Recently released budget projections show that electrification is essential to San Carlos, Calif.-based Caltrain's survival.

A modern, electric-powered railroad will provide quicker, more frequent service, which will attract more riders and generate more revenue. Revenue is projected to increase 49 percent by 2019, while operating costs remain flat. The commuter railroad, which currently uses diesel-powered trains, is facing budget deficit in the upcoming fiscal year.

The current deficit, the result of reduced contributions from Caltrain's partners — the City and County of San Francisco, the San Mateo County Transit District and the Santa Clara Valley Transportation Authority — and a decline in ridership, could mean the elimination of mid-day, night and weekend service.

In Fiscal Year 2010, partner contributions made up about 39 percent of the operating budget and fares made up another 40 percent. Caltrain uses one-time funds from a variety of sources to cover the remaining shortfall.

Caltrain faced a similar budget crisis in 2005, when declining ridership threatened to derail the commuter line. Faced with a choice — either cut service and risk losing even more riders and revenue, or pursue capacity-increasing service changes — Caltrain chose the bold course and reinvented its service. The increase in express service was wildly successful, generating dramatic increases in ridership that continued until the current recession.

Increasing service, the strategy that was so successful in 2005, is no longer an option. The diesel system is operating at maximum capacity and more trains cannot be added during peak commute hours.

Instead, Caltrain has planned a series of capital improvements that will transform the railroad into a modern, electric-powered system. These improvements will reduce operating costs while allowing Caltrain to operate more trains and attract more riders. With a new, modern electrified system, by 2019 the additional subsidy needed to balance the budget would be 45 percent less than today.

In order to electrify the corridor, improve its signal systems and purchase new rolling stock, Caltrain will need to secure over $1.5 billion.

In 2008, California voters approved funding for a statewide high-speed rail system that includes service along the Caltrain corridor between San Francisco and San Jose. Recognizing this as an opportunity to preserve and enhance commuter rail service on the Peninsula, Caltrain's Board of Directors entered into an agreement with the California High-Speed Rail Authority that makes the electrification and modernization of Caltrain a joint project with the implementation of high-speed rail.

Without an ability to expand capacity and attract new riders with improved service, the system's structural deficit will continue to increase and will eventually threaten the entire Caltrain system, according to the agency.