San Francisco Transit Riders’ Local Funding Working Group, composed of staff, board, and members, has met weekly over the past six months to better understand Muni’s funding problems and to identify possible San Francisco-specific revenue sources. We are deeply grateful for the thoughtful engagement of our members in this important work.

The Working Group is releasing a series of blogs to detail our findings and recommendations for new, equitable transportation funding in 2022 and beyond. This blog is the first of three in the series, laying out what we currently face. The second and third blogs will address detailed recommendations, our principles guiding those recommendations, and how you can get involved and make a difference.

Buses at Potrero Yard. Source: SFMTA

This fall, San Franciscans are being asked to make difficult decisions regarding Muni. Choices around restoring routes versus adding frequency provide no clear win for riders. While discussions about how to distribute limited resources to restore Muni service are important, addressing Muni’s severe financial deficit must be at the core of any solution that creates a more reliable, accessible and world class transit system for riders.

We wanted to explore where we are, how we got here, and how we can move forward with solutions for funding Muni that are stable, equitable, and sustainable. We have no illusions that we face a major challenge. But by carefully developing core principles, thoroughly evaluating options, and building the popular support needed to pass major funding measures, we believe that together we can build the future of Muni that we need.

The Problems

1. Transit has been underfunded for decades

The roots of Muni’s current deficit can be traced back over forty years. In 1978, the federal government paid 13% of Muni’s operating gap (losses after fares have been deducted). By the end of Ronald Reagan’s presidency in 1989, that percentage had been cut by almost two-thirds. By 2018, it was down to 1.3%.¹ As SFMTA Director of Transit Julie Kirschbaum put it recently “we’ve been asked to run $16 worth of service on $10 for decades.”

Source: Chris Arvin

With declining federal funding, transit agencies like Muni have had to look elsewhere for funding. This has made them increasingly dependent on fares, as well as parking revenue and transfers from San Francisco’s General Fund. SFMTA manages both transit and streets in San Francisco, allowing it to generate revenue via parking, a unique position not available to other Bay Area transit operators such as BART and Caltrain.

In theory, SFMTA is an Enterprise Department. This means it’s supposed to generate its own revenue and not be dependent on the City’s General Fund. In practice, General Fund transfers play a significant role in SFMTA’s operating budget. Of Muni’s $1.275B pre-pandemic operating budget, 33% came from the General Fund, 30% from parking, 18% came from operating grants and 16% from transit fares. However, none of these sources have been sufficient to replace the significant losses in federal funding or the growing cost of operations.

Source: SFMTA

To preserve service despite decades of declining revenue, SFMTA has papered over the cracks, functioning with minimal staff and forgoing needed maintenance. SFMTA currently has over 300 non-operator vacancies and a train control system that still runs on floppy discs — the 5 ¼” ones.

In addition to an operating deficit, Muni has a $3.24 billion backlog of needed infrastructure replacement or repair, roughly 21.6% of all assets. The operating and capital deficits have a huge impact on riders, from buses missing their scheduled runs, to ghost buses that never come, to routine subway delays and breakdowns. As of 2019, SFMTA projected an almost $36 billion cumulative funding gap by 2050. In Director of Transportation Jeff Tumlin’s own words “the reason why Muni has been unreliable is because we’ve continued to defund maintenance in order to try to deliver more actual transit service than we can afford.”²

Source: SFMTA

2. Federal aid is temporary, while the pandemic has decimated ridership and revenue

The pandemic hit Muni hard, and signs point to it having long-term impacts on our transportation system. Travel in San Francisco fell off a cliff in March 2020, and with it went two of SFMTA’s main revenue sources: parking and transit fares.

Source: SFMTA

Over the past 18 months, SFMTA has lost over $575M in revenue, including about ⅓ of its entire operating budget for FY 2020–2021. Thankfully, in response to the pandemic, the Biden Administration passed three rounds of stimulus funding that have helped prop up SFMTA and other transit agencies. From the CARES Act, the Coronavirus Response and Relief Supplemental Appropriations Act, and the American Rescue Plan Act, SFMTA received over $1.1 billion in one-time relief funds from the federal government, avoiding the need for immediate layoffs or furloughs due to the pandemic.

However, these relief funds will only last SFMTA a few years. At the same time, while ridership is slowly rebounding — currently at 45% of pre-pandemic levels — fare revenue lags behind, exacerbating SFMTA’s funding crisis. Cash fares remain at 17% of pre-pandemic levels, while monthly pass purchasing is at 10% of what it was before the pandemic (the ridership rebound is greater than revenue rebound because a high percentage of current riders are eligible for fare assistance programs).

Source: SFTMA

These recovery numbers point to a longer-term shift in commute patterns due to our robust tech sector. Many workers who used to ride to work every day now don’t anticipate riding more than a few times a week in the near future. As a result, fares and parking revenue will likely not recover before the stimulus money runs out.

3. The structural deficit will only get worse post-pandemic, while the need for service will grow

The impact of the pandemic on existing revenue sources, combined with SFMTA’s pre-pandemic structural deficit, puts Muni in a dire situation. Currently SFMTA plans to provide 85% of pre-pandemic service starting in early 2022, and the hope is that they will restore 100% of pre-pandemic service by Fall 2022.

However, without additional funding, this service plan will exhaust both SFMTA’s remaining stimulus funds and reserve by 2024, necessitating long-term service cuts and layoffs. The images below show SFMTA’s latest low, medium and best-case budget projections based largely on how quickly fare and parking recovers.

Source: SFMTA

Unfortunately, Muni’s structural deficit will continue to grow regardless of how fast parking and transit fares recover, since the root cause — revenue sources not keeping up with the cost of service delivery — remains. A growing deficit will mean future cuts that hurt riders, our economic recovery, and our city’s climate and equity goals.

The Bottom Line

Closing the structural operating gap alone will require $80–200 million a year in additional revenue. On top of that, overdue replacement of our aging transit infrastructure will cost close to $224 million a year. Hopefully additional funding at the regional, state and federal level will help close this gap in capital funding. But barring changes at higher levels, San Francisco needs to identify at least $300 million annually to support Muni as we know it, let alone improve service.

San Francisco Transit Riders is also advocating for additional transit funding at the regional, state and federal level. We will need to be successful on multiple fronts if we are to provide world class transit in San Francisco; to achieve the city’s Climate Action Plan which calls on 80% of trips in San Francisco to be by transit, walking, or biking by 2030; and to create a more equitable, accessible city for all.

Our next two blogs will lay out potential funding options and pathways to address Muni’s financial crisis at the local level. Right now, you can email your supervisor and ask them to support additional transit funding for Muni.

  1. For more information on the history of federal transit funding and service declines, check out this great blog by Chris Arvin.
  2. Transit Advocates Celebrate Muni, Flaws and All (Public Press)

A rider-based organization working for excellent, affordable, and growing transit in San Francisco. Join us!