Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
APRIL 16, 2026
Subject
SUBJECT: FISCAL YEAR 2027 BUDGET DEVELOPMENT STATUS UPDATE
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE the Fiscal Year 2027 (FY27) Budget Development Status Update.
Issue
ISSUE
This report continues a series of monthly updates on the FY27 Budget development process, culminating in a planned May 2026 Board Adoption. The report focuses on the key areas of Metro’s Transit Operations and Maintenance (O&M) Program and Transit Capital Improvement Program (CIP) to maintain transit infrastructure in a state of good repair. These two programs combined make up 37% of Metro’s total budget.
Additionally, an overview of Congestion Management, General Planning and Programs, and Oversight and Administration, which make up about 5% of Metro’s total budget are included to complete the program budget discussions for the FY27 Budget development process.
A recap of the latest update regarding Metro’s comprehensive budget outreach efforts is also included in this report.
Background
BACKGROUND
This preliminary budget serves as the annual expenditures required to advance Transit Operations’ plans, fulfill O&M needs, repairs and upgrades through the CIP, and enhance customer experience. While the O&M and CIP budgets reflect the annual cash flow needs, CIP is controlled at a Life of Project (LOP) budget level.
Discussion
DISCUSSION
In alignment with the CEO’s Equitable Zero-Based Budget (EZBB) and cost-efficiency focus, Metro identified cost saving measures in the FY27 budget request. As shown in Figure 1 below, the programs covered in this board report reflect a -$126.2 M (-5.8%) reduction in controllable costs (expenses excluding labor and allocations) compared to the FY26 budget for the programs covered in this month’s report. The total budget for these programs totals $4.04 B ($2.07 B in controllable costs and $1.97 B in labor and allocations).
Metro Transit Operations and Maintenance Program Overview
Metro Transit’s Operations & Maintenance (O&M) program is dedicated to attracting and retaining riders by providing high quality reliable transit service. This commitment is demonstrated through ongoing NextGen service enhancements, expansion of our transit network, enhanced customer experience, a reimagined approach to public safety, expanded accessibility and affordability for all riders, and comprehensive service planning and operational support for special events.
To advance these priorities, the FY27 Preliminary O&M Budget totals $2.99 B, representing a $81.9 M (2.8%) increase over FY26. The budget funds 8.8 M revenue service hours (RSH) for bus and rail operations, as well as the Metro Micro Pilot program, which delivers flexible, on-demand transit options. In addition, the budget includes additional staffing to support enhancing systemwide safety, customer experience, and operational reliability.
A comprehensive plan and resource requirements for operating D Line Extension Section II and III, and G Line improvements, will be brought to the Board separately for approval. Similarly, the Department of Public Safety (DPS) start up costs for FY27 is still under budget development and will be brought to the Board separately for approval.
Bus
The FY27 Preliminary Budget for Bus is $1.9 B, reflecting a $43.6 M, or 2.3% increase from FY26. The budget includes 7.13 M RSH, supporting the NextGen Bus Plan and special events.
Rail
The FY27 Preliminary Budget for Rail is $1.0 B, reflecting a $36.9 M, or 3.7% increase from FY26. The budget supports rail service levels to not only meet current demand, but also expanding service to increase access to opportunities throughout the region. The budget includes 1.45 M rail RSH for four light rail lines (A, C, E, K) and two heavy rail lines (B, D).
Metro Micro
Metro Micro Pilot program continues as a contracted service allowing Metro to provide important first-last mile connections. The FY27 Preliminary Budget for the Metro Micro Pilot is $23.8 M, reflecting a $1.4 M, or 6% increase from FY26. This budget maintains current service levels and geographical coverage, supporting 253 thousand RSH.
Continued Investments in Customer Experience
Cleaning
The FY27 Preliminary Budget allocates $311.0 M for cleaning efforts, a 2.2% or $6.7 M increase over FY26. This budget supports 1,264 FTEs dedicated for maintaining bus/rail vehicles, stations, stops, and facilities including three shifts for 7-days a week, End-of-Line (EOL) cleaning, and mid-line cleaning program. Figure 3 summarizes the staffing and budget allocated for cleaning initiatives in FY27.
Station Experience (SX)
The CEO-established Station Experience (SX) unit has been highly effective in reducing crime and loitering at stations. Building on this success, SX is expanding to additional locations with a focus on safety and overall customer experience enhancements. Metro continues to prioritize community input, addressing concerns such as improved lighting, mobile ADA-accessible (Americans with Disabilities Act) restrooms, and the modernization of elevators and escalators to enhance safety and accessibility. Access control, safety and fare compliance are strengthened through the taller fare gates and the TAP-to-Exit program.
