The San Diego Metropolitan Transit System board on Thursday approved a $473.1 million operating budget that includes tens of millions in reserves and other funding to balance the spending plan.
The newly approved budget fully funds current service levels on all four trolley lines and 92 bus routes. The approved budget also keeps 15-minute trolley frequencies enacted in January in place.
But the agency turned to non-traditional sources to keep funding regular operations.
MTS reallocated $25 million in what officials called “non-critical capital funds” to support operations in Fiscal Year 2026, which begins July 1.
The budget also uses $62 million in operating deficit reserves, excess stimulus funds from prior years that MTS said were “saved specifically for balancing future operating budget deficits.”
“This year’s budget demonstrates our dedication to delivering dependable, affordable transit while planning for future needs,” Stephen Whitburn, MTS Board Chair and a member of the San Diego City Council said in a news release. “Through strong collaboration, we’ve approved a balanced budget that meets the needs of today’s riders and lays the groundwork for a more sustainable transit system.”
Total budgeted revenue for FY 2026 is projected at $473.1 million.
Financial planning staff already told the board they will need to rely on the capital fund shifts for the foreseeable future – $35 million more in 2027 and $50 million in the following year –to balance the budget. They also recommended that MTS delay planned service enhancements.
The board approved those steps in February. But staff estimated that MTS would hit a “fiscal cliff” early in FY 2028 and run out of “budget-balancing funds,” creating a deficit of more than $120 million in the following year.
The agency now faces a fork in the road – expand services if new funding is found, reduce them if not – and will turn to a consultant for help.
The MTS board, also on Thursday, approved a contract with the San Diego County-based firm Transportation Management & Design, Inc. to conduct an operational analysis.
The process, officials said, includes a thorough evaluation of the bus and trolley system and will lead to recommendations for altering routes, adding or deleting services and other changes, with the goal of to enhancing “efficiency and effectiveness.”
The study is expected to take 18 months. Pursuing an operational analysis now, officials said is “a strategic, forward-thinking action” to address the deficit ahead of 2028.
In addition to the operating budget, MTS also has a $163.3 million capital improvement program that is set to fund 40 projects in the coming fiscal year, including buses, rail, station upgrades and more.
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