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If voters don’t approve a new sales tax this year, could it signal the end of the line for Caltrain? As soon as next year, service cuts could mean Bay Area residents enjoying a night out in San Francisco would have to wrap up their evening before the last train leaves at 9 p.m. Giants fans would need to take the bus or a car to weekend home games.
Caltrain has raised warnings of a fiscal cliff that could require significant service cuts, such as closing more than one-third of stations, eliminating weekend service, reducing train frequency to an hourly schedule or ending service by 9 p.m.
Complicating these financial worries, governance tensions have flared between Caltrain and SamTrans, the San Mateo county transit district that serves as Caltrain’s managing agency.
The financial future of Caltrain and other Bay Area transit providers could be on the ballot in November. Voters are expected to decide on a 0.5% sales tax in San Mateo, Santa Clara, Alameda and Contra Costa counties, and a 1% increase in San Francisco. The measure needs 50% voter approval across all five counties to pass.
Here’s what you need to know about Caltrain, which runs along the Peninsula from San Francisco to Gilroy.
How is Caltrain funded?
Caltrain has a range of revenue sources, including fare revenue, grants, state funding and a regional sales tax. In the current fiscal year, which ends on June 30, its adopted budget includes about $243 million in total funding.
Around 30% of Caltrain’s budgeted revenue this year came from Caltrain’s own operations, which includes its fares, annual passes like GoPass, parking revenue, rental and other income (about $73 million).
The remainder came from contributing sources. Roughly half of Caltrain’s total revenue (approximately $120 million) comes from Measure RR, a one-eighth percent sales tax in San Francisco, San Mateo and Santa Clara counties that serves as a dedicated source of revenue for Caltrain. The measure was passed by voters in 2020.
An additional approximately $35 million comes from grants and about $15 million comes from three state funding programs. The Low Carbon Fuel Standard, which is a California policy designed to reduce greenhouse gases that compels high-emissions fuel producers to purchase credits from low-carbon providers. Caltrain, which became fully electrified in 2024, receives clean energy credits worth around $1 million. The Low Carbon Transit Operations Program was another program created by the state to reduce emissions that provides operating and capital assistance for transit agencies. Finally, the State Rail Assistance program provides supplemental funding.
Why is Caltrain facing a fiscal cliff?
Prior to the Covid-19 pandemic, 75% of Caltrain’s total costs were covered by revenue derived from its operations, including fares and rental income, according to a report prepared by the governing body that owns Caltrain. During the pandemic, commuting patterns shifted as more people worked remotely, causing a sharp drop in the number of riders.
Ridership has ticked up steadily in the last few years, but remains below pre-pandemic levels. Caltrain had 1.1 million monthly riders in March 2026, about 75% of its pre-pandemic ridership (roughly 1.5 million monthly riders), according to statistics on its website.
Caltrain faces a $75 million annual budget shortfall beginning in fiscal year 2027-28. In February, the state legislature passed a law that provided one-time loan funds for Bay Area transit agencies, which will cover Caltrain’s shortfall for fiscal year 2027.
Caltrain’s Executive Director Michelle Bouchard stated that it is facing a structural funding challenge that cannot be solved through cuts or efficiencies alone. Railroads have high fixed costs from maintaining tracks and electrical infrastructure, and inflation has driven up operating costs faster than revenues, its website notes.
“Caltrain is delivering more frequent, faster, and more reliable service for riders up and down the Peninsula,” said Bouchard. “(But), without a stable, long-term funding solution, we will be forced to make difficult decisions that would significantly reduce service and impact the communities that rely on Caltrain every day.”
What is the sales tax measure known as the Connect Bay Area Act?
Last October, a state law called SB 63 was passed to authorize a transportation funding measure to be put on the November 2026 ballot in Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties. For the next 14 years, the measure would implement a 0.5% sales tax in all counties except San Francisco, which would have a 1% rate.
Supporters of the initiative, also called the Connect Bay Area Act, must gather 186,000 signatures from registered voters across the five counties by mid-May to get it on the November ballot. If passed by over 50% of voters, the measure is expected to generate nearly $1 billion annually to help fund Bay Area transit systems, including Caltrain, BART, Muni, Santa Clara Valley Transportation Authority and SamTrans.
Sales taxes are composed of a 7.25% state rate and additional county and city taxes. That’s why the sales tax varies by city in San Mateo and Santa Clara counties. On the Midpeninsula, the current sales tax is 9.875% in Redwood City, 9.375% in Menlo Park and 9.75% in Palo Alto and Mountain View.
SB 63 would add an additional 0.5% sales tax to this existing rate in San Mateo and Santa Clara counties.
What do local governments have to about the Connect Bay Area Transit initiative?
The Palo Alto City Council endorsed the initiative in March. A report prepared by city staff noted that the measure aligns with the city’s priorities by deterring solo drivers and supporting local and regional transportation options. The report also estimated that the initiative could generate $264 million per year for the Santa Clara Valley Transit Authority – a county agency that provides bus services and other transit options – and about $75 million for Caltrain.
In Redwood City, city staff estimated that $50 million of the sales tax would be returned to San Mateo County for use on transit projects including SamTrans. While the city council has not taken a formal position on the tax ballot measure, the city’s communications manager Nick Mathiowdis said that Caltrain is an important part of Redwood City’s transportation network that supports access to downtown and helps connect people to destinations throughout the region.
Menlo Park’s spokesperson said the city had no comment on the initiative and Mountain View’s city council has yet to take a position.