The FY27 Preliminary Budget allocates $29.6 M for SX initiatives and enhancements at additional stations.
Public Safety
Resource Deployment
One of the top priorities for Metro and our riders is safety. Metro’s Reimagining Public Safety Framework outlines a multi-layered approach to enhance public safety on the Metro system by deploying the right resources to address the specific safety concern.
The multi-layered resources include Metro Transit Ambassadors, Community Intervention Specialists (CIS), Homeless Outreach and Mobile Engagement (HOME) teams, Metro Crisis Response Teams, Metro Transit Security (MTS), private security, and law enforcement. The multi-year phased establishment of Metro’s Department of Public Safety (DPS) continues.
A comprehensive plan detailing the resource needs over the various phases is being developed and will be brought to the Board separately for approval.
The preliminary budget for FY27 Public Safety Resource Deployment is $428.6 M, a 1.6% increase from the FY26 Budget, shown in Figure 4 below. The increase is primarily driven by additional private security services for special events, as well as salary and wage adjustments per the Collective Bargaining Agreements for Metro Transit Ambassadors and MTS.
Metro’s public safety capital budget focuses on promoting a safer environment for all riders and Metro employees by maintaining, upgrading and modernizing technology and infrastructure. The FY27 Preliminary Budget of $37.7 M includes expansion of taller fare gates and retrofits, track and tunnel intrusion technology, fencing installations and enhancements, as well as security technology upgrades.
Metro Transit Capital Improvement Program (CIP)
The CIP goal is to methodically renew and improve Metro Transit Systems while maximizing scarce bus and rail capital resources. The CIP budget focuses on maintaining, upgrading, and modernizing assets and infrastructure to provide high quality and reliable transit services. Capital asset improvements within this budget include the implementation of new technologies, rolling stock purchases, rolling stock modernization, station improvements, and other components.
The FY27 Preliminary budget for CIP includes $567.6 M to maintain Metro’s bus, rail, regional, and critical information systems needed to manage and monitor system-wide performance. The budget reflects the annual cash flow to complete FY27 milestones and deliverables. A profile of the CIP program is shown in figure 5 below.
The Bus Program Budget of $186M represents an increase of $15.7M or 9.2%, mostly from ZEB bus purchases and charging infrastructure. The Rail Program Budget of $186.4M consists of rail car purchases, midlifes, wayside and facilities. Other Asset Improvements budget of $195.2M represents a decrease of -13.7% for technology, regional programs and non-revenue vehicles. See Attachment A for additional CIP budget details. See Attachment A for additional CIP budget details.
General Planning & Programs, Congestion Management, and Oversight and Administration
General Planning & Programs
The FY27 Preliminary Budget for General Planning & Programs (GPP) totals $258.8 M, an increase of 0.3% or $874 thousand from FY26. GPP encompasses a wide range of activities that support the agency's goal of delivering improved mobility, sustainability, as well as financial and technical support to Metro’s partners throughout LA County. Activities under this program include long-range and systemwide financial planning and grants management, new and enhanced transit infrastructure, various aspects of Metro’s bike program, other planning and strategic initiatives, sustainability, joint development efforts and Union Station upgrades. Changes in the GPP budget reflect continuous progress on equity outcome-driven initiatives like the Joint Development 10K housing work, additional support for the Regional grants management program, and the continuing work for the Street Safety and Transit to Parks programs.
Congestion Management
The FY27 Preliminary Budget for Congestion Management totals $110.6 M which represents a -$19.1 M, or -14.7% decrease from FY26. The program consists of four major groups: Express Lanes, Freeway Service Patrol (FSP), Motorist Services, and Rideshare Services. The expenditure decrease in FY27 primarily reflects a strategic right-sizing based on historical trends. Service delivery levels will remain unaffected by this adjustment.
Oversight and Administration
The FY27 Preliminary Budget for Oversight and Administration totals $101.5 M, representing 1.0% of the total annual budget. In this program there are continuous cost controls such as: legal services, ethics compliance, internal investigations, regulatory environmental assessments as well as legally mandated financial and compliance audits.
The program improves customer experience by continuing the mystery rider program, which supports fair and equitable fare compliance, ADA-accessibility, and riders with limited English proficiency. Metro is also transforming and elevating customer experience by reinventing customer focused initiatives by concentrating on the customer’s journey. There is continued investment to value our workforce, including Employee Engagement and Recognition Programs, Transportation School (SEED LA) and Workforce Initiative Now (WIN-LA), to create future employment opportunities in our communities. Other investments include software and hardware license renewals and maintenance support to help drive efficiency and performance.
