Muni is having one of its best years — in terms of service provided. Weekday ridership topped 500,000 in July, weekend ridership pushed past pre-pandemic levels for the first time and rider satisfaction just hit its highest mark in 25 years.
Despite these gains, Mayor Daniel Lurie kicked off Transit Month on the steps of City Hall with a stark reality check: The San Francisco Municipal Transportation Agency is staring down a $307 million deficit next year, expanding to $434 million over five years as federal pandemic relief funds dry up.
“A thriving San Francisco needs a thriving Muni,” Lurie told the crowd.
If voters do not pass the local Proposition H and Regional Measure RTM — aka the Connect Bay Area Act — to authorize new revenue in the Nov. 3 election, the system faces catastrophic cuts. Muni could be forced to reduce overall service by 30% and eliminate 20 full routes. Bay Area Rapid Transit could reduce service by 70% and close 15 stations.
San Francisco spent the last 15 years legally mandating that high-density housing be concentrated along transit corridors. Now, the transit system that makes those multibillion-dollar housing investments viable is facing a financial cliff.
To prevent collapse, local advocates are pushing a two-pronged ballot strategy:
- Proposition H: A 15-year San Francisco property and parcel tax aimed at filling about half of Muni’s operating gap.
- Regional Measure RTM, Connect Bay Area: A 14-year, five-county sales tax measure authorized under Senate Bill 63 that covers the remaining gap. For San Francisco, that means allocating 62.87% of local revenues back to Muni, with the balance going toward other transit systems, including Caltrain and BART.
“Our entire zoning and housing are all based on building denser housing on transit lines,” said Supervisor Myrna Melgar, who supports both measures. “All those plans would go out the window because if they don’t pass, we would have to cut service in half. If we don’t have those folks coming into San Francisco, our entire job infrastructure would bottom out.”
That’s why September’s usual Transit Month celebration of buses, trains and ferries could seem like a last stand. The two ballot measures are positioned as Muni’s, and the region’s, best shot at avoiding a service collapse.
15 years of transit-first housing
The funding crisis threatens more than just bus schedules. It risks unraveling San Francisco’s urban development model. Over the last 15 years, city planners and state lawmakers reshaped the city’s zoning laws to concentrate residential development along transit lines.
More than 70% of San Francisco’s high-rise residential towers constructed since 2010 sit within a quarter mile of a subway station, concentrated heavily across the South of Market, Mid-Market and the Transbay and Yerba Buena neighborhoods. The buildout of the Muni Metro T-Third line and the Central Subway served as the catalyst for converting industrial tracts in the Mission Bay and Dogpatch neighborhoods into thousands of high-density housing units.
And rapid bus projects along Van Ness Avenue and Geary Boulevard were explicitly paired with city upzoning to direct mid-rise infill housing onto arterial transit lines rather than quiet residential side streets.
San Francisco is struggling meet the state-set mandate of adding 82,069 new homes by 2031, relying heavily on upzoning transit corridors in the Richmond District and the eastern part of SoMa while waiving parking minimums. But, if the Municipal Transportation Agency is forced to enact 30% service cuts to bridge its structural deficit, transit-oriented development models break down.
Two taxes, one rescue strategy
To prevent a total service collapse, transit advocates have positioned two interconnected ballot measures before San Francisco voters this November:
- Proposition H (local parcel tax): This 15-year property tax dedicated exclusively to Municipal Transportation Agency operations, is projected to generate between $177 million and $184 million in direct annual revenue — closing roughly half of Muni’s immediate deficit.
While the direct parcel tax revenue is significant, its broader financial value extends far beyond that. An analysis by the city’s chief economist, Ted Egan, found that passing the tax and avoiding 30% service cuts would, over 15 years, net the city between $310 million and $400 million annually in overall economic output (the local equivalent of gross domestic product). In short, while the tax would cost taxpayers roughly $184 million a year, failing to pass it could cost the local economy twice as much in lost productivity, travel delays and depressed property values. - Regional Measure RTM, aka Connect Bay Area Act (sales tax): Authorized by state law, this 14-year regional measure would impose a sales tax across five Bay Area counties — asking San Francisco residents for a 1% increase while Alameda, Contra Costa, San Mateo and Santa Clara counties would add a 0.5% sales tax. Of the roughly $230 million raised locally each year, for San Francisco, 62.87% (about $144 million) would flow back to Muni operations.
Under the regional transit measure, the remaining San Francisco revenues are distributed across the region to sustain broader mobility:
- 29.14% to BART and 3.97% to Caltrain for regional rail operations
- 1.40% to expand fare integration, including free transfers and Clipper START discounts
- 0.97% to San Francisco Bay Ferry and 0.40% to Golden Gate Transit
- 0.56% for accessibility upgrades and 0.56% for unified regional mapping and wayfinding
- 0.13% to the Metropolitan Transportation Commission for administrative costs
Simple majority advantage
In San Francisco, tax measures submitted by elected officials typically face a formidable two-thirds (66.7%) supermajority requirement.
To avoid that trap, Lurie and a coalition of labor, tech and transit advocates qualified Proposition H via signature petition drive. Under California election law, voter-initiated local tax measures require only a simple majority.
It is noteworthy that Lurie is supporting Proposition D, which would quadruple the number of signatures required to place a measure on the ballot in San Francisco.
The push for Proposition H is spearheaded and funded by a broad coalition of urbanist groups, transit labor organizations and tech-backed civic advocates. These include the San Francisco Transit Riders Local 250-A and several civic political action committees.
The voter trade-off: renters and sales taxes
While framed as a property tax, Proposition H’s fine print extends directly into renters’ pockets. Landlords can pass through half of the parcel tax to rent-controlled tenants, adding up to $65 annually to lease bills.
This year San Francisco voters are being asked to absorb a disproportionate share of the region’s transit costs. Whether voters will tolerate higher expenses in exchange for protecting 15 years of transit-first housing density remains a core political gamble this November.
Accountability safeguards
Proponents emphasize that Proposition H is built with accountability parameters:
- Sunsets in 2042: The tax automatically expires after 15 years.
- Mandatory audits: Requires an independent efficiency review by April 2028 and ongoing oversight by a citizen review committee.
- Board intervention: The Board of Supervisors holds the authority to amend or repeal the tax by majority vote if Municipal Transportation Agency mismanages operational funds, but it cannot increase or extend it without going back to voters.
- Regional disparity: San Francisco residents are being asked to absorb a 1% sales tax boost — double the 0.5% rate imposed on other Bay Area counties — on top of the local parcel tax.
