Greater Greater Washington

Metro faces big budget gap even with a fare hike

Next year will certainly be a challenging year for Metro. According to Metro's preliminary report, even after an inflationary fare increase of 4-6%, and continued deferral of preventive maintenance, Metro's supporting jurisdictions would still be required to chip in almost 20% more than last year's budget ($107M). Since such a large jurisdictional subsidy increase is almost certainly not going to happen in this budget climate, we will likely be looking at a much larger fare increase as well as debates over service cuts. The Post discusses this further.


Photo by joshuadavisphotography.com.

Fortunately, the Board has a lot more time to contemplate budget-balancing measures this time around. Last year, the Board ended up with a very compressed schedule, forcing the jurisdictions to come up with budget-balancing service cuts for non-regional Metrobus routes only. Under pressure from riders, the Board limited the cuts while funding the remaining gap through borrowing, increases in subsidies, and administrative cost reductions.

What's driving this deficit? In short, higher costs and lower revenues.

Due to contractual obligations, Metro needs to pay its workers about 3% more than last year, from promotions as well as cost of living increases. That's about $20M of the gap.

The cost of Metro's pension plan, health care (retirees and current workers) and other benefits contribute about $33M to the gap. Without more information about Metro's union agreements, it's hard to say much more about these issues.

MetroAccess, WMATA's paratransit service for persons with disabilities, has been increasing in cost rapidly this past decade, up to almost $100M per year in costs, and contributing $19.7M to the budget gap. Because paratransit fares are limited by law to double the equivalent fare by transit, very little of this cost is paid by riders, typically 5-6%. This budget item is expected to grow as the population ages and riders from other jurisdictions choose to use MetroAccess as opposed to services in their home jurisdiction. For example, passenger trips in 1998 were about 250,000, while budgeted trips in 2009 were 1.8 million and are projected to grow to 2.5 million in 2011. In the meantime, MetroAccess expenses in 1998 were about $10M, in 2009 were $78.5M, and in 2011 are expected to be $98.6M.

The costs mentioned above are structural. Without changes in Metro's employee compensation agreements and in the way MetroAccess is delivered, those budget items will increase every year for the foreseeable future. Increases in ridership, fares, and jurisdictional subsidies should be structured to provide for a reasonable amount of growth in employee compensation and contracted paratransit service.

Energy costs continue to increase, contributing about $10M to the budget gap. This budget item is subject to fluctuations in the energy market.

Revenues: Metro calculates that ridership will grow about 1% from last year after accounting for the effect of a fare increase. Combined with a 4-6% fare increase, Metro calculates that about $44M in new revenue will be available next year. However, all of this increase in revenues is wiped out due to a drop in advertising and other revenue.

Coming up, where Metro could save money and what a fare increase proposal could look like.

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 »

Why don't they change the status quo in regards to fare increases?

Instead of going through all these campaigns with negative media coverage about fare increases why don't they explain up front that there will be X percent increase or 5 cents added each year? Lay it out upfront for the customers to understand.

Then, in some years when they don't need to raise fares the customers will be happy that prices didn't go up and the headline will read "Metro doesn't raise fares for the second straight year" or something to that effect?

by Rob on Sep 10, 2009 10:30 am • linkreport

A couple of years ago, the Board refused to take action on a staff proposal to increase fares automatically with the CPI.

I don't think a 5% increase every other year is that bad (my suggestions tomorrow will be worse), but 5% every other year doesn't keep up with costs, and Metro's board isn't doing such a good job at holding down costs to a reasonable growth rate.

by Michael Perkins on Sep 10, 2009 10:43 am • linkreport

Metro could probably raise the fare more than 5% and it still would be cheaper than transit in most other major cities. Am I the only one that loves the irony that cash-starved Metro has artificially low fares while larger TA's (with the dedicated funding streams Metro so cries out for!) have fares quite a bit higher?

Once the dust settles and passes become available on SmarTrip, I think a good idea for a fare increase might be to revisit the idea that non-SmarTrip customers would pay higher fares to encourage SmarTrip use on the rail side. Boston seems to do it with no problem, of course Boston also has a system far superior to our late 90's smartcard on top of a mid 70's farecard system.

by Jason on Sep 10, 2009 11:10 am • linkreport

MetroAccess needs to be changed.

My understanding is that the ADA requires that transit providers accommodate the disabled one way or another on all its routes. A transit system can either have a fully disabled-friendly system (buses with ramps, elevators everywhere, space for wheelchairs, etc.) or can resolve the problem by offering a special paratransit service.

