Metro's options for balancing the budget

Budget

Metro's options for balancing the budget

by Michael Perkins • March 13, 2009 11:08 am

There are essentially four options at this point for closing Metro's $29M budget gap. In order of my preference:

Jurisdictional subsidy increases. This would require local area governments to search hard in their budgets for any additional funding that can balance Metro's budget. The amounts needed by jurisdiction are:

District of Columbia	$4.9M
Montgomery County	$7.8M
Prince George's County	$6.9M
City of Alexandria	$0.9M
Arlington	$2.6M
City of Fairfax	$0.1M
Fairfax County	$4.1M
City of Falls Church	$66K

Photo by afagen.

My home county, Arlington, has already advertised the maximum allowable tax rate, so this will require cuts in other county services as opposed to tax increases. If you know how your home jurisdiction's budget process works, please provide insight in the comments.

Fare or other fee increases. According to the information given yesterday at the FAO Committee meeting, a ten-cent raise across the board would raise over $30M. However, such a flat raise doesn't take into account differences in price between services. It's a pretty large increase on a $1.25 bus fare relative to a $4.50 rail fare. To me that proposal seems inadequately designed and researched, but that's probably because Metro staff were never really allowed to consider fare increases as part of the plan. If a fare increase proposal were better designed and supported by subsidy increases, I could support it. There's also the revenue WMATA could gain by applying performance parking at crowded Metro lots, which has unknown revenue potential and should be part of a fare increase package if one is proposed.
Shifting capital repair to operating funds. Under budget rules, Metro could shift money between budgets and spend some of the money designated for capital, such as new buses, faregates, fare machines, track equipment, and maintenance facilities. This would hurt the system's long-term reliability and usability prospects, and would cause old equipment to be used even longer before it's retired. A lot of this equipment, like Metro's Flxible buses are near the end of their design life (all 150 of them are more than 15 years old). This would make the problem worse. Metro's capital budget is already underfunded. We'll need to fix this problem sooner or later. Because of economic conditions, we may decide to fix it later, but the problem will still be there, and it will grow. note: this is the plan to use the stimulus money discussed earlier
Service cuts. Right now, the Metro jurisdictions' staffs are probably working furiously through lists of bus lines, trying to come up with their allotted amount of cuts in service. But with ridership at all-time highs and service that already doesn't come more than once an hour in some locations, does that even make sense? It doesn't have to be all or nothing, though. The way the FAO Committee left it at the meeting, service cuts would have to be made on bus service only, which doesn't make sense. There are some rail system cuts that could be done without too much pain, like closing some station entrances during non-peak hours where there are more than one entrance (worth $700K per year), and reducing the frequency of trains during the 6-7am timeframe (when I commute!). I would want a plan for how this service gets restored quickly, but I don't think rail should be immune to service cuts because of a quirk in how Metro calculates its subsidy.

In reality, we'll probably solve the budget crisis with a combination of all four of these. There's probably some additonal money each jurisdiction could come up with, but not the whole thing. We may consider fare increases that are better designed and more targeted, but smaller than the whole $30M. There might be some capital expenses we defer to flusher years, and we may make some service cuts. From listening to the committee's discussion yesterday, I was glad to hear somebody on the panel articulate the same arguments I would have made, most of the time more eloquently than I could have.

13 comments

Tags: budget, fares, service cuts

Sarles proposes budget with far fewer service cuts (Apr 22, 2010)
Metro should release more budget-closing options (Dec 3, 2009)
Metro board agrees to disagree on budget (Mar 12, 2009)
Metro faces big budget gap even with a fare hike (Sep 10, 2009)
Proposed Metro service cuts take more from DC (Feb 25, 2009)

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
Add a comment »

Certain targeted service cuts or reengineering are in order. I think asking for subsidy increases is tough when every jurisdiction faces severe financial problems. The WMATA bus fares are significantly less than most any major jurisdiction in the U.S. A $1.50 fare is reasonable. Alternatively, as is done in some places, a peak fare, equal to the periods of rush for the subway system, could be instituted, of a $1.50, leaving the $1.35/$1.25 fare in force during the other periods.

I understand the sentiments to keep fares down. At the same time, the transit system can't be systematically underfunded in the face of expectations that service frequency and quality be maintained.

by Richard Layman on Mar 13, 2009 12:12 pm • link • report

I'd have made #3 a little more clear and explain that the use of "stimulus" money could fall there. I think dipping into capital repair/stimulus money is a bad, bad idea. Metro's problems are very real, and there's only so much you can shove under the rug.

by unsuckdcmetro on Mar 13, 2009 12:26 pm • link • report

Possibly excepting DC, each of the other counties/cities involved with Metro have separately operated bus services. Those other bus services *uniformly* have lower operating costs than Metro Bus. To be frank, while bus service makes a lot of sense, Metro Bus often does not make sense.

So one quite practical option really is to reduce the number of Metro bus routes by converting them into DART, ART, Fairfax Connector, or other county/city bus services.

For DC itself, it does not particularly make sense for surrounding jurisdictions to subsidise bus routes that only serve DC via their Metro participation.

Where Metro Bus might make sense, and likely these are the only routes where Metro Bus makes sense, is on inter-state routes (e.g. DC to VA or MD, MD to VA, and the inverse paths).

So there is room to change bus services in a way that can visibly reduce costs, while retaining the bus services themselves.

by Bus Rider on Mar 13, 2009 1:02 pm • link • report

Locally provided bus services are cheaper because the workers tend to not be unionized. That is likely the biggest cost differential. This should be an issue with WMATA bus drivers if they want to remain working.

Each jurisdiction for the most part pays the full cost for its bus service to WMATA. I don't think you can argue that the other jurisdictions are subsidizing DC's service.

