MTC Approves Budget, Sends $165.8M to BART, Sets Framework for Transit Ballot Measure

The Metropolitan Transportation Commission locked in its annual budget, channeled state capital dollars to BART's Transbay expansion, and adopted the spending blueprint for a future multibillion-dollar regional transit ballot measure — all unanimously — at its June 24 meeting. Meanwhile, a state audit validated the Bay Area's transit coordination model but warned that operators could burn through reserves by fiscal year 2027.

• $165.8M in state capital funds allocated to BART for the Transbay Core Capacity Program, with a public commenter flagging a $1.1 billion gap on the separate BART Silicon Valley extension
• SB 63 rider-focused expenditure plan approved, setting rules for how future ballot measure revenues would be spent on transit improvements; a critical special meeting set for July 24
• FY 2026-27 budget adopted with a 3.8% cost-of-living adjustment, $600K operating deficit, and nearly $79M in reserves — more than double the policy minimum
• $150M Safe Routes to Transit and Bay Trail Cycle 2 guidelines adopted, establishing criteria for the next round of active transportation grants
• State audit finds East Bay transit consolidation offers limited benefit but dings MTC on timeline slippage for its Transit Transformation Action Plan
• Public Participation Plan deferred to August after a commissioner pulled the 90-page document from consent for a full staff presentation

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Transit Ballot Measure Takes Shape With SB 63 Expenditure Plan

The Commission unanimously approved Resolution 4767, a rider-focused expenditure plan that will govern how revenues from a future regional transit ballot measure — authorized by the Connect Bay Area Act (SB 63, 2025) — would be spent.

Why it matters: This is the financial architecture for what could be the Bay Area's next major transit funding source. The plan focuses spending on improvements that directly benefit riders, and its adoption is a prerequisite for placing a measure on the ballot.

Where things stand: Commissioner Candace Andersen, who represents Contra Costa County on the Regional Network Management Committee, presented the item and moved for approval. Commissioner Margaret Abe-Koga, a Santa Clara County supervisor, seconded and requested a reporting mechanism: "At the end of each four-year funding cycle, could we please receive a report detailing how the funds are geographically and programmatically distributed and what outcomes are achieved?" Commissioner Andersen supported the request as direction to staff.

Decisions: The resolution passed unanimously (For: 16, Against: 0, Absent: 5).

What's next: Chair Sue Noack emphasized the urgency of a special July 24 meeting of the Public Transit Revenue Measure District. "Establishing a quorum for this meeting is critically important to take necessary actions by the SB 63 statutory deadlines," she said. That meeting will advance the measure toward a potential November ballot.

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$165.8M Flows to BART as Extension Concerns Mount

The Commission approved Resolution 4777, directing $165.8 million in SB 125 regional capital funding to BART's Transbay Core Capacity Program — a signature expansion designed to increase ridership capacity through the system's most congested underwater corridor.

Why it matters: The Transbay tube is BART's single biggest bottleneck. This allocation from state capital funds advances the long-planned capacity upgrade. But separate concerns about a different BART project — the Silicon Valley Phase 2 extension managed by VTA — added a cautionary undertone.

Where things stand: Public commenter Roland LeBrun supported the $165 million allocation but urged the Commission to hold off on a future $750 million commitment for the BART extension until there is clarity on whether a regional ballot measure passes in November, warning that the funds may need to serve as collateral for further transit operating loans.

During general public comment, LeBrun returned to share findings from a Santa Clara County civil grand jury report on the BART Silicon Valley Phase 2 extension, citing a $1.1 billion funding gap, weak oversight, suppression of independent risk reports, and what he described as governance structural defects. He recommended VTA build a dedicated cash flow model and a Plan B by Dec. 31, 2026.

Decisions: Resolution 4777 passed unanimously (For: 17, Against: 0, Absent: 4).

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MTC Adopts FY 2026-27 Budget With Higher COLA, Strong Reserves

CFO Derek Hansel presented the agency's FY 2026-27 operating and capital budget, which commissioners approved unanimously via Resolution 4778.

The basics: The budget projects Transportation Development Act revenue up 3.5%, a modified interest yield of 3.6% reflecting inflation and reduced likelihood of Federal Reserve rate cuts, and a modest decrease in federal grant funding.

Why it matters: The budget bakes in a 3.8% cost-of-living adjustment — up from the 3.2% projected earlier — driven by higher-than-expected April-to-April inflation. The result is a $600,000 operating deficit, primarily attributed to indirect cost allocation plan carry-forwards.

"In the May draft, we had assumed that the COLA was going to be 3.2%. What we saw was higher inflation than anticipated. The MoU is based on April-to-April inflation. That came in a little hotter than we expected," said CFO Hansel.

Reserves remain a cushion: projected year-end reserves sit at nearly $79 million, well above the Commission's recently adopted $38 million operating reserve floor. "Our projected year-end total reserves are almost $79 million," Hansel noted.

Decisions: The budget passed unanimously (For: 15, Against: 0, Absent: 6).

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State Audit: East Bay Transit Coordination Works, but MTC Must Sharpen Timelines

Staff Theresa Romell presented findings from a Joint Legislative Audit Committee review of six East Bay transit operators — AC Transit, Union City Transit, County Connection, WestCAT, Tri Delta Transit, and LAVTA — and MTC itself. The audit was requested by a state senator to assess whether consolidation could improve efficiency.

