Metro’s pay-as-you-go approach — the result of having no dedicated funding source — is running into trouble as the transit authority prepares to unveil its next budget to its board of directors on Thursday.
The problem: Metro’s operating expenses are increasing while its revenues are not, largely the result of declining rail ridership. So Metro will ask its jurisdictions in Washington, Virginia, and Maryland for more money to fill a potentially large hole in its proposed $1.8 billion operating budget for fiscal year 2016, which starts next July.
But Metro’s request for a 10 percent increase in the annual subsidy paid by its jurisdictions will run into harsh budget realities in the Washington suburbs. Municipalities and counties are facing their own fiscal crunches, possibly forcing Metro to further tighten its own belt — including the possibility of rail service cuts — even during rush hour.
This request for cash is happening at the same time Metro needs its jurisdictions to come up with hundreds of millions of dollars to fund the expansion of its rail car fleet so the transit authority may run all eight-car trains during rush hour.
Metro’s jurisdictions (D.C., Prince George’s, Montgomery, Fairfax, and Arlington Counties, Alexandria, Fairfax City and Falls Church) currently contribute about $800 million to the operating budget, which mostly covers the wages and benefits of Metro’s thousands of unionized workers.
Under the budget proposal that will be presented by soon-to-be-retired WMATA general manager Richard Sarles on Thursday, the jurisdictions would contribute close to $900 million, a 10 percent increase.
If the additional funding cannot be secured, “the Board would have to evaluate more difficult choices, including consideration of more aggressive cost cutting actions that would require extensive public hearings and outreach. However, such actions are not recommended in this proposed budget,” a budget document said.
More aggressive cost cutting potentially would include reducing train frequencies on the Red, Silver, Orange, Yellow and Green Lines.
“As a Maryland representative, my concern is that the state doesn't have a bottomless pot of money here,” said Metro board member Michael Goldman, who has questioned the need for funding for more rail cars as ridership declines. “Choices are going to have to be made. I would rather see the additional investment that Maryland has to make be on the capital side rather than further money to increase the operating budget."
Alexandria Mayor Bill Euille, who also sits on the Metro board, was blunter.
“Alexandria will not give Metro what it is asking for. I can tell you that right off the bat,” said Euille, who said Alexandria is facing its own budget problems and does not have extra millions to spare for Metro. “We are looking at a $16 million shortfall. I know Arlington County is probably looking at maybe an $80 million shortfall. Fairfax County just the other day said it is looking at a $170 million shortfall. It is going to be difficult and challenging for all of us to step up to the plate.”
Why does Metro need more money from places like Montgomery County and Alexandria? As much as 70 percent of its operating budget covers personnel costs: wages, health care benefits, and pensions. Those labor costs will increase $60 million in fiscal 2016, which accounts for about two-thirds of the proposed subsidy increase.
Rising labor costs are being driven in part by a 4 percent wage increase for 8,000 workers in the Amalgamated Transit Union Local 689. Workers’ pensions account for about 10 percent of Metro’s operating expenses, or $171 million in the budget proposal. Pension costs are increasing less than 1 percent because ATU workers will pay a larger contribution of 3 percent next fiscal year.
The transit authority has blamed falling rail ridership on a number of factors: federal government sequestration, the rise of teleworking, and the loss of the federal transit benefit, to name three.
Rider frustrations are more difficult to quantify. Daily delays caused by rail car breakdowns and, to a lesser extent, track or signal problems may have pushed some rail customers back to their cars where falling gas prices await their commutes.
