$750M Transit Loan Revived

The Facts

A $750 million loan from the state to prevent devastating Bay Area transit cuts has been revived after a week of intense advocacy. Governor Newsom announced the reversal on September 10, after his Department of Finance had blocked the deal just days earlier.

The loan was approved in the June state budget to help BART, Muni, and other agencies maintain service until voters can approve a funding measure on the November 2026 ballot. Without it, agencies faced a "nightmare scenario" of severe cuts: BART service could be reduced by up to 90% and Muni by 50%, according to Max Harrison-Caldwell and Gabe Greschler at The Standard.

The Context

BART, Muni, and other transit agencies around the Bay Area are facing significant financial challenges due to a combination of factors, including reduced ridership following the COVID-19 pandemic, rising operational costs, and insufficient funding from state and federal sources. The crisis isn't only due to outside factors, however: budgets ballooned during the pandemic from federal relief funds that have now dried up, and agencies didn't make realistic plans to scale back down.

To address the shortfall, agencies have been cutting budgets and reducing service, but rising costs due to soaring inflation have left them far short of sustainable funding. Leaders from across the Bay Area have been working on a ballot measure to raise a 0.05% sales tax dedicated to funding public transit, but that money wouldn't arrive until 2027, if it passes at all. To bridge the financial gap, the Newsom administration promised to extend a $750 million bridge loan secured against future fare revenue. But on Saturday, September 6 the Department of Finance announced that it would not finalize the loan, creating a new crisis. In response, Mayor Lurie engaged in "hourly communication" with Newsom's office and joined Senator Wiener at a Monday rally.

A BART systemwide shutdown the previous Friday offered a preview of the chaos, leaving highways "choked with bumper to bumper traffic," as reported by Jill Tucker at The Chronicle. The loan is a crucial bridge to the 2026 ballot measure, as that revenue would not arrive until 2027.

The GrowSF Take

What a mess. From the start, the Newsom administration has been dragging its feet on this loan, even as transit agencies warned of catastrophic cuts. The Department of Finance's last-minute decision to block the loan was reckless and irresponsible, threatening to plunge the Bay Area into a transit crisis that would have had severe consequences for commuters, the economy, and the environment. But transit agencies are not blameless either: they failed to plan for a realistic post-pandemic future, and now they're scrambling to avoid disaster.

We're thankful that Mayor Lurie, Senator Wiener, and other leaders stepped up to apply intense pressure on the Newsom administration to reverse course. We hope voters will approve funding for transit in 2026, but if not, we may be back in this situation again.