Greater Greater Washington

WMATA proposes $103 million in cuts, $73 million to go

WMATA staff have posted their latest proposal for budget cuts. They'll present this to the Board of Directors' "Special Budget Committee" at 9am.


Photo by afagen on Flickr.

The biggest chunk of the $176 million shortfall is $99 million from increased personnel costs. Also, Metro used a one-time budget trick last year to reduce the fare increase: fares went up in January 2008, but Metro actually applied the money collected from January to July to the next fiscal year's operating revenues, running from July 2008 to July 2009. Since they can only use that trick once, there's a shortfall of around $36 million.

The plan WMATA will present tomorrow eliminates $103M of the gap. Management and the Board then face the tough decision of what service to cut, or whether to increase fares just a year after the last fare hike. WMATA could ask its member jurisdictions to provide a "cost of living" increase of 2% in the budgeted subsidy, which would reduce the shortfall by another $10M, but those jurisdictions aren't flush with cash either.

In the plan, Metro will cut 292 of their over 10,000 employees. These cuts will keep WMATA's personnel costs from increasing by almost $100M this year. Out of the eliminated positions, most (70%) will come from rail and bus divisions, with about twice as many lost in rail as in bus. Most of the rest will come from administrative divisions (28%).

It's hard to tell from this presentation whether most of the eliminated jobs are slots that just haven't been filled, or whether they are workers who will be laid off. According to a recent article in the Washington Post, when Metro was considering cutting 900 jobs, the split was approximately half and half. Now that the number of eliminated positions appears to have shrunk, perhaps most or all of the proposed staffing cuts will come from unfilled positions. It's unclear from the previous discussion whether the 900 eliminated jobs include those that result from service cuts.

Other smaller cuts would increase the number of workers per supervisor, reorganize the staff with fewer levels of supervision, reduce overtime, and take advantage of today's low fuel prices. They also propose "employ[ing] technology-driven approach[es] to traffic/ridership measurement", which, according to Metro, should result in more accurate data collection. I hope WMATA will be forthcoming in sharing this data with the public.

In addition, Metro will defer non-personnel expenses, such as materials purchases, when possible. This should concern riders because it just pushes the problem down the road rather than actually cutting back on costs. It doesn't eliminate the need for fare increases or service cuts, merely defers them until next year. Also, if the reduction in supervision allows poor customer service or unsafe practices to arise or continue, it could reduce the quality of WMATA's operations.

The largest increase in personnel costs this year, $44 million, comes from wage increases for unionized employees. WMATA budgeting treats those as sacrosanct. But in these hard times, unions all over the country are being asked to do their part to help keep costs down. For example, in Montgomery County the firefighters' union agreed to cuts in order to help the county balance its budget, nationally the Teamsters agreed to wage cuts of 10% in order to help keep their employers afloat. All Headline News reports that Boston has asked its city worker's union for a wage freeze in order to help balance the budget. Bridgeport, Connecticut workers have agreed to a two-year wage freeze as well as a five day unpaid vacation (furlough). Would it be fair to ask the unions to compromise and agree to a cut in wages or at least a cut in wage growth rates? Perhaps a one-year wage freeze. The cuts might save some jobs compared to having to lay off workers or cut service, which would lay off even more workers.

Since Metro's previous proposal from early January, an "other" expense of $22 million has disappeared. With that unexplained change, WMATA appears to have met their goal of eliminating $103 million from cost cuts. That leaves $73 million of shortfall.

The previous proposal estimated that closing the gap with service cuts will cut expenses by $87 million and decrease revenues by $14 million. The new presentation does not provide any specific proposals for service cuts. Alternatively, the Board could decide to raise fares or the subsidy provided by local governments. Representatives of WMATA and member jurisdictions have been discussing and debating this very question of where to get the last $73 million, and if cuts are involved, what to cut. Look for much more debate on these issues in future board presentations.

Michael Perkins blogs about Metro operations and fares, performance parking, and any other government and economics information he finds on the Web. He lives with his wife and two children in Arlington, Virginia. 

Comments

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Why do wage hikes anyways? We're experiencing recessionary deflation, not inflation. A COLA would be negative.

by MPC on Jan 28, 2009 8:55 pm • linkreport

Why does WMATA need "over 10,000 employees?" And why can I never find one when I need one? They sure as hell aren't answering their phones.

by monkeyrotica on Jan 29, 2009 6:43 am • linkreport

oh, yea, that makes sense. when the economy is tanking, take away public transit options. all this when metro is hitting record ridership numbers fairly regularly. heres hoping that metro, and other transit systems, get a good chunk of that stimulus cash. we should be making it easier for people to get around without cars, not harder.

im sure that there are opportunities to make metro more efficient, like combining redundant bus lines, but to cut back on a public service like this just sucks. maybe im too liberal, but it seems like public transportation shouldnt be forced to make a profit and should get public funding so that people can get around. its not a for profit company so why treat it like one?

by dano on Jan 29, 2009 7:39 am • linkreport

>"In the plan, Metro will cut 292 of their over 10,000 employees. These cuts will keep WMATA's personnel costs from increasing by almost $100M this year."

