I think what we're seeing here is a total failure of management. They have failed to secure funds for the system when the other public transit systems in the area have assured funding (in fact, they made Caltrain dependent on those agencies which cut that funding first before defunding their own operations.) They have failed to modernize and upgrade the service including electrification which would have brought more riders, but are now instead putting off electrification in a time of rising fuel costs (how silly is that?) And they spend all their time trying to put proposals forth on how to cut service instead of enhancing it. They're walking illustrations of the principle that if you focus on your fears, you make them real. It's time to take CalTrain away from the CalTrain management/board and let another agency - like BART - run it. BART just announced a surplus they will use to upgrade stations. Amazing how different the two situations are.

BART receives tax revenue, which although declining a bit recently, is still dependable. CALTRANS does not. But I agree, this is a silly way to fund an agency. Unfortunately, with today's spend less attitudes, a permanent source of funding is unlikely. What is needed is for someone(s) to come forth and lead an effort to secure permanent funding. I am not optimistic.

BART receives tax revenue, which although declining a bit recently, is still dependable. CALTRANS does not. But I agree, this is a silly way to fund an agency. Unfortunately, with today's spend less attitudes, a permanent source of funding is unlikely. What is needed is for someone(s) to come forth and lead an effort to secure permanent funding. I am not optimistic.

@David: CALTRANS is the California Department of Transportation which is different than Caltrain.
CALTRANS does get tax revenue from the state

The two-year $30 million plan should focus on M-F commute hours. Everything outside of this is optional, including weekend, early morning, mid day, and late night trains. Support the taxpayer's livelihood.

JPA are very tenuous contracts that are not stable. CalTrain is a good example (not counting management conflict-of-interest problems with overlapped management personnel) as is the JPA to fund MV schools from Shoreline and Santa Clara Unified schools (in Golden Triangle) from SJ Redevelopment funds. This 'hodgepodge' of funding is part of California's systematic public funding problem - it really confuses accountability. How many RDAs (redevelopment districts) or quasi-RDAs (Shoreline) give any property tax money to the train system? Oh, you mean Downtown MV should spend RDA money on transit-oriented development studies - and yet not any money on the actual trains? Sort of odd.
That's why I'm all in favor of trashing RDAs and starting again (Govs 2011-12 budget). That's why I'm all in favor of trashing JPA-CalTrain and starting again.