Why it matters: The audit found that inter-agency coordination is strong, service duplication is minimal, and transfer challenges are not significant. Consolidation, it concluded, would offer limited benefit due to high labor costs, potential loss of dedicated local funding, and legal complications.

But the auditors flagged three areas where MTC needs improvement: establish realistic timelines for the Transit Transformation Action Plan, enhance performance metrics, and identify additional transit funding sources. The audit also noted that ridership recovery ranges from 59% to 83% of pre-pandemic levels and that agencies risk depleting reserves by FY 2027. A separate recommendation went to the legislature: extend zero-emission bus transition deadlines or provide more funding, since ZEB mandates significantly increase costs.

The other side: MTC pushed back. "I think it's fair to say that we were surprised by that and maybe a little bit disappointed, primarily because those recommendations seem to kind of ignore or bypass the proactive core coordination work that was and continues to be done by MTC," said Romell. She noted that "since the pandemic, MTC has advocated successfully for over $5 billion in new revenue to assist with the financial challenges coming out of COVID."

Commissioner Gina Papan drew a historical parallel, noting that San Mateo County consolidated 11 bus providers into what is now SamTrans in 1973 through legislation. She called for standardization across the region.

What's next: MTC must submit implementation updates at 60 days, six months, and one year.

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$150M Active Transportation Grant Program Opens for Cycle 2

Commissioners adopted Resolution 4768, setting guidelines for Cycle 2 of the Regional Measure 3 Safe Routes to Transit and Bay Trail grant program — a $150 million pot of RM3 toll revenue designated for bike and pedestrian projects that improve access to transit.

Why it matters: These grants fund the infrastructure that connects riders to stations on foot and by bike — the kind of "last mile" investments that determine whether people actually use transit.

In a related action, commissioners also approved Resolution 4621 (Revised), modifying the scope of five existing projects in the RM3 capital program following a public hearing and comment period.

Both items passed unanimously with no public comment.

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Executive Director: Plan Bay Area Wins Fastest-Ever State Approval

Executive Director Andrew Fremier reported three major milestones during his update to commissioners.

First, MTC and ABAG received formal California Air Resources Board approval of Plan Bay Area 2050+, the region's long-range growth and transportation blueprint. "Our staff really did a fantastic job. The quickest turnaround we've ever seen," Fremier said. The approval means the region has achieved SB 375 greenhouse gas reduction compliance.

Second, the state transit operating loan is on track for July 1 disbursement to four transit operators. "The loans have been closed, and we're just ready to receive the money and get it off to the four transit operators on July 1," he said.

Third, MTC transmitted the first phase of a financial efficiency report to the legislature, fulfilling an SB 125 requirement, with all transit agencies committed to their components.

Fremier also acknowledged the retirement of staff member Caitlyn Sweeney and her work on bridge resiliency.

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Advisory Council Pushes for Equity-Centered Engagement

Vice Chair Diana Benitez of the MTC ABAG Community Advisory Council reported on the council's priorities for its draft work plan and for MTC's public participation plan: equity, accessibility, and culturally responsive engagement.

"Members stressed the importance of working through trusted CBOs and continuing to expand those partnerships across the region," Benitez said. "And there was strong support for meeting people where they are through a mix of different approaches, like in-person, hybrid, and culturally responsive engagement strategies."

The council also called for showing how public input shapes decisions and reducing barriers through stipends, language access, and childcare.

Separately, Commissioner Papan pulled the draft 2026 Public Participation Plan (item 10L) from the consent calendar, calling it "really important for all the commissioners to get a presentation on" given that it is a 90-page document. Staff confirmed the plan is out for public comment and will return at the August meeting with a full briefing.

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Commission Honors Retiring ABAG Clerk Fred Castro

Chair Noack read Resolution 4784 honoring Fred Castro for 20 years as ABAG Clerk of the Board and MTC committee clerk. The resolution highlighted Castro's Navy service, his role in the agency's 2016 building move, and his preservation of ABAG institutional knowledge during the 2017 ABAG-MTC staff integration.

Castro delivered an emotional farewell, invoking naval tradition: "Madam Chair, I salute you and my colleagues and friends. I wish you fair winds and following seas. And this resolution, I will request permission to go ashore."

He also thanked three executive directors — Steve Heminger, Therese McMillan, and Andy Fremier — for allowing him to continue as ABAG Clerk through the merger. The resolution passed unanimously (For: 16, Against: 0, Absent: 5).

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Minor Items

• $8M in Priority Conservation Area grants approved for projects protecting natural and agricultural lands and improving outdoor access and urban greening under Plan Bay Area 2050+. Approval conditioned on cooperative scope development between MTC and project sponsors. Passed unanimously (For: 15, Against: 0, Absent: 6).
• Consent calendar (items 10A-10K) approved unanimously, including designation of the TNC Access for All program fund administrator, STA exchange funds for Bay Bridge Forward, SB 125 long-term financial plan, updated BIL regional priority endorsement list, and an AB 2308 support position regarding San Francisco redevelopment successor agency debt.
• Closed session held on anticipated litigation against Cubic Transportation Systems, Inc., the Clipper fare payment contractor. General counsel reported direction was given but no reportable action was taken. Public commenter Alita Dupree urged commissioners to approach the matter deliberatively and base claims on credible facts.
• Commissioner Papan highlighted a Vision Zero street-safety event in Redwood City that drew over 100 attendees.
• Chair Noack recognized Commissioner David Ambuehl's 36-year career at Caltrans as he approaches retirement.
• Next meeting: Aug. 26, 2026.