What is WMATA's 2025 budget? Should we care today?
In 2012, like the last few years, WMATA faces a budget shortfall. In coming months, it will make some cuts, secure more funding from jurisdictions, and increase fares considerably. Then, next year, the cycle will likely repeat.
Will these routine funding crises end? If so, how many years will it take and how do we get there?
Riders don't have that information today. Some WMATA officials would like to collect and share it, but it will take support inside and outside the organization to make it happen.
Meanwhile, the largest repair effort in the agency's history is underway. It's absolutely necessary, but riders must suffer frequent single-tracking, delays from shuttle buses on weekends, and even entrances closing for months.
When asked about specifics of the repair timeline, CEO Richard Sarles has only said, "It'll be done when it's done." That answer certainly avoids setting any expectations that the agency might fail to meet, but it doesn't address a much deeper and critical question:
Will we ever get out of the proverbial woods?
WMATA knows how much its current employees are paid and can estimate the rate at which their compensation will increase. It knows or can project how much their pensions and benefits will cost. It's not impossible to estimate how fuel and electricity will change over time. Also, we can approximate how much it will cost to maintain equipment and keep it in a state of good repair.
In many industries with physical machinery, there are best practices in asset lifecycle management. For any part, one can predict how many of them have to be replaced per year, how many years each lasts on average, and how much each costs.
With this information, it should be possible to project WMATA's costs into the future. For a particular year, the estimates may be off in any direction for any of the variables, but over time, we should be able to make realistic estimates.
Divide the time by the cost and you get a dollar figure per year. Maybe one year will be higher if many things happen to break at the same time, but if the overall projection is on target, other years ought to cost less to balance it out.
What good is this? It's important because WMATA can't keep telling riders, year after year, that costs have increased unexpectedly. In 2009, it was because the pension contributions had gone up due to the stock market decline. Then fuel prices were rising. Health care costs were spiraling. Ridership was off because of the downturn. The arbitrator granted bigger raises than expected. And so on.
At some point, if costs keep exceeding projections, then something is wrong with the projections.
We're coming out of a bad economic time. Before, in good economic times, the budgets balanced more easily, fare increases weren't so large, Metro could put less into their pension funds, and local governments didn't have to keep paying more. But when they did that, they just pushed the problem off to the future.
Local governments will have to increase their contributions each year. Fares will have to rise over time. But how much, in the long run?
Riders deserve to see a long range plan that says, in effect, the following:
- Until 20XX, Metro will be in "catch-up mode." After that, they'll be in "keep it working" mode.
- During catch-up mode, Metro needs $x million in capital funds per year, increasing at a rate of x% per year. After that, they'll need $y million in keep it working mode (less than in catch-up mode).
- If we can still afford the catch-up mode funding once Metro reaches a state of good repair, then we can start using the surplus to pay for some projects to deal with the high passenger loads that there will be by this time, like adding physical walkways between Metro Center and Gallery Place, new entrances at busy stations like Foggy Bottom, or new lines or tracks in the core.
- If Metro doesn't get enough money in catch-up mode, then that mode will have to last longer. If it doesn't get enough in keep it working mode, then it may have to go back into catch-up mode.
- In keep it working mode, to maintain the existing service, given wages, pensions, fuel, health care, and so on, Metro will have to increase its budget by z% each year. A certain percentage of that can come from riders, while jurisdictions should plan on increasing their Metro contributions by the remaining amount necessary to reach the z% per year.
- In good years, Metro will use the extra money to top up its rainy day fund; in bad years, it'll spend money from that fund.
Many businesses do this type of planning as a matter of course. Households and financial advisers do the same to plan for retirement. Riders and local leaders should ask for the same from WMATA, an entity which provides a fundamental service that residents and visitors depend on every day, and which also benefits the region in enormous ways that we often take for granted.
From talking to some WMATA employees, my understanding is that many but not all top leaders want to be able to project like this. Some of the information about asset lifecycles they have, while some they hope to collect. It's less clear how much consensus there is over how deeply to share the information with the public.
Such a comprehensive analysis also takes time and cooperation from all departments. It will take pressure from Sarles, the board, jurisdictional officials, riders, the press, and other stakeholders to make this happen.
It would be worth it, though. A well-defined plan like this will build credibility with the public and help ensure WMATA gets the necessary funding to repair its system and maintain high-quality service for the long term.
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