July 28, 2026
City Council
DATE: July 28, 2026
TO: Mayor Martinez and Members of the City Council
FROM:
Councilmember Soheila Bana
Subject:
Presentation from AC Transit on Agency Deficit
Projections, Services, and Workforce Reductions
FINANCIAL IMPACT: There is no immediate fiscal impact associated with receiving this presentation. However, AC Transit has
projected significant budget deficits beginning in Fiscal Year 2027-2028 and has warned that service reductions
may be unavoidable without additional funding. Any
future reduction in regional transit service could increase demand for City-funded transportation, public safety, and social service programs, which may create budget
pressures for the City in future fiscal years.
PREVIOUS COUNCIL
ACTION:
None.
STATEMENT OF THE
ISSUE:
The Alameda-Contra Costa Transit District (AC Transit)
is the largest public bus-only transit system in California.
For 65 years, AC Transit has connected East Bay
residents to jobs, school, healthcare, and community life.
However, rising costs have outpaced funding provided for AC Transit, and the District is now at a historic financial crossroads, facing a four-year, $200 million deficit
beginning in Fiscal Year 2027-28. The 65-year-old transit district faces unavoidable service cuts of up to 16 percent and potential lay-offs impacting as many as 300
employees.
AGENDA
REPORT
July 28, 2026
RECOMMENDED ACTION:
RECEIVE a presentation from AC Transit on agency
deficit projections and potential service and workforce reductions - Councilmember Soheila Bana (510-672-
3490).
DISCUSSION:
The Alameda-Contra Costa Transit District (AC Transit) is the largest public bus-only transit system in California. For 65 years, AC Transit has connected East Bay residents to jobs, school, healthcare, and community life. However, rising costs have outpaced funding provided for AC Transit, and the District is now at a historic financial crossroads, facing a four-year, $200 million deficit beginning in Fiscal Year 2027-28.
The emergency relief funding that sustained service through the pandemic is now gone.
At the same time, costs of operating transit are rising – from wages and benefits to fuel, parts, and bus production – while the rise in costs has outpaced revenues.
A recent State of California bridge loan provides temporary relief but does not solve the ongoing lack of funding. The passage of a proposed ballot measure in November could provide funding for AC Transit to continue full service. However, without that additional funding, our 65-year-old transit district faces unavoidable service cuts of up to 16 percent (%) and potential lay-offs impacting as many as 300 employees.
This is an informational presentation. AC Transit representatives will provide an update on the agency’s financial outlook, including projected deficits and possible service and workforce reductions, and will invite public input.
DOCUMENTS ATTACHED:
Attachment 1 – AC Transit Presentation