SFMTA’s Budget Crisis: What You Need to Know
Budget Explainer: SFMTA is struggling but even the deep dives from major media outlets in the last few days are missing something fundamental. How is a budget bucketed and what goes into it?
Terms and Definitions
The fiscal year for most city agencies and organizations begins in July. Think of a fiscal year like a school year – if you’re Class of ‘08, senior year started in the late summer of 2007. In fiscal year terms, FY08 started on July 1, 2007. So when you see “FY25,” that one started on July 1, 2024.
SFMTA’s budget is a two-year one. This gives some flexibility and cost-saving because projects that span multiple years can be more easily accounted for. But it can also make cuts and pivots look more drastic.
Their budget consolidates two major buckets, capital and operations. You might recall that during the mayoral election, there was a moment when failed candidate Mark Farrell suggested SFMTA cut all of their capital projects and focus only on operations. If those words mean nothing to you, you’ve come to the right place.
What’s Operations? What’s Capital?
SFMTA’s operational costs include running transportation daily. There’s revenue and expense, or how much money comes in through fares and how much money it costs to pay for everything from gas to labor. Thankfully revenue includes some operating grants, so they’re not only reliant on people paying enough on tickets.
But what’s capital and why did Farrell think it should be cut? Capital costs are ugly, hulking behemoths that suck up all the money on unglamorous projects that few people understand. That doesn’t mean they don’t benefit anyone. They just take a long time and don’t look pretty. They’re like the bread of a feast – such necessary vehicles for everything, but they take a long time and aren’t often showstoppers. And you have to plan way ahead to make them.
Capital Opportunities
Capital is a great opportunity for SFMTA to find grants, but that’s tricky too. These things depend heavily on the political climate. For example, after the September 11, 2001 attacks a capital project like “hardening transit systems against external threats” would be an easily sell. Or in the 2010s Obama era, the federal government might find funding for climate resilience projects like improving a bus depot that’s prone to flooding.
Blurred Lines
The lines between operations and capital can be somewhat blurry. How many times does your Muni bus drop its guy (the leash-looking line on top of the 22, for instance)? Operations costs might include replacing it if it frays. But above a certain cost it might turn into a capital cost (like replacing the whole thing with something stronger).
Consolidation Woes
However, even though the capital and operational budget are consolidated for public consumption, their funding sources are so different that you can’t just cut one to feed the other. The agency has to keep both running. If they stop operations to upgrade everything, there won’t be any fares to keep trained operators on staff. If they stop capital projects, the operators will run the trolleys and busses into the ground and eventually things will break beyond a simple repair.
So when we say SFMTA is in hot water financially (partly because of the poison pill from Prop M), what we really mean is that there have to be some operational cuts. There might be some capital projects that get deprioritized. But if SFMTA won a grant for a major capital project, even if it feels like fluff, it can’t just get cut and redistributed. The grant money is allocated only for that project. Tough shit if you want to move money around.
What’s Next for SFMTA
It’s all a hell of a difficult problem for The City to have. Good thing we have a lot of smart people working on it. And now Denim Dan Lurie’s at the helm. Maybe he can come up with a Hail Mary to save the beloved public transit that makes shopping, eating out, and supporting local businesses possible. Otherwise the local economy is going to have a pretty rough few years.
Howdy! My name is Katy Atchison and I'm an Associate Editor for Broke-Ass Stuart.
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