Ridership soars but funding gaps grow as Caltrain balances expansion with fiscal reality
San Mateo County, California – The Caltrain Board of Directors has officially approved the rail agency’s operational and capital budgets for Fiscal Year 2026. This means that electric train service will continue and important infrastructure upgrades will be made, even though there are financial problems on the horizon.
The operating budget for FY2026 is around $260 million, and it comes from a variety of sources, such as passenger fares, Measure RR revenue, SB 125 state subsidies, and money left over from State Transit Assistance (STA). The agency also lowered nearly $10.9 million in predicted costs by decreasing both personnel and non-labor costs, all while keeping the same level of service.
That service includes trains running every 15 minutes during rush hours and every 30 minutes during off-peak and weekend hours. In the previous several months, Caltrain has become much more popular. In April, ridership was up 60% over the same period last year. Weekend use is now the highest it’s been in the 161-year history of the rail corridor.
The capital budget for FY2026 is $34.8 million. This money will be used to make safety and maintenance improvements throughout the system. These expenditures, which include upgrades to grade crossings, are paid for by the federal government, the state government, and local governments. At Broadway Burlingame, a major success has already been achieved. Safety improvements like solar markings and AI-based monitoring have stopped cars from accidentally driving onto the rails.
But even though more people are use the Caltrain services, financial challenges still persist. Starting in FY2027, Caltrain is expecting an average yearly budget shortfall of roughly $75 million until FY2035. The agency may have to make difficult decisions, including eliminating services, closing stations, or cutting back on administration, if it doesn’t get more money, like from a possible regional sales tax.
The Governor’s May Revise budget proposal, which may cut Caltrain’s SB 125 funding by more than $10 million in FY2026, makes things much more difficult. In response, the agency is working harder to cut costs and find new sources of funding. Strategies include a minor 25-cent fee hike beginning July 1, targeted marketing initiatives, and a reform of the GoPass program to attract more frequent customers.
Caltrain is also thinking outside the box by looking for ways to make money other than ticket sales, such as renting out trains for events, making advertising deals, selling name rights, and leasing fiber optic equipment.
The FY2026 budget year officially begins out on July 1, 2025, and will last through June 30, 2026. Caltrain’s biggest problem right now remains finding the right balance between growing service and addressing the financial deficit as it enters a new fiscal cycle.
