BART eliminates multi-million-dollar FY26 budget deficit through cuts and efficiencies

BART has eliminated what was projected to be a $35 million budget deficit for the next fiscal year through various cuts and strict cost control efficiencies. The upcoming Fiscal Year 2026 Preliminary Budget Memo, to be released at the end of the month, will now show a balanced budget for the fiscal year beginning July 1st, but structural deficits of $350 million to $400 million loom in following years unless long term, stable funding sources can be identified.

“We’re getting our budget in order to the extent that we can,” said BART Board President Mark Foley. “Closing a $35 million gap is no easy task. Now that we’ve overcome the first hurdle, we’ll focus on the bigger picture of restructuring BART’s funding model for long term sustainability.”

BART was able to close the projected $35 million dollar deficit through a combination of cost controls and revenue generation. Examples include:

Cost Controls

  • A strategic hiring freeze while protecting safety and service quality
  • Labor savings from reducing near term retiree healthcare costs
  • Non-labor budget reductions across all departments
  • Running shorter trains
  • Locked-in low renewable electricity rates
  • Implementation of Inspector General’s recommendations for efficiencies

Revenue Generation

  • Installation of Next Generation Fare Gates to reduce fare evasion and increase ridership
  • Maintaining inflation-based fare increases
  • Offering new fare products like Clipper BayPass which is now revenue positive
  • Improving transit coordination
  • Growing ridership through station activations and events
  • Negotiating new agreements for telecommunications revenues

Total operating expense growth in the FY26 budget is only 1% compared to inflation in the Bay Area at 2.7% over the past year and the size of workforce has been reduced from the current year due to the strategic hiring freeze. In fact, even before the recent cost cutting, BART has been able to keep its operating costs below the rate of inflation since 2019.

While BART is prioritizing high-quality and frequent service to attract more riders, overall, BART is running 100 fewer trains per week than before the pandemic. 

BART is one of the most cost-efficient rail operators in the nation despite operating in a very high-cost region. By one measure, the cost per vehicle revenue hour, BART is significantly more efficient than similar systems like Washington, D.C.’s WMATA and Atlanta’s MARTA (Vehicle rail hour rates: BART - $283, MARTA $370, WMATA $466). 

BART cannot close structural deficits with service cuts

As ridership continues to slowly grow, BART’s historical reliance on passenger fares to pay for operations, long seen as very effective, is outdated and no longer sustainable. New sources of funding are needed to avoid significant service cuts.

Even with belt-tightening, BART can’t cut its way out of the crisis without causing a transit death spiral. That is because rail has high fixed costs to maintain infrastructure and low marginal costs driven by changes in service. For example, when BART closed at 9pm and reduced frequencies during the height of the pandemic, it represented a 40% cut in service, but it only reduced operating costs by 12%. Even a 90% cut in service (9pm closure, one-hour frequencies, and running only three of the five BART lines) would close less than half of the FY27 $376 million deficit.  

Next steps for the BART budget

The soon-to-be-released 2026 Preliminary Budget Memo will mark the beginning of the final stretch of BART’s budget activity for the year. A series of presentations at Board meetings will culminate in a Board of Directors vote in June to adopt a two-year budget for fiscal years 2026 and 2027.