — to bail themselves out of a hairy economic situation.
At meeting’s end, Maxwell summed up the situation: “Anything we do is going to be difficult,” she said. “There aren’t going to be any easy solutions.”