BART's deficit held at $375 million. The plan to close it changed

BART priced its FY27 deficit four times in 13 months: $375.6 million in the two-year budget plan⧉, approximately $376 million in the audited FY25 financial report⧉, $375.4 million in the preliminary budget⧉, and $375 million in the adoption resolution⧉.▸ The number held. The financing did not. The Sources and Uses exhibit⧉ closes the year with $274,990,957 — 23 percent of the operating budget — that arrives once, or not at all: $88.5 million of borrowing, a $59.7 million one-time accounting change, $52.4 million of unspent FY26 emergency aid, and $74.4 million from a measure on the November ballot.

The sequence is reconstructable from document dates alone.▸ On May 22, 2025, staff presented a two-year sources-and-uses plan but recommended adopting a budget "for FY26 only given uncertainty around FY27"⧉; its FY27 forecast showed a $375.6 million gap, zero emergency assistance remaining, and no replacement revenue identified. In October 2025, per the ACFR's Note 18, Senate Bill 63 authorized the regional sales-tax measure for the November 2026 ballot. In December 2025, the audited ACFR⧉ disclosed, under GASB Statement No. 102, a recurring deficit of approximately $376 million beginning FY2026-27 and stated that the district "is vulnerable to a risk of substantial impact from its concentration in farebox revenue and constraints on local taxing authority." Its five-year forecast carried no measure revenue and projected $1.528 billion of deficits for FY27–FY30.

On February 26, 2026, the board initially approved an Alternative Service Plan — the documented path if the measure fails.▸ On March 31, 2026, the preliminary budget memo⧉ assumed the measure passes and proposed $97.9 million of borrowing from a source still undecided. On May 28, 2026, the FY26 third-quarter report⧉ showed the district running $52.4 million better than budget. Four days later, on June 1, 2026, the board adopted the FY27 budget — a one-year budget, the resolution notes, until "BART's financial outlook has stabilized."

The adopted Sources and Uses exhibit⧉ itemizes the bridge.▸ Borrowing: $88,487,666. Regional Sales Tax — the measure booking: $74,424,103, assumed to begin flowing around April 1, 2027, nine months into the fiscal year. Sales Tax Accrual Change: $59,679,188, a one-time recognition from moving to accrual accounting. SB 125 Carry Forward from FY26: $52,400,000. Together: $274,990,957 — 23 percent of the operating budget, and 73 percent of the size of the $375 million deficit itself; the rest is closed by ongoing revenue increases and expense cuts. The preliminary memo⧉ described the accounting change and the borrowing as actions that "allow BART to budget an additional $157.1M in operating revenue in FY27 only," and the general manager's letter in the same document states plainly: "Budgeting one-time funds and temporary cost deferrals are not best practices."

The borrowing carries its own trail through the adopted attachments.▸ Between the March preliminary and the June adoption, per Attachment 1⧉, bond debt service rose $14.3 million — the resolution⧉ identifies this as state-loan debt service — while investment income rose $35.5 million, from $3.0 million to $38.5 million, attributed by the resolution to "higher projections of investment income on BART's cash balances," including "State loan interest income." A year earlier, the May 2025 plan had forecast FY27 investment revenue of $5.0 million, on the logic that income would fall as BART spent down its reserves. The adopted budget instead borrows, holds cash — the Q3 report notes "large balances reflect short-term cash preservation strategies in advance of November ballot measure" — and books the interest. On the expense side, the deferrals continue: $68.3 million of retiree-health trust contributions across FY25–FY27, and $52.1 million of planned capital contributions in FY27 alone.

The FY27 budget authorizes 4,535.675 permanent full-time-equivalent positions, per the Sources and Uses exhibit's footnote⧉ — down 64.0 from the 4,599.7 in the FY26 adopted budget, chiefly through the elimination of funding for 63 vacant operating positions⧉.▸ The same labor budget funds previously negotiated raises of 2 percent on July 1, 2026 and 2 percent on January 1, 2027 across AFSCME, ATU, SEIU, non-represented, and police unions, and assumes 5 percent of operating positions and 15.5 percent of capital positions sit vacant. Exhibit B⧉ records that no rate increases were approved for Board Appointed Officers. The Alternative Service Plan defines the other branch: roughly 1,170 positions — vacant and filled — cut from the budget if the measure fails, about eighteen times the adopted budget's trim.

