Beginning June 16, 2025, Tamien Station Electric Train service temporarily suspended. Info: caltrain.com/status.
By Dan Lieberman
The way people live and work, and even travel, have all drastically changed. Caltrain has seen this reflected in its ticket sales, with fewer riders getting on board to get to work five days a week. These changes in ridership patterns have directly impacted Caltrain’s budget and upended its funding model that once relied heavily on daily commuters.
In the past, Caltrain covered nearly 75% of operating costs from fares but that is not the case today. While Caltrain has seen significant ridership growth in recent months, a new funding model is needed to adjust to this new reality.
Caltrain is projecting an average annual deficit of approximately $75 million from FY2027 to FY2035. Without additional funding, Caltrain will be forced to explore difficult decisions such as drastic administrative cost and service reductions, including station closures. This operational funding shortfall could be made worse by proposed cuts in the Governor’s May Revise budget, which would result in an additional $10.4 million in cuts in Caltrain’s operating funding.
There are fundamental, structural challenges that the agency is facing when trying to respond to new and evolving travel patterns. Caltrain needs a new, secure and reliable funding source that will put the agency on stable footing and allow it to successfully maneuver and grow its ridership.
The increase in ridership due to electric service combined with one-time state funds and Measure RR funds have closed the funding gap for Fiscal Year (FY) 2026, but the agency is facing an annual structural operating deficit of $75M million a year between FY2027 and FY2035. Conversations around a regional funding measure are ongoing, but the current timeline and uncertainty revolving around these efforts leave significant uncertainty for how the agency budgets for future years.
While there are a multitude of uncertainties that come along with the budget process, it is clear that people love Caltrain. A January poll of Santa Clara, San Mateo and San Francisco counties revealed that 82% of respondents have a favorable view of the transit agency and, of those that ride Caltrain, the number went up to 91%. The launch of electrified service in 2024 has also led to a positive upswing in ridership, with data revealing that from April 2024 to April 2025, there was a nearly 60% increase in ridership, with almost 925,000 riders climbing aboard. Additionally, weekend ridership is now at its highest point in Caltrain’s history.
Today, Caltrain is trying to build on that progress and do what can be done with the tools available to cut costs, increase revenues, and grow ridership. Here are a few ways Caltrain plans to do exactly that:
Growing revenues by monetizing assets
Caltrain is looking at strategies that grow revenue, from traditional sources like fares and ticket sales to new, innovative short-term and long-term non-fare revenue strategies to boost revenue like hosting special events on board or investing in more transit-oriented developments.
Within the next two to five years, Caltrain will also explore bolstering its solar and energy systems. As part of an earlier capital project, Caltrain installed 52 miles of conduit and fiber optic cable within the Caltrain right-of-way from San Jose to San Francisco. Now, the agency is pursuing efforts to lease fiber optic cable infrastructure in order to connect commercial buildings to internet providers and grow revenue sharing opportunities with private companies for commercial fiber and telecommunications. Longer term, the agency hopes to increase the supply of transit-oriented development and pursue opportunities to lease land and buildings. Caltrain also hopes to use its station areas and platforms for pop-up retail use and special events.
In terms of growing revenues from traditional sources, Caltrain is pursuing ways to incentivize those who do work in-person to ride trains during the work week to boost fare revenues. The agency is modernizing the Go Pass program, a successful 20-year-old employer pass program, to meet current commuter needs. Caltrain is also collaborating with cities to decrease traffic congestion and increase Caltrain ridership through land use policies, development incentives, Go Pass participation, and other strategic plans.
Special event partnerships are another important part of Caltrain’s growth strategy. Caltrain wants to cultivate ridership among those who might not rely on Caltrain for their daily commutes. This includes custom-event themed cars for major concerts and sporting events, as well as expanding advertising initiatives to reach potential new riders.
The goal is to make sure Caltrain is exploring every avenue available in order to maximize existing revenue sources and create new ones to address the structural deficit.
Controlling Costs
Every program at Caltrain is being evaluated to see where the agency can achieve cost savings, from cutting back on capital expenses all the way down to saving money on software services.
To control costs, Caltrain’s capital improvement program identified a few critical projects that will require a grants funding strategy, since not every project will be able to be funded in the current environment. Already, the agency has identified about $10.9 million in savings and will continue to look for ways to tighten its belt.
The agency is reducing internal costs and exploring new revenue strategies to address the funding deficit, as well as working closely with regional and state partners to secure external funding. Caltrain’s base ticket fare will increase by 25 cents on July 1, in accordance with the Board-approved fare policy.
Caltrain is committed to navigating its budget challenges and opportunities in a transparent way, keeping safety and customer service at the forefront of every decision. Caltrain is dedicated to serving its riders and to continuing to provide an environmentally and fiscally sustainable future for the many years to come.