(Kevin N. Hume/S.F. Examiner)

(Kevin N. Hume/S.F. Examiner)

Despite CARES Act funds, Caltrain faces ‘existential crisis’

Agency projects $71 million deficit over next financial year

By Isabella Jibilian

Special to the S.F. Examiner

Empty platforms. Empty trains. Empty coffers.

Caltrain is facing projections of a $71 million deficit over the next financial year, as ridership has plummeted due to the coronavirus pandemic.

Although the railroad received nearly $50 million in relief through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, staff said at a board meeting Thursday that Caltrain should prepare for a looming “existential financial crisis.”

“The CARES Act funding that has been applied so far has stopped the bleeding,” said Seamus Murphy, a Caltrain spokesperson. “It has covered the losses in the near term.”

The long term outlook is another story.

Transit systems across the nation are facing decreased demand amid the threat of COVID-19, but Caltrain’s existence is more tenuous than most. Unlike BART and Muni, Caltrain is not funded by sales or property taxes. It depends on fares and parking fees to say afloat.

Following the outbreak of COVID-19 and “shelter-in-place” orders, ticket sales have been down more than 95 percent, according to Derek Hansel, Caltrain’s chief financial officer. While the federal funds should last into the summer, Caltrain needs to find another source of cash to avoid shutdown.

“This organization is in big trouble,” said Charles Stone, a Caltrain board member, on Thursday.

Once shelter-in-place orders are lifted, revenues won’t necessarily bounce back, Caltrain board members said. Some riders will choose to commute to work via car as a means of maintaining social distance. Some workplaces will not open and encourage their employees to continue to telecommute.

Another problem persists: in a time after shelter in place, but before the end of the coronavirus pandemic, maintaining social distance on public transit will be difficult and expensive. Prior to the pandemic, rush hours with more passengers than seats were the norm. Operating trains at low capacity might prevent the spread of disease, but a daily ridership cut of even 25% could result in a $22 million revenue loss, according to Caltrain’s projections.

Amid plunging revenues, some might recommend cutting costs. But many of Caltrain’s costs are fixed, staff members say, and the CARES Act precludes layoffs or stopping service. The funding aims to keep public employees at work and help Caltrain continue to provide service transporting essential workers.

“We have been able to survive year to year by balancing tight budgets… because our ridership has been strong,” said Sebastian Petty, Caltrain’s director of policy development. “But as the crisis has really exposed, there has been a structural instability to Caltrain’s funding, and with this pandemic, it is upon us now.”

In the short term, Caltrain’s hopes are pinned on receiving more aid. The CARES Act will distribute a second round of funding, though Caltrain’s share has yet to be decided.

In the longer term, board members and staff are considering turning to tax revenue to supplement the farebox, by placing a $108 million measure on the November ballot.

“The status quo is not acceptable,” said Jim Hartnett, Caltrain’s executive director. “The search for external funds is going to be a very serious effort.”

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