BOARD OF DIRECTORS ADOPTS A BALANCED BUDGET FOR FY 25-26

Preserving service, protecting jobs, and pursuing sustainable funding in the coming fiscal year

OAKLAND, Calif. – The Alameda-Contra Costa Transit District (AC Transit) Board of Directors is pleased to announce the approval of a fully balanced Operating Budget for Fiscal Year 2025–26, adopted at its most recent public meeting.

Developing this balanced budget was a challenging and arduous undertaking. Yet through significant cost-cutting efforts, it maintains service at 85% of pre-pandemic levels, supports the launch of the all-new Realign bus network, prevents layoffs, particularly among our critical frontline workforce, and prioritizes the pursuit of sustainable funding sources to help avoid the anticipated fiscal cliff.

AC Transit’s Fiscal Crisis

The Board remains acutely aware that, beginning July 1, the start of the new fiscal year, all emergency federal and state relief funds related to COVID-19 will be fully depleted. As a result, AC Transit is facing a fiscal crisis, with a projected $41.5 million shortfall. However, what sets this moment apart from a true fiscal cliff is AC Transit's careful financial stewardship throughout the pandemic, which has allowed our transit district to navigate current challenges without immediate service cuts or layoffs.

"Reaching this milestone balanced budget included significant belt-tightening measures," said Board President Diane Shaw. "Through a thorough review of our finances, the Board worked diligently to ensure that every department, and every AC Transit employee, not only restricted but reduced expenses. This was no easy task, as everyone was asked to make cuts without directly impacting service levels or reliability."

This balanced budget was achieved through the prudent use of $41.5 million in reserves.

However, the Board recognizes that relying on reserves to cover operational expenses is merely a temporary bandage, not a cure. Fiscal Year 2026–27 presents an even greater challenge with a projected $72 million shortfall. Although AC Transit has carefully built-up financial reserves, those funds are projected to run out in the coming fiscal year, which brings the District perilously close to the fiscal cliff. Compounding this challenge, AC Transit’s four-year budget shortfall has surged by 55%, growing from a $149 million estimate last fall to $238 million based on updated revenue projections.

AC Transit’s Fare Adjustment, July 1

To help accomplish this balanced budget and confront the deepening fiscal crisis, AC Transit’s Board of Directors approved a modest fare increase in March as part of a broader, long-term financial strategy. The adjustment is expected to generate much-needed revenue to support daily operations and preserve essential bus service, all while aiming to minimize the burden on riders.

The fare adjustments will roll out in two phases: the first, effective July 1, 2025, will slightly raise the local adult cash fare by 25 cents, from $2.50 to $2.75, and the Transbay cash fare from $6.00 to $6.50. 

A second 25-cent adjustment is scheduled for July 1, 2026, raising the local cash fare to $3.00.

Our transit district is helping riders and East Bay communities prepare for the changes online, on board, and through partnerships with community-based organizations. Riders are encouraged to fully utilize the Clipper® regional fare system, which provides half-off adult cash fares for eligible low-income riders through the Clipper® START program, as well as for youth, seniors, and riders with disabilities. For full fare details, please visit actransit.org/fares.

Launching the all-new Realign Bus Network, August 10

The adopted balanced budget includes $564.7 million in projected operating revenue and subsidies, offsetting $606.3 million in expenses and bridging the gap without sacrificing essential transit services. However, AC Transit continues to confront a sobering reality: ridership remains at just 85% of pre-pandemic levels. Since the shelter-in-place orders were issued in March 2020, approximately one in five riders have yet to return to our buses.

Although the past fiscal year saw 33.5 million boardings, a $3.3 million (8.9%) increase over FY 2024–25, ridership and farebox revenue growth have slowed significantly. This slowdown highlights the ongoing challenges AC Transit faces in rebuilding fare-based income and achieving long-term financial stability.

As a result, this balanced budget prioritizes protecting the Board-approved Realign Plan – the all-new bus network specifically designed for the post-pandemic East Bay. After two years of careful planning, extensive community engagement, and a strong commitment to equity, Realign is set to launch on August 10. The plan includes changes to 74 bus lines, tailored to better match riders’ current travel patterns and address the continuing effects of the pandemic. For more details, visit actransit.org/realign.

Avoiding Workforce Reductions

In addition to resource management, thoughtful workforce planning plays a crucial role in this balanced budget. By carefully controlling hiring throughout the coming fiscal year, the District aims to maintain stability and avoid layoffs, ensuring continued reliable service.

"AC Transit has not implemented a hiring freeze, recognizing that such a move would severely limit our transit district’s ability to respond swiftly to the challenges ahead," said General Manager Sal Llamas. "Instead, we are strategically managing any new hire, approving only those positions essential to maintaining operational readiness and ensuring service continuity in the coming fiscal year."

Prioritizing the Pursuit of Sustainable Funding Sources

The Board of Directors is also supporting and seeking amendments for Senate Bill 63 (SB 63), a proposed November 2026 ballot measure by State Senator Scott Wiener and Jesse Arreguin that would establish a sales tax in Alameda, Contra Costa, and San Francisco counties, with an option for San Mateo and Santa Clara counties to participate. 

AC Transit is taking additional steps to close the fiscal gap, including considering a state-funded bridge loan. If approved in its current form, the bridge loan proposal would unlock $750 million in state funding for AC Transit, BART, Muni, and Caltrain, providing critical financial support to the region’s largest transit agencies. Loan terms, including eligibility, repayment conditions, and expiration, are anticipated to be defined in future legislation.

Importantly, this approved Capital Budget lays the groundwork for AC Transit’s continued state of good repair. Approximately $25.3 million is allocated to meet the Federal Transit Administration’s (FTA) mandates, ensuring our bus fleet remains safe, reliable, and capable of providing sustainable transit services despite fiscal uncertainties.