$100M / 292 = $342,466.

Wha wha what?!?

by springroadintoaction on Jan 29, 2009 9:15 am • linkreport

MPC: I don't know the specifics but the union contract is available online, at WMATA's web page. There's probably something in there about cost of living increases.

Monkeyrotica: There's about 4000 employees each to run Metrorail and Metrobus operations, all the way from mechanics to line operators and line supervisors. Full details are in WMATA's 2009 operating budget which is on the page mentioned above.

Dano: I don't think anyone is expecting WMATA to turn a profit, it's just that the governments that fund WMATA aren't willing to give them any more money than last year, even though costs have gone up. The member governments are still going to be subsidizing public transit to the tune of over $500 million for the year. That combined with a pledge to not raise fares two years in a row means that WMATA's only option is to cut back on service.

If each of WMATA's approximately million customers wrote them a check for $73, that would probably take care of it. If each of the metropolitan area's approximately 4 million people wrote a check for $19, that would do it too.

My argument is that to avoid service cuts, the member jurisdictions should increase the subsidy. It's a small per capita amount, but the service cuts needed to get there are probably going to be pretty severe.

by Michael Perkins on Jan 29, 2009 9:32 am • linkreport

Springroad: The cost of an employee is far greater than just their salary and wages. Benefits, overhead (i.e. the cost of their office space, etc.) all are factored in.

That number is perfectly reasonable, depending on who they're cutting.

by Alex B. on Jan 29, 2009 9:35 am • linkreport

Springroad: Perhaps I could have written that better. Here's an attempt.

Under a baseline scenario, Metro's personnel operating costs are projected to rise by $99M, from $925M to $1024M. With the personnel and other cuts, costs rise from $925M to $964M, or $39M.

Divided by the 300 jobs lost = $130,000. With overtime, health care, retirement, fringe benefits, etc., skilled labor total compensation could be as high as this amount.

It's possible that in addition to the actual job cuts, WMATA plans on taking other non-layoff steps, such as limiting overtime, increasing health insurance premiums, reducing or eliminating raises for non-contract (salaried) employees or reducing training.

by Michael Perkins on Jan 29, 2009 11:07 am • linkreport

Zimmerman is giving his final remarks as chairman now. Listen in at:

http://wmata.com/about_metro/board_of_directors/agenda.cfm?agendaID=1653&committeeID=10&committeeName=Board%20of%20Directors%20Meeting

by Michael Perkins on Jan 29, 2009 11:46 am • linkreport

My apologies, the real link is:

http://wmata.com/about_metro/board_of_directors/meetings.cfm

by Michael Perkins on Jan 29, 2009 11:53 am • linkreport

Mr. Graham is nominated for chairman

Mr. Benjamin nominated for vice chairman

Mrs. Hudgins nominated for 2nd vice chairman

All elected unanimously.

by Michael Perkins on Jan 29, 2009 11:57 am • linkreport

WMATA has a union problem not a budget problem. If the Unions deferred their salary increase like everyone else in this economy and were required to pay more of their health care like everyone else and we did something about 6 figure retirement pensions then we could probably LOWER fares, INCREASE service, and still be within the budget. Seriously, when is someone going to confront the real problem which is runaway union salary and benefits.

by pct on Jan 29, 2009 4:28 pm • linkreport

The way around the union problem is contracting out, as has been done in London and New York City. Expect a strike to shut down the system. Alternatively, jurisdictions can continue to reduce their Metrobus service, and their labor costs. Another thing that can be done is to hire more part-timers. Full-timers hate this, but why should we pay drivers to do nothing during the day, when they could be doing something productive? Unfortunately, this has to be done when the economy is good, to reduce resistance.

by Chuck Coleman on Jan 29, 2009 9:48 pm • linkreport

Yeah, those metro employees shouldn't get benefits like insurance and sick days! Boo on them!

Seriously, you think Metro is bad now? Hire part time workers and non union workers, and you'll see how truly bad it can get. Those workers you disparage are helping to keep it together.

Look, there's a lot to be done to cut down on unnecessary expenses. Getting rid of the union isn't one of them.

I agree the union can go a lot farther.

by Jazzy on Jan 29, 2009 10:44 pm • linkreport

Chuck Coleman: Under the current union contracts, WMATA is prohibited from using contractors to replace current jobs.

I wasn't advocating getting rid of the union, merely negotiating with them so that they can be part of the solution.

by Michael Perkins on Jan 30, 2009 6:09 am • linkreport

With the Unions: recall (e.g. from Hurricane Isabel) that if Metro shuts down, the Federal government shuts down. So there is a very strong incentive to ensure that, e.g., Metro doesn't shut down because of a strike. I think there's some sort of trade-off where, in exchange for no-strike provisions, the Union contracts are negotiated through binding arbitration, every time.

by thm on Jan 30, 2009 9:38 am • linkreport

The Wmata can cut cost by out sourcing there third party liability department. Hire a outside insurance company to settle their claims. Do away with that department.

by wow12 on Feb 13, 2009 9:45 pm • linkreport

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