Welcome to the second episde of the Streetsblog California podcast, StreetSmart. In this podcast, I’ll be talking to experts about various topics, policies, programs, and people that I’ll be covering as part of the beat at Streetsblog California.
Our guest in this episode is Juan Matute, the Deputy Director of the UCLA Institute of Transportation Studies, a contributor to Streetsblog’s sister publication Santa Monica Next and one of the foremost experts on transportation, land use, and how technology can be used to enhance transportation systems.
Transit funding in California is in a strange place at the start of 2025, with federal priorities having shifted away from promoting alternatives to driving gasoline powered vehicles and with the long-term impact of COVID-19 on transit operations still somewhat unclear. Matute cuts through a lot of the confusion in this podcast to explain where the state is and what the governor, legislature, and cities can do to maintain and improve transit operations.
You can listen to our first episode “Demystifying the CTC with Jeanie Ward-Waller,” here.
Transcript:
Juan
Yeah, so in California, transit operations get most of their funding from local tax sources and from fares of people who write them. And so the availability of local tax sources and the farebox recovery ratio, so the percentage of fare revenues as a fair revenues as a percentage of operations, vary throughout the state.
So we’re speaking in Los Angeles County, which has four half-cent sales taxes for transportation, which bring a great deal of funding for transit operations for LA Metro, Foothill Transit, Long Beach Transit.
And that allowed those agencies to have fairly low fares prior to the pandemic and fairly low farebox recovery ratios. An agency like LA Metro or Big Blue Bus or Long Beach Transit or Foothill Transit was reliant on fares to cover, let’s call it between 17% and 25% of its operating costs. It’s lower now than during the pandemic, but that is a percentage of revenue that’s relatively low and easier to make up through other sources. So the state has come in and given a lot of money to transit agencies.
That’s in contrast with agencies like Metrolink, BART or Caltrain, which prior to the pandemic were reliant on fares and other directly generated sources of revenues :advertising, rentals, park and ride is a big one for these commuter rails.
But those are all really related to ridership, either first order or second order effects. Their recovery ratios prior to the pandemic were around 47%. Caltrain was exceeding 75%. So that meant that they weren’t as reliant on tax subsidies for operations, but they were also much more sensitive than some of these other agencies with lower farebox recoveries to ah changes in ridership affecting their bottom lines, which is what we’re seeing ah with Caltrain, BART, Metrolink,and even San Francisco Muni.
Damien
Now, Muni, though, is mostly buses. Because when I first looked at this, I saw a lot of the agencies that were struggling were rail. As you mentioned, Metrolink is a commuter rail down in LA County. Caltrain, I mean, they’ve got “train” right in the name. So even if you’re not familiar, Muni is, I believe, mostly buses. but ah So it’s not really a mode issue. It’s how much is funded by taxes and how much is funded by fares.
Juan
Yeah, it’s not a mode issue. I mean, Muni has some light rail, even a street, and even a cable car.
They’re one of the most diverse rail agencies in terms of different types of rail that they offer.
But, San Francisco Muni has more local support, was re less reliant on fares prior to the pandemic, but is also having challenges because Muni would pick up trips going into the central business district of San Francisco from Caltrain and BART, which are also having the ridership challenges. So that’s kind of how they’re entangled in the current decline.
Damien
So you have a spiral effect there too. If the agencies that are supplying people for long distance trips for your local trip are not seeing ridership, then you’re also going to see a decrease in your own ridership. I guess that makes sense if you think about it.
So let’s talk a little bit though about possible solutions. We covered in Streetsblog California last week and in the podcast with Jeanie earlier this week, that a lot of environmental groups are hot on this issue and they are encouraging the governor and the legislature to do something about it.
But, is there something the governor and the legislature can do about it? The governor has been preaching…I don’t want to say austerity…but his budgets have been lean on climate issues since his climate budget a couple of years ago when there was a big surplus. Is there a chance the state’s going to sort of come riding to the rescue for transit operations?
