California and its regional and local governments have invested heavily in public transit over the past half-century to provide an alternative to driving, ease traffic congestion, reduce emissions, slow climate change, steer new development, and provide mobility for those without. As a result, bus service has improved and expanded, and many parts of the state’s metropolitan areas are now served by rail transit.
Yet today, many of the state’s transit systems are struggling operationally and financially. Ridership began eroding in the half-decade leading up to 2020 and plummeted at the start of the COVID-19 pandemic. Three federal pandemic relief bills provided a critical lifeline to keep struggling transit systems afloat early on, but these funds are running out. Meanwhile, operating costs have risen, ridership and fare revenues have only partially returned, and some transit systems face “fiscal cliffs,” where they will need substantial new infusions of funding, substantial cuts in costs and service, or some combination of the two.
Against this backdrop, this report examines the current state of California transit finance: why ridership and fare revenues are down and their prospects for recovery; what lessons the successful federal relief bills provide; why commuter-oriented systems are struggling financially much more than those that primarily service transit-reliant riders; and what the financial managers at transit systems have done to cope with this turbulent time and how they see their future financial prospects.