It would never happen, but the threat of DC moving its bus services to an own-operated service and dropping WMATA/WMATA bus drivers as the operators and therefore the contract with the Union could "encourage" the Union to modify its contract including certain onerous provisions regarding pensions.

by Richard Layman on Mar 13, 2009 1:08 pm • link • report

How about option 1 & 2? How about metro riders challenge their jurisdictions to match a fare increase? That would not only allow metro to stop it's budget gap, but to actually catch up on it's overdue repairs.

Obviously, the fare increase can be distributed. Perhaps a nickel on bus fares, and 15 cents on the longest metro ride?

by Jasper on Mar 13, 2009 1:13 pm • link • report

@ Richard: The Fairfax Connector folks are well organized. May I remind you of the long strike they had in September?

by Jasper on Mar 13, 2009 1:14 pm • link • report

Ok, here's a suggestion. You know how MD has speed cameras, and red light cameras? How about Metro makes stop sign cameras! I walk from Branch Ave to my office every day, and I don't think I've ever seen someone actually stop at the stop sign pulling into the metro kiss & ride. All motorists treat it as an optional stop, which means I almost get run over every time I try to cross the street at that intersection. Fining all those people would surely rack up a huge amount of dough.

by Matt Glazewski on Mar 13, 2009 5:53 pm • link • report

These red light cameras are getting out of hand and now they're going to start adding the speed cameras. my wife has gotten nabbed twice on a legal right on red - i went out and bought a gps angel from amazon that beeps whenever she is near one of these cameras to remind her to slow down and fully stop. i'm all for safety but at some point public safety becomes an atm machine for cash strapped governments. you should check out www.gpsangel.com

by Adam on Mar 13, 2009 7:55 pm • link • report

@ Adam: Ask yourself: How do you prefer your government gets its cash. By fining speeders, or by taxing you?

by Jasper on Mar 13, 2009 10:51 pm • link • report

So you tax speeding, and thus speeding goes down, and thus revenues drop.

Another brilliantly thought-out plan.

You're supposed to tax something which won't allow people to change their behavior. Throw a small car tax increase; people won't change their lifestyle over another 20 bucks they have to pay on a title; tax cigarettes, they're addictive after all.

by MPC on Mar 13, 2009 11:07 pm • link • report

Some explanation of WMATA bus service and union/non union issues is necessary:

The way bus service works (by agreement between the jurisdictions) is that there are "regional" routes run by WMATA. There is a set of criteria that define "regional" routes but basicly they either cross jurisdictional lines or travel on major arteries and service major activity centers other than Metrorail stations. The cost of these routes are shared by all jurisdictions by a formula that is somewhat like Metrorail. This formulation was developed to insure that riders in each jurisdiction had access to major employment/activity centers in other jurisdictions.

All other routes are "non-regional" and local jurisdictions may run that service themselves or contract with WMATA to do so. All jurisdictions now have their own local providers but all contract with WMATA to run varying percentages of their "non-regional" service.

The initial cost in "privatizing" the routes sometimes results in some operating cost savings but is usually offset by capital costs. Over time, operating costs rise relative to WMATA's. Montgomery County Ride-On, the first area local bus system, has pay scales that now exceed WMATA's.

The takeover of bus routes from WMATA has been driven more in recent years by "empire building" than any real cost savings. The proposed Fairfax County takeover of routes 2W, 12s & 20s scheduled for June 2009 is projected by Fairfax County to cost $137,000 more in the first year of operation than WMATA. This figure does not include the $8.5 million cost of the buses and also seems to also exclude from its calculations some other costs that WMATA includes.

With the exception of Alexandria's DASH system (largely kept non-union by competitive wage rates and is 3rd in pay behind WMATA & Ride-On), all the local bus systems have been unionized. If Fairfax takes over the 2W, 12s & 20s, those workers would initially be non-union at the new West Ox facility and would be paid considerably less without any savings to the Fairfax taxpayer.

The worst parts of the WMATA Board proposal to balance their budget are that they left the decision to local jurisdictions to cut regional bus service (which should have been decided by all jurisdictions) and basicly took rail off the table (decisions on "non-regional" bus service are already determined by the local jurisdictions). The board decision not to seek a fare increase at this time (this issue must go to public hearing and it apparently will not be on the docket) is only postponing what seems to be inevitable. The General Manager projected a $125-150 million deficit next year even after the cuts already made and those that may be proposed.

Subsidy increases are not off the table in all jurisdictions. Maryland and Arlington have expressed their willingness to add some/all subsidy increase and the District indicated they are looking for ways to fund some/all of their deficit. It is less clear that Alexandria and Fairfax have that flexibility.

by kreeggo on Mar 13, 2009 11:50 pm • link • report

Read in the post, people that keep getting fined for HOV violations keep doing it. People in this area on the whole don't learn, which is why the cameras were installed - they have BECOME a steady source of revenue. It's just like gambling...you don't have to do it, but if you do, you risk losing money.

by Matt Glazewski on Mar 14, 2009 12:31 am • link • report

I think that asking for more in subsidies without asking the management and staff to innovate does not make a whole lot of sense. Neither does cutting service without giving management and staff a chance to innovate.

The negative press lately of some Metrobus drivers and governmental scandals in general should be pushing Metro to step up and do something creative and proactive for a change. If they don’t acknowledge the things weighing them down, the future does not look good. It would appear that now is the time.

Also, I tend to agree that a fare increase to $1.50 would be ok, but with cuts? That's harder to swallow. Keep in mind, that people who pay cash do already or will be paying more for their rides than those with a card.

Unionized drivers are by and large doing an adequate job. Switching to a new company might not promise the improvements you might think. At least not in the long term.

by Jazzy on Mar 14, 2009 4:33 pm • link • report