At the Board of Directors meeting on Feb. 13, the San Diego Metropolitan Transit System passed two items on structural deficit budget planning. Item 18 proposed three actions: a fare increase study, a potential sales-tax revenue ballot measure, and a Comprehensive Operational Analysis — an evaluation of an agency’s operations to ensure efficiency and identify areas of improvement. Item 19 proposed delaying trolley and bus services improvements that were approved in 2024.
Both items aim to address the MTS’s structural deficit, which is projected to reach $100 million in the 2026-27 fiscal year. The deficit is the result of a post-pandemic decrease in ridership that the agency has been unable to recoup. MTS is currently reliant on federal stimulus funding that will be depleted by FY 2028-29.
Item 18, which proposed three actions, passed with a unanimous vote. MTS will authorize the San Diego Association of Governments, a planning organization that focuses on developments to improve the San Diego region, to conduct a fare study.
The study, which is expected to take one to two years, will evaluate the potential impacts of a fare increase on those who rely on San Diego’s public transportation, the accessibility of transit, and on the MTS budget. There has not been a major fare increase for MTS services since 2009.
Another of the actions passed through item 18 is a potential half-cent sales tax ballot measure for the November 2026 general election. To decide whether to pursue the ballot measure, MTS will conduct outreach efforts surveying public opinion and make a decision by May 2026.
The ballot measure will only apply to voters in MTS service areas and require two-thirds approval. MTS service areas exclude North County, which is served by the North County Transit District. If passed, the sales tax is estimated to collect $30 million a year.
The third action item 18 approved is a Comprehensive Operational Analysis. MTS will hire a contractor to evaluate how the agency can optimize performance and ensure cost-efficient transit services. This analysis, projected to commence this summer, aims to investigate the growing structural deficit and the reasons for continued low ridership, which has decreased since 2020 with the onslaught of the COVID-19 pandemic.
MTS relies on regional or federal funding to conduct the COA. Without external support, the agency will consider reallocating between $30 million to $50 million of its budget to fund the analysis. Brent Boyd, director of planning and scheduling for MTS, explained during his Feb. 13 presentation that MTS would have to make major service reductions to meet this financial burden.
The UCSD Guardian contacted Joshua Kavanagh, assistant vice chancellor for Transportation and Activation at UC San Diego, about potential impacts on the Triton U-Pass Program. He said that the University plans to maintain student access to public transportation.
“The university’s focus is to ensure our students, faculty and staff continue to have robust transit options,” Kavanagh’s statement read. “We plan to provide input to MTS throughout their budget planning process to try to minimize any potential impacts to the university community.”
Item 19, which passed by a 9-2 vote, will delay the implementation of several transit improvements that were approved in 2024. These include the Innovative Clean Transit projects, zero-emission buses, and a seven-and-a-half minute wait time for the Blue Line service.
Several of these enhancement projects are not affected by item 19 and will continue as planned, such as $16 million to increase security on buses and trolleys, $26 million for the Orange Line Improvement Project, and $46 million to implement overhead bus chargers.
As another part of item 19, MTS aims to fund operations long term using only recurring revenues. As of now, the agency has been operating on federal and state funding to fill the gap in its deficit since the COVID-19 pandemic.
MTS plans to shift unallocated funds from the Capital Improvement Program to its operating budget to mitigate its structural deficit. The CIP is a state plan used by cities to fund infrastructure and road projects. In FY 2026-27, it plans to shift $25 million, $35 million in FY 2027-28, and $50 million in FY 2028-29.
MTS currently funds its operations with $220 million allotted in 2020 by the Coronavirus Aid, Relief, and Economic Security Act. The agency also depends on $140 million in additional stimulus funding from the 2021 American Rescue Plan Act. The California Senate Bill 125, a bill that allocated approximately $4 billion statewide to support transit agencies, also provides MTS with the funds to propose service enhancements.
“Our recurring revenues do not match our recurring expenses, and we’ve been balancing that with the stimulus and reserves,” MTS Deputy Chief Financial Officer Mike Thompson said in an article by The San Diego Union-Tribune.
