Tough decisions await Caltrain 

Caltrain’s immediate financial predicament may not be as dire as first projected, but it still must make some painful decisions to balance its budget.

Worse, the outlook one year from now is even more bleak.

Last month, Caltrain Executive Director Michael Scanlon dropped a bomb when he announced that the agency’s projected budget deficit for the 2011 fiscal year, which begins July 1, could be as high as $30 million.

Revised projections of the agency’s finances reveal a $23.5 million budget deficit, and Caltrain will use $6 million in savings from this fiscal year and $5 million in new state funding to shave the shortfall to $12.5 million, according to Virginia Harrington, Caltrain’s chief financial officer.

If the agency’s current economic situation continues until the 2012 fiscal year, Caltrain could be looking at a budget shortfall of $38.9 million — a total that represents nearly 38 percent of the system’s $103 million overall budget.

To make up this year’s deficit, Scanlon said the agency could pursue massive service reductions, including the elimination of all weekend and midday weekday trains. Those options are still on the table as the agency ponders how to make up its $12.5 million shortfall.

One-time contributions, such as the funding and agency savings that helped minimize this year’s shortfall, will not be enough to sustain operations, Scanlon said.

Caltrain’s woes can be traced to its financial dependence on three fellow local transit operators: the San Francisco Municipal Transportation Agency, which manages Muni; SamTrans; and the Valley Transportation Authority. Combined, they make up 40 percent of Caltrain’s operating budget by contributing subsidies. But with those agencies struggling financially — particularly SamTrans, which is facing its own $28 million deficit — they have been forced to drastically cut down on their allocations. This fiscal year, the agencies gave Caltrain $39.4 million. Next year, they’re projected to slash that total to $25.4 million.

The lower-than-expected subsidies, combined with dwindling ridership — passenger fares are down 7.5 percent this year — has created a situation that’s threatening the existence of Caltrain.

The agency is pinning much of its long-term hopes on electrifying its system, a move that would allow it to run more-efficient train service. However, those plans are still years away, and for the time being the agency must find ways to make ends meet.
“It’s like we’ve been invited to the most beautiful banquet, but we have to make sure we don’t starve to death before we get there,” Scanlon said.

Although the agency has just seven weeks before the beginning of the next fiscal year, it could still balance its budget after the July 1 deadline, he said.

Deficits looming

$102.4 million Proposed Caltrain budget for next fiscal year

$12.5 million Current shortfall for next fiscal year

$38.9 million Projected shortfall for 2012 fiscal year

Source: Caltrain

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Will Reisman

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