Juan
It’s very unlikely.
There are a lot of possibilities that doesn’t require billions of dollars raining from the state and there was maybe a glimmer of hope in 2024 so that if the state suddenly came into money that transit operations would be a major expenditure ah from that money.
I haven’t looked at the latest…well the LAO fiscal update isn’t out yet. ah So there may be some money, but I think it’s now clear that that money is going to disaster response and recovery. That has jumped in line in terms of need and priority. And so the state, um while it may be able to shore up some of the agencies, so I think we’ll have to look towards ah the many, many opportunities for non-fiscal assistance for California’s transit agencies.
Damien
Now, what does that look like? It sounds to me like non-fiscal aid would be that they would be reducing service, or is there something I’m missing?
Juan
I’ve been part of ah about a year’s worth of conversations from stakeholders across the state as part of this California Transit Transformation Task Force that was stood up in response to SB 125, which was a funding measure that brought a lot of extra funding to California transit agencies, which they could use for operating or capital support.
That group has identified a number of measures that could really help transit agencies. So if you think of what costs money, it’s driver operators, vehicle maintenance, and then large capital projects. Those end up being big chunks of money.
So for the operator side, it is possible to, and there has been prior state legislation to, exempt ah bus lanes and other bus priority projects from CEQA, but the state could look to go a step further.
We are seeing these lines in some of the data that is available on these routes actually. These facilities have recurrent congestion that slows buses during peak hours. People are spending another 30%, 40% of time on that bus. And that’s delaying everybody. It’s taking longer. But it’s actually having a cost on operations where the transit agency needs to pay that operator an extra 30%, 50% for that run because that bus is stuck in traffic.
So moving towards faster implementation of transit priority bus lanes, transit signal priority, queue jumps, etc. would be a way to actually reduce the cost of providing a given level of transit service. It also allows agencies to think more about what types of capital projects that they may want to pursue in the future.
Damien
I was and was going to ask about that because that’s been a common theme in the past couple of weeks or months since the election. What can California be doing with its own capital dollars, not the ones it’s reliant on from the federal government to to improve things on the ground, not just for transit agencies, but to reduce car dependency. The letter last week was talking about how we know we may not have a partner on electric vehicles anymore. Since that was a big part of our climate plan, ah how much of our climate plan do we have to change?
So, let’s take that thought and tie it into what you were just talking about with capital.
Juan
Yeah. Well, the idea is doing more with less. So, well I’ll set aside the issue of electrification of transit fleets for a second.
Right now, many of the new rail projects, not all, but many of the new rail projects being pursued in this state for billions of dollars would be more cost effective (and pretty much as operationally identical in terms of the number of people, how frequently it runs, and how fast the vehicles can go) as bus rapid transit projects.
There’s a preference for light rail projects because the minimum design standard for a light rail project usually includes some sort of grade or or physical separation, so lane exclusivity, if not grade separation, but there are often grade separations and intersections….
Damien
….Yeah, light rail’s generally faster than the yards.
Juan
Light rail is generally faster, but that’s usually as a result of design choices.
If we were to make more light rail style design choices for lane exclusivity, for preemption…even for targeted grade separation for bus rapid transit. Now, bus rapid transit that would score well on the ITDP’s a bus rapid transit index (a group that basically offers scores to bus rapid transit facilities.)
And the US usually gets poor scores because anytime we’re redesigning the streets, considerations about accommodating existing automobile traffic usually take priority over the idea of having a well-designed, higher functioning, high efficiency, a higher capacity ah transit system. And so because of those political choices, we end up with a choices between various watered-down BRT project that maybe is going to take us long to build as a rail line because of community opposition and a more expensive light rail project that would serve the same number of people.
There’s been many of these in California’s history. The Van Ness BRT was one of them for many years, but that was actually constructed and was quite successful. In San Francisco, Muni is loving having that facility.
