Caltrain board wrestles with Covid recovery budget; service cuts among potential cost-cutting measures

Caltrain ridership is coming back slowly after precipitous pandemic declines, and costs have been rising. On Thursday the Caltrain board will discuss budget options including potentially cutting service and raising fares.  Following discussion this month, the board will make decisions in June.

The proposed operating budget for 2023 is balanced, with little to spare, and the prospects for 2024 are risky depending on the pace of ridership recovery.   The capital budget is not yet balanced – that’s a separate post.

Caltrain’s staff recommends that to attract riders back to the service, the agency should maintain service and refrain from substantial fare increases.  Around the region, other agencies are maintaining service with a goal of bringing back riders.

Regarding fares, the proposal is to increase fares for individual Clipper users by 25 cents per trip, but to hold off on previously scheduled increases in base and zone fares. For large employers, the proposal is to  reduce the employer Go Pass discount to 20% from 25%.

Fiscal cliff risk as federal relief funding ends.

Federal relief funding, which has kept public transportation around the country going during the depths of the pandemic, is running out.   Out of all the Bay Area’s agencies, Caltrain is second closest to the fiscal cliff (Union City Transit is closest.)   The 2023 budget is being balanced including $4M in surplus from last year’s federal relief funding. 

Fare revenue, which had accounted for about 70% of Caltrain’s revenue before the pandemic, is down to less than 30%. The budget makes an assumption that ridership will climb back to 36% of pre-Covid levels.

Measure RR, which passed in 2020, is playing an essential role at keeping Caltrain running. The original goal of Measure RR was to support a mix of service and capital improvements, but all the Measure RR funds are going toward operations in the current budget.

Meanwhile, costs have increased across the board, with 3.5% wage increases, increased pension costs, and increased fuel costs driven by global issues but mitigated by hedging.

Judgement calls – attract riders back, or shrink?

At last week’s Finance Committee hearing, board members probed for options to improve budget situation, including options for cutting service and increasing fares.  However, as the staff analysis points out, cutting service and increasing fares runs the risk of depressing ridership, potentially making the financial situation worse.

In particular, the 42 employers that continued to pay for the Caltrain Go Pass in the months and years when offices were closed due to Covid (down from 117 Go Pass subscribers before Covid), could choose to unsubscribe if the service no longer met commuter needs as companies bring more workers back to offices. And lower-income riders who were an increasing share of Caltrain’s ridership during Covid might ride less with higher individual fares.

Given the uncertain and changing times, it would be helpful for Caltrain to continue to monitor ridership trends throughout the year – weekdays vs. weekends, corporate commuters and more diverse riders – to get a longer preview for next year’s budget decisions.

Also, this year/s budget’s cost increases include four new full-time senior staff positions that were identified to be separated from SamTrans. However, we have heard from several sources that the timing of these hires is discretionary, so this seems like an option to defer in a tight budget time.

To share your thoughts, send email to board@caltrain.com, or give public comment at tomorrow’s board meeting starting at 9am, online or in person. The meeting will be a hybrid format. Proof of vaccination is required to attend in person at 1250 San Carlos Ave in San Carlos. The zoom link is here.