The key is that only the system, as it's available to normal riders, needs to be made accessible to the disabled. MetroAccess, however, is available far beyond the standard Metro/Metrobus routes.

MetroAccess should be scaled back considerably to only pick up or drop off within a tenth of a mile (about a block) of a bus line or Metro station. Otherwise, we're subsidizing people for their choice to live in transit-unfriendly areas yet reap all the benefits of cheap transit, but on the backs of everyone else.

by Joey on Sep 10, 2009 11:14 am • linkreport

Jason, I don't think you need much encouragement for regular rail riders to use SmarTrip - the vast majority of them already do.

The real incentive needs to be for bus riders to use it. They also have the most to gain in terms of operations - speedier boarding, less fare evasion, etc.

by Alex B. on Sep 10, 2009 11:27 am • linkreport

I looked more into it. ADA changed the previous law which only required what I described above. The ADA actually requires that paratransit be offered within 3/4-mile of routed systems.

It doesn't, however, require that any pickups or drop-offs be available beyond a 3/4-mile radius (compared to the unlimited range Metro Access offers).

It also only requires curb-to-curb service (compared to the more expensive door-to-door service MetroAccess offers).

Further, the ADA requires that the paratransit service offer no worse than a 1-hour pickup window (compared to MetroAccess' 30-minute window).

by Joey on Sep 10, 2009 11:32 am • linkreport

Metro really should make SmarTrips free and raise the non-SmarTrip bus fare to $2.00. It's a lot simpler to pay in cash than $1.35, and would probably recover a lot of the cost of issuing free SmarTrips.

by Phil on Sep 10, 2009 11:32 am • linkreport

@Jason: For peak rail commuters, WMATA is one of the most expensive systems in the world. Other systems typically have flat fares below $2.50 each way, and monthly passes priced at 35-40 single rides, allowing people to commute for no more than $100 per month. Some systems give you a free month if you buy the year, an additional discount.

It's only bus and off-peak rides that are artificially cheap, for various policy reasons.

I have a question in for passes on Smartrip. It's scheduled to start in September for bus passes, but I haven't seen any preparatory actions.

@Joey: This TCRP document describes the difficulty with integrating paratransit and fixed-route service. I read the document once and was convinced that point-to-point was better for everyone, but I don't recall the specific argument.

That said, it's not required and should not be policy that Metroaccess be available far outside of the 3/4-mile boundary prescribed by Federal law.

by Michael Perkins on Sep 10, 2009 11:36 am • linkreport

Honestly, I don't see why the paratransit should be capped at 2x the comparable transit fare. It seems like a very small cost difference that wouldn't serve as much deterrence for those who qualify for paratransit to use it all the time even if they can reasonably access the regular transit.

Though that's not an issue WMATA can address directly.

by kidincredible on Sep 10, 2009 12:03 pm • linkreport

@kidincredible, like you said, WMATA can't address it, because it's federal law. WMATA doesn't have to keep it at twice bus fare, it can instead charge twice the comparable bus or rail fare, which would be higher, and significantly higher during peak hours.

by Michael Perkins on Sep 10, 2009 12:07 pm • linkreport

@Joey

I absolutely agree. MetroAccess is far more extensive than any other system I can find anywhere in the country. In the San Francisco bay area, each local jurisdiction serviced by BART provides its own form of paratransit service, each paid for by that local jurisdiction. That makes sense to me. In the DC area, each jurisdiction maintains some form of local bus service funded on their own in addition to Metrobus; I don't see why we can't do the same to provide ADA-compliant paratransit service.

@Phil

Yes. Raise cash bus fares ($1.50 even makes more sense) and make express buses "SmarTrip only". When an express bus sits at a light waiting for a rider to count out $1.35 in nickles, it really defeats the point of "express" service.

by Adam L on Sep 10, 2009 12:09 pm • linkreport

@Michael Perkins
So, is WMATA NOT charging twice the RAIL fare? Cause if that's the case, it seems like that would be one spot where they could close the gap a little.

Like I wrote earlier, I wonder how many of these paratransit users are ambulatory enough to utilize the regular transit but aren't deterred enough by the price premium to stop using paratransit.