Another example is the the Pasadena to North Hollywood Bus Rapid Transit, which has encountered opposition from multiple cities and has been and designed to the point where it will not be as effective as a transit service in the future ah because people were concerned about impacts to vehicle users, both those driving and also to a certain extent parking.
Agencies are forced with this like long slog for a sub-optimal BRT project versus maybe finding three, four, or five times the money as needed for light rail, where they think they’ll get more lane exclusivity and preemption, but perhaps not.
I think that there should be a third choice, which is like a high-quality, cost-effective bus rapid transit project where you could, instead of finding five times the money, you could roll out five times the network route length. Rather than fighting over which area of LA gets the next right light rail line or which area of San Diego or Fresno or Sacramento is getting the next light rail line, you can move forward with more high quality bus rapid transit lines at the same time, rather than just fighting on a piecemeal basis.
Damien
So while we’re talking about capital improvements, we can talk about the “T word” because President Trump’s impact on transit in the state is going to be real, a although probably not as much operations because that we don’t get operations money from the federal government, but we do get capital money, i.e. new electric buses or i.e. funding to build those ah BRT lines or those light rail lines.
As we look at things, we probably don’t have as good a federal partner as we had two weeks ago. But what is it? Do you have any forecast this early on on what that means for the state’s capital projects?
Juan
So rural transit and paratransit to get state or federal funding for operations…I’ll be looking towards those. I have been made aware of through work, an executive order that includes um stopping programs associated with accessibility. I’m a bit concerned that that will be defined in a way that means reducing federal support for the paratransit service that offers access to people with disabilities. But we’ll see how that plays out within the industry. I know that there’s sometimes ambiguity and interpretation of these types of executive orders.
I think there is a concern for service now that primarily obtains its operating funding from the federal government: rural and accessible services. California can flex a lot of its money, so we have a very large state with the most state motor vehicle fuel tax revenues of any other state by a function of our size or demand for petroleum and then also ah the share of the cost that is the percentage of tax or excise tax and other fees.
Damien
Cap and Trade….
Juan
So there’s money there and there are ways to flex that money. It’s not as straightforward as just saying, “I’m going to take this dollar from this pot and put it in that pot.” Some pots may be that straightforward, but there are other things that the state could do and say, “Hey, you know this is an incentive that we’re um you know including for certain types of projects.”
There’s ways for the state to flex its existing money. In California, we have very low property taxes and higher income and sales taxes, and that’s how the state operates. Very low property taxes as a percentage of both assessed valuation and then assessed valuations are limited.
There has not been a lot of momentum in the past on the idea that a new transit line or an existing transit line ah would be able to collect some revenue from property owners who benefit from increases in accessibility from that transit line. This is a version of value capture finance, which is the method by which a lot of the highly successful transit systems in Asia fund their capital and operations.
There may be opportunities legislatively to say, “hey, we are rebuilding these neighborhoods with a lot of transit oriented development as a result of a lot of our climate and housing affordability and multimodal policies.” They all point in the direction of increased densities and reduced parking for new developments near transit.
What the state could do is say, “We’re going to give transit agencies or counties or other some other entity the ability to assess an additional fee or collect an incremental growth in property tax revenues from the area around a major transit stop,” which is a legal definition in California. That would help to fund capital operations maintenance of that line. So that’s a possibility that does not rely on federal money at all. It’s a state choice.
Damien
If you were to, I don’t know if it’s possible to describe the outlook for transit and transit riders in the state, and say,” this is good news for transit riders or this is bad news for transit riders” because so many systems are experiencing different things and there’s so many different ways that transit agencies are funded.
Juan
It’s a big diverse state and a lot going on. And so there’s it’s really hard to characterize transit in California with a one-size-fits-all approach.
So that doesn’t happen.
Well, it does happen constantly, but it doesn’t happen effectively.
Damien
Right, it’s hard to do well.
Juan
It’s hard to do well.