FY27 Public Budget Outreach Update
Building on the groundwork established from September to March, the FY27 budget outreach process has pivoted from gathering community input to actively applying feedback to the development of the budget and the investments made. The feedback and insights gathered via the My Metro Budget Activity (5,800+ responses) and the My Metro Priorities tool (1,500+ responses) were funneled into departmental dashboards. The direct integration of 5,000+ written comments into the budget development of Metro’s programs ensures the budget remains aligned with the goals of our riders.
Throughout April and May, the focus shifts to closing the feedback loop through continued stakeholder engagement and the presentation of the FY27 Proposed budget. These meetings serve as a bridge to the formal public hearing in May, providing the Board with a comprehensive, community-oriented framework for final decision-making. Comments received related to this month’s programs are documented in Attachment B.
Equity_Platform
EQUITY PLATFORM
Budget equity is an integral part of the budget development process. For FY27, Metro will uphold its commitment to equity through the continued application of the Equity Zero-Based Budgeting (EZBB) evaluation process. Guided by Metro’s Equity Platform Framework, the FY27 Budget process prioritizes equitable outcomes for everyone while addressing key organizational priorities such as public safety, system cleanliness, system expansion, labor equity, and environmental sustainability. The overarching goal is to deliver a transit system that is efficient, safe, inclusive, and equitable for all Los Angeles County residents and riders.
To enhance inclusivity, Metro will actively engage with underserved communities across Los Angeles County through targeted outreach efforts. In addition, Metro will continue its dialogues with a broad spectrum of stakeholders, ensuring that the public has ample opportunity to provide input on the agency’s infrastructure planning and construction projects. The feedback received will be carefully documented and integrated into the budgeting process, helping to shape budgetary priorities that reflect the collective needs and values of the community. Metro will assess the budget for the effectiveness of these initiatives and ensure the system remains equitable, sustainable, economically productive, safe, and ADA-accessible.
Vehicle_Miles_Traveled_Outcome
VEHICLE MILES TRAVELED OUTCOME
Vehicle Miles Traveled (VMT) and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with the declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
Although this item is administrative, providing an update on the development of specific parts of Metro’s upcoming proposed budget, the programs discussed in this item are expected to contribute to further reductions in VMT. They support Metro’s systemwide strategy to reduce VMT through expanding transit services, improving accessibility and affordability, enhancing safety and cleanliness, and improving customer experience to attract and retain riders.
The budget allocations discussed in this item will support the delivery of 8.8 M revenue service hours (RSH) across bus, rail (including a new rail line extension), and the Metro Micro Pilot project. The preliminary budget funds efforts to provide a safe, reliable, affordable and clean transit service by enhancing the customer experience, such as more frequent bus and rail cleaning, multi-layered safety initiatives, the Station Experience program, upgrades to faregates, station lighting and cleanliness, and addition of mobile public restrooms. It also provides resources for infrastructure and fleet maintenance, rolling stock upgrades, and new technology implementation, ensuring a safe, affordable, high-quality transit system that encourages ridership growth. Metro’s Board-adopted VMT reduction targets were designed to build on the success of existing investments, and this item aligns with those objectives.
*Based on population estimates from the United States Census and VMT estimates from the highway performance monitoring system data between 2001 - 2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports the following Metro Strategic Plan Goal:
Goal # 5: Provide responsive, accountable, and trustworthy governance within the Metro Organization.
Next_Steps
NEXT STEPS
Staff continues to review and refine the FY27 Preliminary Budget as it advances through the process, carried out through the delivery of the Service Plan and Capital Improvement Plan, as well as planned Agency-wide initiatives. The FY27 Proposed Budget will be published on April 30, 2026. A public hearing will be held on May 21, 2026, for the Board's consideration to adopt the proposed FY27 Budget on May 28, 2026.
Attachments
ATTACHMENTS
Attachment A - Metro Transit Capital Improvement Program Details
Attachment B - FY27 Public Budget Outreach Update
Prepared_by
Prepared by: Irene Fine, Deputy Chief Financial Officer (Interim), (213) 922-4420
Tim Chin, Executive Officer, Finance, (213) 922-3082
Parvaneh Ahmadi, Deputy Executive Officer, Finance, (213) 922-2864
Spencer Vrieze, Principal Budget Analyst, (213) 922-2449
Reviewed_By
Reviewed by: Michelle Navarro, Chief Financial Officer (Interim), (213) 922-3056
