A deal between Gov. Gavin Newsom and Bay Area lawmakers on a bailout for the region’s struggling transit agencies won’t come together before the end of the Legislative session — but state funding is still on the table.
After Bay Area lawmakers raised alarm bells earlier this week that the governor was reneging on a deal to provide a $750 million loan to the region’s struggling transit agencies as part of an earlier budget agreement, Gov. Gavin Newsom announced Wednesday that the financial support from the state will indeed materialize.
It just might not be $750 million. Or a loan. And exact details won’t be decided this Legislative session, as the budget deal earlier this summer stipulated, but rather sometime this fall.
Newsom’s announcement was light on details — he intends to provide “hundreds of millions of dollars” in the form of “loans or other mechanisms” to the transit agencies, he said. But the statement also implied that Newsom is hesitant to provide a loan without baking in greater oversight over how funds are spent. He said that any state funding would “align with operational needs, protect service, and support fiscal reforms, with clear and reliable repayment plans.”
Since the pandemic cut ridership levels drastically, Bay Area transit agencies have relied on state and federal emergency funds to continue operating without major service cuts. But that funding ends this year, and agencies including BART, Muni and AC Transit are all facing major funding gaps starting in June 2026. Without extra help, they have said they would need to make major cuts to certain lines, and cut frequencies to bring costs down.
Bay Area state senators Scott Wiener and Jesse Arreguin had negotiated a $750 million loan for transit into this year’s budget, meant to avoid service cuts until voters authorize a potential regional sales tax measure in November 2026 that could provide longterm replacement for farebox revenue.
Lawmakers and the governor blamed each other for not moving fast enough to finalize the loan before the end of the session. But for now, they seem to have agreed to delay talks: Proposed legislation published Wednesday morning would require the Department of Finance, as well as the California State Transportation Agency, to finalize the financial assistance by January 10, 2026.
“I’m very encouraged by both the progress of talks and the Governor’s commitment to getting a deal done in time to prevent these cuts,” Wiener said in a statement Wednesday.
He stressed the urgency of finalizing the loan terms as quickly as possible.
“Operators need to be able to plan and cannot do so unless they know funding is coming,” he wrote. “If transit operators don’t have confidence that funding is firm, they will have no choice but to start gradually reducing service. We must not allow that to happen.”
For now, the governor’s office is staying quiet about how much financial assistance will be coming. Asked for more details, the governor’s Deputy Director for Communications, Daniel Villasenor, wrote that the “statement and legislative language speaks for itself.”
Transit proponents say that if agencies have to make service cuts, that could threaten voters’ support for a regional sales tax measure.
“Bay Area agencies are working on a pathway to get this right, to not be reliant on state funding,” said David Harrison, a lobbyist for the San Francisco Chamber of Commerce. “This bridge funding is really critical that we don’t kill any of that momentum by having to face service cuts as we’re going to the voters.”
Newsom’s statement noted that the state has already provided billions in assistance to transit agencies since the start of the pandemic in 2020. A 2023 budget deal provided transit with $5.1 billion in assistance over four years, including diverting $4 billion from infrastructure funding to operations.
The deal included certain accountability measures, including a new transportation “task force” that was meant to oversee the use of state funds and find ways to increase ridership. That task force’s final report is due at the end of this month.