The retirement ledger sits behind the suspended policies.▸ The Q3 FY26 report⧉ puts the unfunded pension liability at $985,769,886 — the Miscellaneous plan 75.4 percent funded, the Safety plan 59.4 percent, per June 2024 valuations — and the unfunded retiree-health liability at $225,605,000. The FY27 budget's response, per the adopted exhibit⧉: the Pension Funding Policy allocation is budgeted at $0, the Low Carbon Fuel Standard sustainability allocation at $0, and retiree-health operating contributions stay deferred. The preliminary memo⧉ is explicit that benefits themselves are unchanged and that the deferrals are scheduled to reverse: "All RHBT and planned capital contributions are assumed to resume in FY28."

The allocation that was coming back. The May 2025 presentation⧉ told the board that the Priority Capital allocation — BART's committed contribution to the Core Capacity Program, "memorialized in a Full Funding Agreement with FTA" — had been "deferred in FY25 and FY26 based on anticipated project cashflow needs, returns in FY27," and its FY27 forecast budgeted $38.4 million for it.▸ The adopted FY27 exhibit⧉ budgets that line at $0, and the preliminary memo⧉ moves the return date: "The Priority Capital Allocation will be deferred to FY28 through FY31." The commitment did not return on the schedule the earlier document stated; it moved out one to four more years.

The measure that decides — and the table that says otherwise. The general manager's March 2026 letter states the November measure "will decide whether BART receives the operating funding necessary to maintain service."▸ Five pages later, the same document's Table 2⧉ runs the forecast with the measure approved — $307.5 million of measure revenue in FY28, rising to $339.4 million by FY31 — and still shows a negative total net result in every year: −$58.9 million, −$55.7 million, −$47.9 million, −$29.5 million, a cumulative $192 million through FY31. Passage, by BART's own arithmetic, narrows the problem without closing it. The audited ACFR frames the same asymmetry from the other side: without the measure, projected deficits for FY27–FY30 total $1.528 billion.

The recommendation and what adoption did with it. On May 28, 2026, the Q3 report⧉ told the board FY26 was running $52.4 million better than budget through March — after $30.7 million at Q1 and $27.7 million at mid-year — and projected "a ~$74M positive variance by FY end," which staff recommended "using to reduce deferrals and borrowing FY27."▸ The budget adopted four days later books exactly the observed $52.4 million as an SB 125 carry-forward and cuts planned borrowing by $9.4 million, from $97.9 million to $88.5 million, per Attachment 1⧉. The remaining projected variance is handled by a new resolution clause directing the general manager to apply "all unused SB 125 funds from FY26" against borrowing and deferrals — the final FY26 number, per the Q3 report, will be known by the end of September 2026.

The dates are in the documents.▸ Bay Area voters decide the SB 63 regional sales-tax measure in November 2026. If it passes, the budget⧉ assumes revenue begins around April 1, 2027, and the preliminary memo⧉ assumes retiree-health and capital contributions resume in FY28 — with FY28 still forecast $58.9 million short. If it fails, the memo's schedule is: a Title VI equity analysis and a revised FY27 budget at board meetings in November and December 2026, then Alternative Service Plan phase 1 in January 2027 — train hours cut an estimated 63 percent, fares and parking up 30 percent — then phase 2 in FY28: up to 15 station closures within a cumulative 70 percent service-hour cut. The plan's third phase is one sentence long: if BART cannot safely or legally operate with available resources, "stop passenger service." Before the vote, the FY26 books close by the end of September 2026, fixing how much unused aid the new resolution clause sends against the $88.5 million of borrowing.