SFMTA, which oversees Muni and transit infrastructure in San Francisco, said it may lay off 18% to 22% of its workforce, or up to 1,226 employees, in response to a massive deficit
The agency already froze 1,000 positions, slashed dozens of bus lines, and used $373.8 million in CARES Act funding to help balance its budget
SFMTA Director Jeffrey Tumlin points to long-term, structural challenges with the transit agency, noting that annual expenses outpaced revenue growth by $50 million prior to COVID
SFMTA, the San Francisco agency that oversees Muni and transportation infrastructure in San Francisco, could be the first City agency to lay off workers in response to the COVID-19 crisis.
SFMTA could lay off between 18% and 22% of its workforce, or up to 1,226 employees, the agency said last week. Absent more drastic relief measures, those layoffs would be a necessary response to an enormous budget deficit the agency is currently grappling with.
According to its latest budget update, SFMTA is facing a staggering shortfall of $68 million this fiscal year and $168 million in fiscal 2022. It may have to lay off large numbers of workers in addition to cost-saving measures it has already enacted, such as a hiring freeze on about 1,000 open jobs and deep service cuts. Earlier this year, Muni slashed 40 of its 68 bus lines, and the SFMTA cautioned that it may only be able to operate 35% of its pre-pandemic service.
Other cuts could include eliminating school crossing guards and the Essential Trip Card program, a discount program that helps seniors and people with disabilities pay for essential trips in a taxi, the agency said.
"Muni is in deep trouble," said Mayor London Breed at a recent press conference, calling for immediate federal aid.
SFMTA received $373.8 million in CARES Act funding, a federal aid package enacted in March 2020, but has already earmarked those funds to balance its budget. Bay Area transit agencies received $1.3 billion in aid from the CARES Act, 29.3% of which went to SFMTA.
San Francisco officials are hopeful that the Biden administration will bring more federal relief to financially strapped local agencies. In the meantime, a new COVID stimulus package, which could inject more funding into state and local governments, has yet to materialize.
Congress has tentatively agreed on a $908 million stimulus package, which will reportedly include about $160 billion in state and local aid. But language of the bill has yet to be released.
Even if more federal aid arrives, it's unclear to what extent that funding would stave off layoffs, let alone guarantee the long-term fiscal health of SFMTA.
At a recent meeting hosted by San Francisco Transit Riders, SFMTA Director Jeffrey Tumlin pointed to serious, long-term fiscal challenges that predate the COVID-19 crisis.
"Here in California, every single public agency has a built-in structural deficit," said Tumlin. "Our expenses increase with the cost of living, because our expenses are driven by labor. And we have to pay labor a living wage in a region where, because of our cruel housing policies, it gets outrageously more expensive to live here every year. Meanwhile, our revenues at best increase with inflation, and some of our key sources of revenue are decreasing in real dollars."
Prior to COVID, SFMTA was already running a structural deficit of $50 million per year, Tumlin said, meaning that expenses increased by about $50 million more than revenues.
"And so you wonder why we're not providing reliable service; it's because this is the reality of every single municipal and transit agency in the state," he added.
SFMTA expects that even in the best case scenario, Muni ridership -- which generated about $200 million in fares annually, pre-COVID -- will remain depressed for some time.
Looking ahead, the agency projects daily ridership of less than 300,000 through the end of fiscal 2021, which ends in June of next year. Typical, pre-COVID ridership hovers around 700,000 daily riders or higher.