Comments on WMATA saves some money - Greater Greater Washington

Comment by Deege

Sat, 03 Nov 2012 00:17:31 EDT

Hilts has a good point about ways to reduce overcrowding on the Red Line. Perhaps Board members who ride the Metro Rail system during rush hour could sympathize.

Let's have a "Brainstorming" Contest on ways to reduce Red Line overcrowding and methods of getting riders to wait for the next train which is not full to the brim. What can be done to have riders spread out on the platforms?

Metro is a great system and we depend on it for in and outbound travel, reducing poor air quality problems, parking congestion and rapid transit. Why utilize the public in brainstorming ideas which increases the systems popularity and revenue. Encourage employers to stagger work hours and arrival times with reducing rates or offering perks.

Comment by Michael Perkins

Wed, 12 Sep 2012 17:13:01 EDT

@steve strauss: I think Metro pretty much said it was because of changes in MetroAccess policy that cut back on how much people use the service. Also figuring out who among Metro workers are sharing their health insurance with people that aren't really eligible.

It may be a small portion of their budget, but it's nearly half of the projected shortfall for the coming year, and it was apparently important enough to Metro for them to send out a press release about it. Maybe in the past they still had a surplus but didn't crow about it. They probably also silently gave it back to the jurisdictions.

Comment by Capt. Hilts

Wed, 12 Sep 2012 13:04:04 EDT

Metro fares are too expensive for too many populations.

Free transfer from bus to rail would encourage downtown transit riders - such as those on Conn Ave. - to use the bus to get to the Blue line, etc. Thus, lowering crowding on the Red Line South of Bethesda.

Comment by Mikeindc

Wed, 12 Sep 2012 09:58:43 EDT

Maybe they could clean light fixtures and replace burnt out light bulbs. When Dan Tangherlini became acting chief this was supposed to be his first priority. Sadly he left before they changed a single bulb and I wonder why this is so difficult to do. I've never seen such bad lighting ain any other subway anywhere.

Comment by steve strauss

Wed, 12 Sep 2012 09:46:12 EDT

Lets clarify a few facts on the FY12 budget results. WMATA spent $30 million less than its approved budget, a savings of 2 percent of its total operating budget. Revenue was $2.0 million below budget, a negative variance of 0.2 percent.

Opinions may differ as to whether all of the savings were the result of a well managed budget or whether some credit might be given to generous budget assumptions for fuel and propulsion power to start with. Fuel hedging doesn't necessarily save money it only guarantees a price for the hedger. The hedger pays a fee to guarantee the price. If prices rise abouve the hedge assumptions WMATA "wins". If fuel prices match the budget assumptions or fall, WMATA loses on the hedge but still pays what it assumed for the hedge protection. Depending on the amount of the fuel price decrease, it may or may not save money on fuel purchases.

Given WMATA's financial dependence on subsidies from several jurisdictions and lack of dedicated taxes, there is a strong incentive for the agency to always spend slightly less than their budgeted subsidies and fare revenue.

Comment by Jasper

Wed, 12 Sep 2012 09:24:20 EDT

@ charlie:bikesharing is costing WMATA about $5 a week,

Yep. Pretty much $3.50 at least, and now with the new stations in Alexandria, it could go up to $8.25 a week. I will rarely be able to bike every day to Alexandria, but I did most days last week.

Comment by charlie

Wed, 12 Sep 2012 08:47:30 EDT

@WRD + MLD: well, I'd just like to get a bit more granular on that. Diesel prices have been steady, as WRD says natural gas is very very low, and not sure about electricity. So is the cost saving hedging (as the press release says), lower prices (MPerkins summary?) or something else.

The problem with hedging it is goes both ways. As with their tax deal a few years ago, WMATA is by no means a sophisticated player.

On another two notes:

1) I'm sure WMATA will continue to blame the "recession" on the lack of revenue; rather than poeple turning away from WMATA because of poor service and other issues (cost)

2) Also wondering if we'll first see a concrete change from bikesharing. At least for me, bikesharing is costing WMATA about $5 a week. Not huge numbers, but it is something.

Comment by MLD

Wed, 12 Sep 2012 08:05:48 EDT

@charlie
@MLD; that's fine, except I've asked before about fuel hedging and was told that 1) fuel isn't a big mix of WMATA's cost structure and 2) hedging is too risky.

Can't say I remember people saying that - transit agencies have been doing this more frequently since 2008 and I think WMATA started doing it in 2009.

It isn't that much of their costs, around 6% of operating expense for Bus, but it is a large portion of the non-labor operating expense.

Comment by WRD

Tue, 11 Sep 2012 21:04:20 EDT

What about increasing service? I'd rather have service restored and the states pay the same than trust the states to do something decent with it.

That's mismatching revenues and costs. This is a one year surplus of $28m. Increasing service is (say) one year of $10m in extra costs...every year, forward forever. Service increases need to be matched to revenue sources that provide money as the service is consumed (i.e. over many years).

except I've asked before about fuel hedging and was told that 1) fuel isn't a big mix of WMATA's cost structure and 2) hedging is too risky.

Utilities (gas and electricity, presumably) have been $84.7m, $94.2m, and $110.6m in the years ended June 30, 2011, 2010, and 2009. That's 4.0%, 4.7%, and 5.8% of total operating expenses in each of those years.

