BART eliminates projected $35 million budget deficit for FY26
Bay Area Rapid Transit (BART) has eliminated what was projected to be a $35 million budget deficit for the next fiscal year (FY) through various cuts and strict cost control efficiencies. BART notes the upcoming FY 2026 preliminary budget memo that is set to be released at the end of the month will now show a balanced budget for the FY beginning July 1 but structural deficits of $350 to $400 million loom in following years unless long term, stable funding sources can be identified.
“We’re getting our budget in order to the extent that we can,” said BART Board President Mark Foley. “Closing a $35 million gap is no easy task. Now that we’ve overcome the first hurdle, we’ll focus on the bigger picture of restructuring BART’s funding model for long term sustainability.”
BART was able to close the projected $35 million deficit through a combination of cost controls and revenue generation.
Cost controls
- A strategic hiring freeze while protecting safety and service quality.
- Labor savings from reducing near term retiree healthcare costs.
- Non-labor budget reductions across all departments.
- Running shorter trains.
- Locked-in low renewable electricity rates.
- Implementation of inspector general’s recommendations for efficiencies.
Revenue generation
- Installation of next generation fare gates to reduce fare evasion and increase ridership.
- Maintaining inflation-based fare increases.
- Offering new fare products like Clipper BayPass, which is now revenue positive.
- Improving transit coordination.
- Growing ridership through station activations and events.
- Negotiating new agreements for telecommunications revenues.
The agency notes total operating expense growth in the FY 2026 budget is only one percent compared to inflation in the Bay Area at 2.7 percent over the past year, and the size of workforce has been reduced from the current year due to the strategic hiring freeze. According to BART, even before the recent cost cutting, the agency has been able to keep its operating costs below the rate of inflation since 2019.
While BART notes it is prioritizing high-quality and frequent service to attract more riders, overall, BART is running 100 fewer trains per week than before the COVID-19 pandemic.
BART says it is one of the most cost-efficient rail operators in the U.S. despite operating in a very high-cost region. The agency notes that by the cost per vehicle revenue hour, BART is significantly more efficient than similar systems like the Washington Metropolitan Area Transit Authority and the Metropolitan Atlanta Rapid Transit Authority.
BART cannot close structural deficits with service cuts
BART notes that as ridership continues to slowly grow, BART’s historical reliance on passenger fares to pay for operations, long seen as very effective, is outdated and no longer sustainable. The agency says new sources of funding are needed to avoid significant service cuts, but that it can’t cut its way out of the crisis without causing a transit death spiral. According to BART, rail has high fixed costs to maintain infrastructure and low marginal costs driven by changes in service.
According to BART, at the height of the pandemic when it closed rail services at 9:00 p.m., it represented a 40 percent cut in service, but it only reduced operating costs by 12 percent. The agency notes that even a 90 percent cut in service (9:00 p.m. closure, one-hour frequencies and running only three of the five BART lines) would close less than half of the FY 2027 $376 million deficit.
Next steps for the BART budget
BART notes the soon-to-be-released 2026 preliminary budget memo will mark the beginning of the final stretch of BART’s budget activity for the year. The agency says a series of presentations at board meetings will culminate in a board of directors vote in June to adopt a two-year budget for FY’s 2026 and 2027.
