In October 2025, Senate Bill (SB) 63 authorized the formation of a new, five-county Public Transit Revenue Measure District that allows the board of that District or citizens exercising their power of initiative to place a revenue measure on the November 2026 ballot.

A group of citizens has already begun gathering signatures for a citizens’ initiative called Connect Bay Area.

If approved by a majority of voters, Connect Bay Area would fully address Caltrain’s operating deficit for 14 years and allow Caltrain to continue to operate frequent service, seven days a week. 

Caltrain has taken significant cost-cutting measures, including hiring freezes, crewing efficiencies, and reductions to professional services and other non-labor expenses. Caltrain is working on monetizing available resources and diversifying revenue through a non-fare revenue strategy portfolio that includes expanded advertising, property leasing, leasing fiber optic cable and transit-oriented development. The preliminary Fiscal Year 2025 budget end results are showing positive impacts reflecting cost efficiencies and greater than budgeted revenue.

Caltrain has modernized and expanded its service, boosting train frequency beyond traditional commute hours, improving reliability, and enhancing the rider experience following electrification. The focus on quality service is paying off: ridership rose 47% in Fiscal Year 2025, and at peak periods, Caltrain carries the equivalent of three lanes of Highway 101 traffic onboard every day. Caltrain was recently named the fastest growing transit agency in the United States by the American Public Transportation Association (APTA). Rider satisfaction has grown, with 91% of frequent riders approving of the agency in a recent poll and results from a recent rider satisfaction rating are the highest they have ever been in the 27 years of surveying Caltrain riders.

2.9 million people live along the Caltrain corridor, making up approximately 37% of the Bay Area’s total population, allowing Caltrain to take tens of thousands of cars off our roads every day. Since switching from diesel to electric power, Caltrain went to 100% clean and renewable energy between San Francisco and San Jose, improving air quality along the corridor. 
In a partnership with San Jose Clean Energy and Peninsula Clean Energy, Caltrain trains run on solar and wind energy, qualifying the agency for Low Carbon Fuel Standard credits from the state, generating additional revenue for the agency. Additionally, Caltrain returns 23% of its power to the regional grid thanks to its new regenerative braking system, helping to keep electric power more affordable and accessible

Without Caltrain, the region would see more traffic and more pollution: an additional 36,000 car trips every day, driving an additional 828,000 miles and generating 220 additional metric tons of carbon dioxide..  

Caltrain also contributes to the local tax bases and provides major benefits in terms of economic development along its corridor. Proximity to Caltrain stations increases the property value of homes and increases the rents for offices. Caltrain serves some of the biggest economic centers for the state, and its station areas anchor many transit-oriented development projects, both on-going and complete. The connection between public transit and economic growth has long been documented, with a recent study by the American Public Transportation Association showing that for every $1 billion invested in transit, we see an additional $5 billion in GDP, creating or sustaining over 40,000 jobs and generating $251 million in tax revenue.

Caltrain is also supporting community access through the Pass Forward Program, where passes are donated to a network of qualified community-serving organizations who then distribute them to low-income individuals, and Clipper START, which is an income-based program that provides single-ride discounts where participants meeting income limits save 50% on all Bay Area public transit systems.

Additionally, Caltrain carries more bicycles and cyclists than any heavy rail system in the United States, with over 500 bike lockers installed at stations so far and on-board bike cars in high demand seven days a week. Caltrain enables people using other forms of transit and active transportation to extend the range of their trips: only an estimated 1 in 6 Caltrain passengers drives and parks at a station.

One of the main reasons for the operating deficit is that commute patterns have shifted with the rise of remote work, causing sustained, significant changes in how people travel across San Francisco and Silicon Valley.​ This has resulted in lower ridership and revenue from 2019 levels. While ridership is rebounding significantly, it is still lower in absolute terms compared to the pre-pandemic era, when fares made up over 70% of Caltrain’s operating budget. Today, fares make up less than 30% of Caltrain’s operating revenue. Additionally, Caltrain, like all railroads, has high fixed costs - there is a need to maintain tracks and the electrical infrastructure regardless of the amount of service. Unlike bus agencies, these costs don’t scale with service. Across the transit industry rising costs due to inflation have resulted in operating costs growing faster than revenues.

The combined result of these factors and the elimination of member agencies' contributions is a structural operating deficit that cannot be resolved through cuts or self-generated revenue alone (fares, parking, real estate, etc.).  Caltrain has received one-time assistance that should keep trains operating through Fiscal Year 2027, but a sustained longer-term funding source is needed to fill the gap going forward to maintain current service levels.

Caltrain staff has proposed considering closing one-third of Caltrain stations if no external funding is available. Before a decision is made, there is additional analysis that is needed regarding ridership, equity, Title VI, operational efficiencies, and geographic distribution, to name some of the factors.

In addition to authorizing a ballot measure, SB 63 establishes accountability measures and efficiency reviews to ensure that transit agencies are acting responsibly and appropriately with the funds they are receiving.

The legislation requires a two-phase efficiency review for the four agencies that would receive direct operating funds. The first phase takes place regardless of whether the regional measure passes, requiring an independent oversight committee to analyze and report on:

• Cost-saving measures and rider improvement strategies implemented by the affected operators since Jan. 1, 2020
• Real property assets each operator owns and ways real estate could help bolster funding for each operator

The oversight committee is also charged with determining early action strategies that each operator could implement to deliver increased or improved service and enhanced customer experiences with existing resources.

SB63 requires an even more robust financial efficiency review if the measure passes. The legislation would require the independent consultant for the phase two efficiency review to “identify a menu of cost-saving measures that, if implemented, would reduce one-time and ongoing fixed and variable costs for the subject operators.”  

In addition to evaluating cost-saving measures, the review would include a comprehensive regional assessment of development and financing strategies to maximize the value of each subject operator’s real property assets,including evaluating strategies to leverage assets through housing, commercial, mixed-use, and other transit-supportive development, and more.

Transit agencies from around the Bay Area are also facing operating deficits and could have a compounding impact. You can read more about the other agencies here:

• BART
• MUNI
• AC Transit
• MTC