Looks to me like fuel (natural gas) prices are pretty low, all things considered. All they're (probably) doing is locking in a price that they pay, regardless of what happens to gas prices in the market. What about WMATA's fuel hedging specifically do you not like?

Comment by charlie

Tue, 11 Sep 2012 20:10:57 EDT

@MLD; that's fine, except I've asked before about fuel hedging and was told that 1) fuel isn't a big mix of WMATA's cost structure and 2) hedging is too risky.

@Andrew; it isn't so much the salaries are bloated. There are real problems with overtime, with pensions, and more importantly the pension benefit WMATA has to put in and how long you can spread it out.

Some of this stuff can be negoiated; some of it is union practices which are going to next to be impossible to change.

Comment by Transport.

Tue, 11 Sep 2012 16:59:54 EDT

@Andrew- the last time WMATA put funds in a reserve fund, an arbitrator ruled against WMATA and forced pay raises for the unionized employees. Why? I believe the reason was the arbitrator saw the funds WMATA set-aside in case they had to pay the raises they didn't want to pay and used that to justify funds available for the raises.

I probably don't have this 100% correct here but the basic point is the same.

Comment by MLD

Tue, 11 Sep 2012 16:49:11 EDT

@andrew
Also, we need to have a serious discussion about why Metro's labor costs are so damn high, and how to reduce those costs without deliberately f---ing the employees.

Are their labor costs high? That might be question #1. From what I've seen their costs seem to be in line with other transit agencies both in terms of labor costs compared to service provided and labor costs as a percentage of total costs.

Comment by andrew

Tue, 11 Sep 2012 16:34:27 EDT

Thinking off-the-cuff, it wouldn't be awful if Metro just poured the money into small projects for things like landscaping, bike racks, ADA improvements, station lighting, etc...

Also, we need to have a serious discussion about why Metro's labor costs are so damn high, and how to reduce those costs without deliberately f---ing the employees.

Comment by AlanF

Tue, 11 Sep 2012 15:32:38 EDT

WMATA should look at putting some of the extra money into, if not a rainy day fund, call it a buffer fund to help cover interim shortfalls in revenue. But the politics and financial considerations are obviously complicated with wages and benefits are under the control of an arbitrator combined with dealing with multiple local governments.

However, if the Metro is doing better on operating costs than expected, rather than be in fear of future service cuts, maybe some of the savings should go towards improving service hours and frequency? Radical idea I know.

This blog just had a long discussion on this, but how about applying some of the surplus to increase operating hours on Sunday to Thursday to actually mean midnight (or later) closing time at all stations in the "greater core" (including Navy Yard) and at least 11:50 PM heading inbound from the outermost stations. Then also expand opening hours to 6 AM on Saturday and Sunday. If the cost per hour at late night service frequencies is $29.5K minus ticket revenue, even at a 35% cost recovery from fares, my back of the envelope guess-estimate math says expanding the hours by this really modest amount would not cost all that much.

Comment by John Muller

Tue, 11 Sep 2012 15:31:22 EDT

*1am !!!

Comment by John Muller

Tue, 11 Sep 2012 15:30:47 EDT

Open Metro earlier on weekends (6am) and keep Metro open later Monday thru Thursday (1pm) or reduce the fares!

John Muller
early morning and late night Metro for more than a decade

Comment by Jimmy

Tue, 11 Sep 2012 15:17:21 EDT

How about replacing the worst escalators throughout the system? Or, at least, as many of the worst ones as $28 million will cover.

Comment by drumz

Tue, 11 Sep 2012 15:15:36 EDT

What about increasing service? I'd rather have service restored and the states pay the same than trust the states to do something decent with it.

Comment by Falls Church

Tue, 11 Sep 2012 15:06:24 EDT

Can't Metro put this money into a "rainy day" fund to cover a future mid-year shortfall?

If they can't do that, then Metro can "store" this extra cash in a different way. They can pull forward capital improvement and maintenance projects, essentially banking their extra cash in physical stock rather than in a fund. Then when a shortfall occurs in the future, they can reduce capital/maintenance expenditures accordingly to cover the shortfall. This also avoids the problem of looking like they have spare cash on hand to the unions.

Comment by Marc

Tue, 11 Sep 2012 15:04:01 EDT

Excellent points here.

With such a large percentage of the budget for labor costs, it amazes me that contracts and other one-time projects take up so much of the media about Metro. The arbitration process (and taking a look at previous processes that Metro appealed all the way through a judge's order) has a huge impact on the overall budget, and in result, rising fares and contributions from the jurisdictions.

Hopefully these savings do make an impact and spare riders from increases for FY2014

Comment by MLD

Tue, 11 Sep 2012 14:36:20 EDT

@charlie
fuel hedging? hmm...

Many transit agencies sign fuel price contracts for a year or several years. It has worked out well since fuel prices have gone up every year but one since 2002.

Comment by andrew

Tue, 11 Sep 2012 14:28:54 EDT

Can't Metro put this money into a "rainy day" fund to cover a future mid-year shortfall?

Wouldn't want the local jurisdictions to get too comfortable with the idea of getting part of their money back. That sets a potentially dangerous future precedent for budgeting.

Comment by charlie

Tue, 11 Sep 2012 14:26:09 EDT

fuel hedging? hmm...