Ballot measure? Fare increase? Options to address Caltrain funding gap with governance implications

With budget challenges looming in the 3-year window before electric service starts, the Caltrain board discussed funding options at a board workshop on December 14, including the ⅛ cent sales tax option approved by the legislature in 2017, and the potential to once again increase fares.   Options to address the funding gap raise important consequences for governance, equity, and climate.

An ⅛ cent sales tax would raise $94 million per year to provide stable funding for operations and maintenance.  While riders have been paying over 70% of the annual operating budget in fares, the bulk of the remaining public funding comes from the three county partners.

The contribution of Joint Powers Board members included 25.8 million in operating funding (17% of the total) and 22.6 million in ordinary capital spending (keeping trains in good repair, station upkeep, etc, not counting electrification construction).  Operating expenses are expected to increase, with greater payments to train operating staff, including to run the positive train control system, and greater fuel costs before electric service starts.


Fare increase, and equity questions

The board members discussed the possibility of a fare increase to help close the budget gap before electrification. Caltrain’s rider base has a very high income, and Caltrain’s fare study suggests that increasing fares will not lose many riders. But Caltrain’s relatively high fares and high income rider population become a self-perpetuating feedback loop. Low and moderate income riders are priced out, and increasing fares prices the service even further out of reach.

Currently, Caltrain’s deepest discounts go to its high income riders with the GoPass, which is available only to full-time employees of large corporations, and is not available to large numbers of contractors who work for outsourcing vendors at the sites of major corporations. Nor is it available to employees covered by Transportation Management Associations that manage transportation benefits for smaller companies.

Caltrain is increasing the price of the GoPass by 20% this month (January 2019), but that still leaves GoPass riders paying less per trip than other customers.  To raise revenue and improve equity, Caltrain could likely increase the GoPass price further. And especially, Caltrain could extend the GoPass to cover outsourcing contractors and workers whose benefits are managed by Transportation Management Associations.

Ballot measure, partner pullout, and governance implications

Partners – VTA in particular, which is facing serious budget challenges, are talking about taking advantage of the sales tax to reduce or eliminate funding for Caltrain.

From minutes of the December 14 special board meeting, “Director Chavez expressed concern regarding VTA’s ability to invest in Caltrain in the future and stated the current funding asks should be reformatted with a “must have/nice to have” approach.”

If the ballot measure is used to *replace* the contributions of the current county partners, that may raises questions for voters.  And it raises bigger strategic questions about how Caltrain will and should be governed in the age of electrification.


Questions about voter value and governance implications

If the funding partners pull out when the ballot measure passes, that would leave less than half of the new funding for improved customer service and capital improvements that voters would notice.

We’re wondering if this strategy would raise concerns for voters, who might expect that new Caltrain taxes would be devoted to notable improvements to service and congestion relief, rather than being devoted to helping VTA, SamTrans, and SF with other budget needs.  Voters are going to need a compelling vision of how this ballot measure – as part of bigger strategy – will improve service, alleviate congestion, fight climate change.

And if funding partners decide to pull out, that also raises larger governance questions regarding how Caltrain should be structured and who should be in charge of setting direction for the service.   When the Peninsula Corridor Joint Powers Board took responsibility for running Peninsula Corridor service in 1992 from the State of California, board logically consisted of representatives of the three county agencies that contributed most of the annual public funding: the City and County of San Francisco, the San Mateo County Transit District (SamTrans), and the Santa Clara Valley Transportation Authority (VTA).

Governance and strategy for great service

Caltrain’s business plan process, and the big transition to electric service, is already a logical opportunity for fresh thinking about how Caltrain should be governed.  To think about this touchy subject, it is helpful to consider the strategic questions – what are the medium and longterm goas, and what governance structure will help it reach those goals?
Integrated service.  One of Caltrain’s goals in the business plan is providing regionally integrated service.  This need will become even greater in the future, when BART is extended to San Jose Diridon station, when the Downtown Extension connects the Caltrain tracks to downtown SF.  Even more regional and megaregional integration will be needed when/if Dumbarton Rail service brings passengers to and from the East Bay and Central Valley.

Fundraising to increase ridership.   As readers will know, Caltrain’s ridership analysis for the business plan concludes that Caltrain could increase ridership by nearly 4x, to ~250,000 riders, by increasing service and improving infrastructure.  Global examples suggest that increasing service might result in even stronger financial performance than Caltrain’s 70% farebox recovery. Infrastructure improvements will be needed to increase ridership, including longer trains, level boarding, and station improvements. The funding from the SB797 ballot measure is a good first step but additional funding will be needed for those investments.

There are several logical options that would address the needs.

  • Make Caltrain a special district.  The complicated multi-agency process needed to put a sales tax on the ballot highlights the fact that unlike BART, Caltrain doesn’t have the powers of a special district that can raise funding.  State legislation could create a special district allowing the agency to raise funding in the future. With less contribution from county partners, it would make logical sense for the board composition to change. Since 70% of revenues come from riders, it might make sense to have board representation from major employers that contribute many riders; and perhaps from other groups representing riders.  The latter option would be similar to the SFMTA board, which has had representatives from transit/livable streets/active transportation advocacy groups appointed. Since Caltrain is an increasingly important corridor for the state, it might be relevant to have a State representative.
  • Combine Caltrain with BART.  In the 1960s, Santa Clara County and San Mateo County decided not to join the BART district; Santa Clara because they wanted to focus on the County Expressway system, and San Mateo County because local leaders feared connections to ethnically diverse parts of the bay. These historically unfortunate decisions could be repaired by extending the BART district to San Mateo and Santa Clara Counties, adding board representation for the new counties.  A combined agency could treat the services as a single service, with an integrated schedule and single fare system.
  • Combine with other regional rail services. ACE and Capitol Corridor both use standard gauge tracks and have more technically in common with Caltrain.  However, these services have much lower ridership, so combination might help less to provide funding and seamless customer experiences.
  • Establish a Bay Area “transport federation” that could require integrated fares and schedules around the region. This has the potential to significantly improve transit user experience in the Bay Area. However, the change would be at a larger scale and outside of Caltrain’s control.

Caltrain strategy, funding and climate

A recent report from the California Air Resources Board concluded that even if electric vehicle market share increased tenfold by 2030,  California needs to reduce driving miles by 25% to reach the state’s Climate Goals. And a recent United Nations Climate Report indicated that the planet has a dozen years to cut greenhouse gas emissions to prevent severe consequences of global warming.

Caltrain’s board needs to be prudent about its budget in the next few years before electric service starts and before a ballot measure providing dedicated funding. That said, the improvements to Caltrain service and infrastructure that would remove a couple of hundred thousand cars of the highways seems like a “must have” rather than a “nice to have.”

What do you think?

Should Caltrain strengthen its governance to be able to grow to meet pent up demand and climate goals?  Which of the sets of choices would do the best job to help reach the goals?

In the age of electrification, how should we think about fares?  Should Caltrain – as part of the region – work toward moderately priced integrated fares that do the best job of competing with driving and taking hundreds of thousands cars off the road?  Should Caltrain position itself as a luxury niche product, for a select set of customers?

Share your thoughts in comments, and to Caltrain at Feel free to copy