Newsom authorizes $590 million loan to fund Bay Area public transportation

(CN) — California Governor Gavin Newsom signed a new bill on Thursday afternoon authorizing a loan for more than half a billion dollars to prevent transportation agencies in the Bay Area from cutting services.

Senate Bill 117 authorized the $590 million loan to help stabilize public transportation agencies across the Bay Area, including Bay Area Rapid Transit, San Francisco Municipal Transportation Agency and Caltrain, which have faced issues with public funding for years.

The move was hailed by transportation officials and elected representatives as a major step towards reinvesting in the region’s public transportation.

“This is not just about transportation, it’s about economic development and it’s also about our inheritance, and we’ve been, frankly, living off our inheritance,” Newsom said during a press conference about the loan at BART’s Daly City, California, maintenance yard. “We’ve taken a lot of these systems for granted. We haven’t invested in them over the course of many, many decades.”

The new loan, which will be paid back over a period of 12 years, is not a long-term solution, but will prevent short-term cuts to services to public transportation agencies.

The first two years of the loan will be interest free, the governor said. After that, interest will be based on the state’s surplus money fund to prevent the state’s general fund from being short-changed, he said. The law also allows the loan to use money awarded to the state department’s Transit Intercity Rail Capital Program that has not yet been allocated for Bay Area projects.

“This is about all of us,” Newsom said.
”This is our identity. It’s not just about moving people. It’s about goods movement, it’s about regional vitality and it’s about the energy and daring that is our great export here in the Bay Area and in our great state.”

The governor also used the moment to urge state leaders to begin more efficient and strategic planning for public investment to prevent cuts to public services, like transportation.

“We all need to step up our game, in that we can’t continue to do what we’ve done, because we’ll be right back here in a few years,” he said.

Last year, the governor signed Senate Bill 63, authorizing a November 2026 ballot measure to clear the way for voters in five Bay Area counties to approve a 14-year sales tax increase to fund regional transportation services, according to the regional Metropolitan Transportation Commission. The new sales tax would generate about $1 billion in funding annually, the commission reported.

About 60% of that revenue would be dedicated to preserving service on BART, Muni, Caltrain and AC Transit, all of which are expected to experience budget deficits of at least $800 million starting in the fiscal year of 2027-28, the commission reported.

In opening remarks at the press conference, BART Board President Melissa Hernandez said that the transit agency dispatches 665 trains each weekday and about 55 million total trips in 2025. That’s an increase from 2024, which saw 50.7 million riders.

“These are trips that keep the economy thriving and the Bay Area moving,” Hernandez said. “So many of us in our community depend on BART as an affordable way to move around and we cannot let the system fail.”

BART’s ridership has increased since the Covid-19 pandemic, but is still far below pre-pandemic levels. In 2019, the transit agency reported 118 million trips.

“While ridership dropped rapidly during the pandemic, it’s been steadily recovering, and now stands at about 70% of pre-Covid levels,” Metropolitan Transportation Commission Chair Sue Noack said at the press conference. “Today, our transit systems carry an average of over 900,000 trips per day, and the systems receiving the loan are seeing ridership and customer satisfaction growing each year.”

California state Senator Scott Wiener, who co-authored Senate Bill 63 with Senator Jesse Arreguín, said that the funding problems for Bay Area public transportation are not new, but that they were exacerbated by the pandemic.

“We are step by step changing that,” Wiener said. “What we’re doing here today is to stabilize these systems and to bridge us from here until we have a longer term sustainable funding solution. Fundamentally, this is about people in the Bay Area. This is about people who rely on transit to get to work every day, students who rely on transit to get to school, people who rely on transit to visit their family, to go shopping, to get where they’re going.”