SFMTA lays out budget plan, seeks state loan and voter measures to close $300M gap

SFMTA leaders on Tuesday detailed a multi‑pronged plan to close an almost $307 million shortfall in the upcoming fiscal year and to steady a structural budget gap that staff say could grow without new, sustained revenue.

City Controller Greg Wagner told the board the broader city faces a large structural deficit — roughly $936.6 million over two years — driven in part by the end of pandemic federal relief and by federal changes to safety‑net funding. SFMTA Chief Financial Officer Brie (self‑identified in the transcript) said the agency now relies on three main pillars to balance the agency's two‑year budget: a Bay Area regional sales‑tax measure, a local parcel tax, and internal efficiencies plus one‑time sources.

"If successful, [the regional measure] would bring $155,000,000 to Muni in particular," the CFO said, and she said the proposed local parcel tax would generate about $150,000,000 for Muni, with at least $10,000,000 dedicated to service‑quality improvements. Staff also announced that a state loan of up to $200,000,000 is available as a bridge; they described it as a loan, not a grant, with terms still under negotiation.

The CFO summarized the agency's fiscal challenge: about 77% of SFMTA's operating budget funds transit operations, most pandemic relief is ending, and personnel, health‑care and benefit costs are driving expenditures above modest revenue growth. "The majority of our budget deficit is being driven by the fact that we no longer have pandemic relief to depend on," the CFO said.

Board members and staff framed the loan and other one‑time sources as stopgaps that carry tradeoffs. The CFO said the loan would increase later‑year obligations; in questioning staff clarified the loan structure discussed with the state includes a 12‑year term with two years interest‑only and a roughly 10‑year repayment window and variable interest tied to SIFMA, and that combined principal and interest payments could reach tens of millions annually once amortization begins.

Directors signaled general support for combining one‑time sources (reserves, fund balance and cost‑control savings) with the state loan to fill the immediate gap, while expressing reluctance to flex capital funds to operating at scale. Several directors proposed using the agency reserve and portions of the fund balance as part of a blended, one‑time solution, and asked staff to return with specific replenishment plans and year‑by‑year effects of any borrowing.

Staff said the voter measures are designed to include accountability and efficiency requirements. The regional measure also seeks to expand programs such as Clipper START, a regional discount program; the local parcel tax would be indexed and built with caps and tiers so payments vary by parcel type.

The board did not adopt any final budget actions at the workshop. Staff will incorporate the latest state revenue outlook and finalize the balancing plan for further review. The next steps are a March update with a detailed balancing plan and continued public outreach ahead of budget adoption.

What's next: staff will return with precise repayment mechanics for the state loan, options for replenishing reserves, and an updated revenue forecast following the state's operating‑grant announcement in coming weeks.