Metropolitan Transit System officials voted Thursday to delay efforts to seek a sales tax ballot measure from 2026 until at least 2028 and instead to pursue their first fare increase since 2009.
The moves are part of a wider plan to shrink future budget deficits totaling about $250 million. Other parts of the plan include unspecified cuts to bus and trolley service and raiding funds intended for capital projects to pay routine operating expenses.
The plan, which was approved unanimously Thursday by the MTS executive committee, also includes the option of shrinking the system’s annual pension payment by softening some requirements.
MTS is facing a budget crisis just as local transit has begun to attract more riders, including higher-income riders who aren’t dependent on transit to get around. Officials say lack of funding threatens to thwart that progress.
The local moves come as transit agencies around the nation move to manage financial problems. San Francisco’s transit agency is facing a budget deficit and cutting service, despite rising ridership, while Philadelphia’s has moved to slash service and raise fares in the absence of state funding, with lawmakers months late in passing a budget.
Recent polling and research show that 2028 — a presidential election year, when higher voter turnout is often expected — makes more sense for the ballot measure than 2026, said MTS chief executive Sharon Cooney.
Other concerns include the possibility of competing revenue measures on the 2026 ballot and the lack of time remaining to prepare, she added.
The proposed half-cent sales tax increase could generate about $300 million a year. It would be limited to areas served by MTS; North County communities would be excluded because they are served by the North County Transit District.
Cooney said delaying the sales tax measure, while the right move, worsens the MTS budget crisis by postponing by two years the possibility of a crucial new revenue stream.
That’s why the move to delay the ballot measure until 2028 is being approved in conjunction with other efforts to address the budget crisis, including a fare increase of somewhere between 10% and 20%.
The one-way fare of $2.50 would rise to either $2.75 or $3, and an adult monthly pass would rise from $72 to either $79 or $86. MTS officials said they expect the hike, if approved, to begin next July.
Mike Thompson, MTS deputy chief financial officer, said the $72 adult pass rate should have risen to $110 if it had been adjusted for inflation since the last increase in 2009.
“You can see how much we’ve lost,” he said.
A 10% fare increase would raise MTS annual revenue by about $8 million per year, while a 20% hike would generate about $16 million. Those figures account for some loss of ridership in response to the hikes.
People walk past a Blue Line trolley at the 12th and Imperial Transit Center on Friday, May 30, 2025 in San Diego. (Meg McLaughlin / The San Diego Union-Tribune)
The fare increase generated the most backlash Thursday from the executive committee, especially from county Supervisor Monica Montgomery Steppe, who stressed that roughly 75% of MTS riders are low-income.
“I’m not going to continue to do this on the backs of poor people,” said Montgomery Steppe, adding that federal cuts to social services make the timing particularly bad. “I’m anticipating the kind of dire need from people that I don’t think we’ve seen in a long time.”
Montgomery Steppe suggested targeting fare hikes at higher-income riders, such as those who use rapid buses or take the trolley to Padres games.
Stephen Whitburn, the executive committee chair and a San Diego City Council member, suggested fare hikes could exempt groups that already get discounts, including seniors, veterans, community college students and others.
The proposed fare increase faces a number of bureaucratic hurdles.
It must first be analyzed by the region’s transportation agency, the San Diego Association of Governments, which must also handle public outreach.
Then a formal proposal will go to boards for MTS and NCTD for approval. Once those hurdles are cleared, the proposal would go to the SANDAG board for final approval.
The last time a fare hike was considered was in 2020 — but local leaders ended up going in the opposite direction. To encourage more transit use, they instituted free transfers from buses to trolleys and within the bus and trolley systems.
Ronn Hall, who represents Santee on the executive committee, stressed that fare increases simply can’t generate enough revenue to solve the financial problems facing MTS.
Other parts of the plan include raiding capital project funding to cover operating expenses in an effort to minimize possible service cuts.
The MTS board had previously approved moving $25 million in capital funds to pay for operations in the ongoing fiscal year, $35 million in fiscal 2027 and $50 million in fiscal 2028. On Thursday, they increased those contributions to $50 million per year for four consecutive years, fiscal years 2027 through 2030.
The changes mean the system will have taken $225 million in capital funds and spent it on operating costs over the next five years. MTS would continue to spend roughly $90 million on capital projects, but the approach would be more reactive and less proactive.
The final element of the plan is cutting costs, including with cuts to bus and trolley service that haven’t been determined.
Those cuts might be informed by a comprehensive analysis MTS launched earlier this year of what service could be added with new revenue and what major service cuts would look like. Cooney said an update on that effort will be presented to the board in October.
MTS buses at the Old Town Transit Center on Thursday, Sept. 4, 2025. (Sandy Huffaker for The San Diego Union-Tribune)
RideSD, a local transit advocacy group, said Thursday it strongly opposes service cuts.
“We are definitely opposed to MTS cutting services as it disproportionately disadvantages lower-income communities,” said Leif Gensert, the group’s vice president. “In addition to that, it further jeopardizes the city’s climate goals as some of these cuts would result in increased car traffic.”
Gensert noted that RideSD unsuccessfully lobbied last spring for state funding increases that could have shrunk the deficits MTS faces.
Another cost-cutting option for MTS would be to make major changes to how the system pays off its pension debt, Thompson said.
Annual pension payments could be reduced significantly if the payoff date for the debt were delayed from the current 2038 to about 2046, which would shrink payments sharply in coming years and raise them in later years.
In addition, MTS uses relatively conservative assumptions for annual returns on its pension system investments, according to Thompson. If MTS assumes those investments will grow faster, that would also shrink the annual payment.
MTS uses a 6% assumption, while Thompson said the median rate among pension systems nationwide is 7%. He said an increase to 6.5% would save MTS about $1.4 million per year.
The plan approved unanimously Thursday by the executive committee must be approved a second time by the full MTS board next Thursday.
Originally Published: September 4, 2025 at 6:22 PM PDT