So, ridership is a challenge. Ridership, a lot of our systems have been oriented towards commutes because a lot of transportation planning has been oriented towards central business district commutes for 30, 40 past years.
Damien
But, this is true of the whole world for the most part.
Juan
What?
Damien
This is true of the whole world of the most part, that transit has been built around getting people to and from work. And you’ll have separate lines or separate stops that are for something else. But for the most part, transit has been a get to work sort of thing.
Maybe in the largest cities, you’ll have other stuff ah you built around.
Juan
Well, yeah, but Caltrain has different commuting markets. And so going from the peninsula in the San Francisco Bay Area, going up and down that peninsula, there’s a lot of really expensive housing and really successful companies all the way from San Francisco down to San Jose.
That means that the workers And the residents in that area are often higher income, well statistically higher income than other areas in California. And so that’s a different transit market even than just any standard metro line, where you still have the commuter rail dynamics, where it may be more professional workers that are going into the CBD, a more upper middle class connecting from the suburbs.
But Caltrain has that in a more ah greater extreme. We’rein a period of economic uncertainty. There just seems to be a lot of uncertainty associated with how policy changes will have an effect both the actions of government, but also the macro economy.
Frankly, one of the roles that transit provides is providing affordable mobility for people who would otherwise not be able to be mobile. Transit agencies can see more riders during a recession or periods of higher unemployment. In that way, it’s kind of a social safety net that ensures that people are still able to get around to their doctors appointments, check-ins, even if they get a new job, even if they aren’t able to make payments on their cars. And we’ve seen how the used car market skyrocketed during COVID. It’s gone but back down a bit. But cars are still fairly expensive to acquire and maintain versus what they were 10 years ago. And so transit’s there as a safety net to catch.
Those will be priced out of driving themselves or having every adult in a household driving themselves. And that could help increase transit ridership in a way that makes us really grateful for having the transit system exist because it is functioning as a safety net, allowing people to still get around and access opportunities, social, economic, educational, health, whatever.
Other changes that might affect ridership is if there’s a federal executive order about return to office, so working in person.
Damien
Yeah, that’s true.
Juan
If that has some downstream effects on private employment, state employment, other forms of employment. I know there have been trends ah for return to office, but I don’t know if people will look at what the federal government has done and you may see more infrequent commutes or more frequent commutes into central business areas as a result, which would also be a transit market.
And so there are ways that ridership could go up as a result of the uncertainty and some of the things we’re seeing in a way that helps some of these other agencies that rely on Farebox recovery ratio, or that really accentuates the need for having transit service as part of a mobility safety net in California. And in that case, there would be more political interest in doing some of the things I mentioned earlier in this conversation to make sure that transit can succeed, even if there’s not tons of money raining for the federal government.
Damien
All right. Well, we are closing in on the end of our time. So do you have any closing thoughts for us or should I go right into our outro, as we like to call it?
Juan
Transit is public space and it’s becoming more excludable as a result of some state changes that allow transit agencies to prevent people from coming onto their systems based on the history. But all public space is pretty much managed through both government and social norms and expectations. Everybody can do their part by just riding transit and using it for their mobility. If you haven’t been on transit for a while and you’re somebody who’s more concerned about what you’ve been hearing…I’ve been riding transit with my family during the peak of the pandemic but even just last weekend to get around. I don’t find it unsafe. I don’t find it too disorderly. It’s always a little bit disorderly. So I’d encourage people to get it back out there and try it if they haven’t in a while.
Damien
All right. Well, thank you so much for your time today. You are our second guest. So everyone is probably mentally comparing you to Jeannie right now…our third guest, our third guest will get away from that. People will stop doing those comparisons, but thank you.
Juan
No, I’m looking forward to listening to Jeanie’s, which I will already have done when the listeners listen to this one.
Damien
Well, thank you again. We’ll talk to you probably this summer when some of the legislation’s moving.
Juan
Okay, that’s good.