And before someone jumps on me for advocating raising prices for people with disabilities: there is an issue of social equity here that paratransit addresses, but if WMATA cannot reconcile their budget, then there may be NO service, which does nobody any good... (that's extreme, but the point still holds)

by kidincredible on Sep 10, 2009 12:13 pm • linkreport

@ Michael Perkins: Seriously? Metro the most expensive in the world? Ever ridden the Tube in London? Their highest rush hours fair is 3.80 pounds. If you have an Oyster card. If not, you're just toast for 4 quid whatever you do.

by Jasper on Sep 10, 2009 12:51 pm • linkreport

@Jasper: I said one of the most expensive in the world, I even put out a challenge on my little-read blog infosnack.org for someone to point out a more expensive system.

London is the first I've heard of that's more expensive. They have an annual pass for Zones 1-6 that costs £1900. The equivalent here (52 rail fast passes and 52 weekly bus passes) would cost $2600.

Zone 6 is at the far outreaches of the London system, most of the system is included within Zone 4. For example, Epping is in Zone 6, and is 15 miles from the City of London (the actual old city), Heathrow is 16 miles distant. This is equivalent to a trip from Metro Center to Rockville at $4.45.

If you go look on a map, Epping looks like a small town, similar to the historic part of Leesburg. £3.80 each way for trips from there to the center of town seem like a pretty good deal. Epping looks like it's outside of the green belt, too, though I could be wrong.

Notwithstanding that London is probably the most expensive city in the world and the exchange rate sucks.

Feel free to point out other systems I missed that cost this much.

by Michael Perkins on Sep 10, 2009 1:29 pm • linkreport

A flat fare to Zone C in Berlin (which includes Schönefeld Airport and Potsdam) is €2.80, regardless of time of day. A monthly pass is only €88.50 though, which is 30x a single fare so it's a pretty good deal.

by Phil on Sep 10, 2009 2:05 pm • linkreport

@Adam L.: The only problem with making express buses SmarTrip only is that their two big money maker express routes (5A and B30) largely have passengers who wouldn't have a SmarTrip or have no way to buy one since there are no outlets that sell them anywhere near BWI or Dulles. Putting in some vending machines like the ones at stations with parking can't be that hard, can it?

@Michael: Something that has irked me, especially since paper transfers ended, has been that Metro could have easily redone the rail passes to allow them to be used as bus flash passes. It's way beyond high time for Metro to go to a unified fare system, what worked in the 70's does not work now.

by Jason on Sep 10, 2009 2:20 pm • linkreport

time to kill metroaccess...sorry.

by charlie on Sep 10, 2009 2:23 pm • linkreport

Even if London's system is marginally more expensive than ours (depending on where and how frequently you want to travel), I'd argue that you get a lot more for what you pay. Epping has evening tube service every 10 minutes until 1:00 in the morning (according to the schedule, anyway - I've never been there). Other end-of-the-line stations I've checked are served more frequently still - no Metro-style 20-minute headways. Even bus routes that far out of the city center offer frequent service at all hours of the day, night, and weekend, where a similar bus route in MD or VA might run once an hour or not at all.

Speaking of which, and getting back to MetroAccess: Suppose you qualify for paratransit and you live within 3/4 mile of a bus stop, but the bus that serves that stop doesn't run on Sundays. Does the ADA require Metro to provide you with paratransit service on Sundays?

by Johanna on Sep 10, 2009 2:27 pm • linkreport

@Johanna: No, ADA does not require paratransit service when the equivalent transit system is not operating. The regulation allows this determination to be line-by-line or route-by-route, but WMATA's guidelines allow paratransit trips to be taken regionwide, regardless of where and when transit is operating.

Note: ADA paratransit is not required to be run similar to commuter services like VRE, MARK or OMNI Link, and Metroaccess does not provide these kinds of trips because those counties are not WMATA compact signatories.

Charlie: Metroaccess or similar service is required by the ADA. The system can be pared down to only the system required by regulation, but it cannot be killed without changing federal law.

Jason: For those express bus lines, you could install a vending machine to sell a bus ticket good for one ride or a round trip, which could be displayed to the driver before boarding.

Also, It's hard to push a combined pass system at this point with Metro's budget so stretched. The passes would either be priced to benefit the rider, in which case WMATA would lose money, or be the sum of other passes, in which case very few would be purchased. I would say that adding a bus pass to your rail pass should cost about $7.00. We'll see where this goes once Smartrip starts getting pass capability.

by Michael Perkins on Sep 10, 2009 3:39 pm • linkreport

I just got back from London on Tuesday. What an impressive system. Makes ours look puny.

by NikolasM on Sep 10, 2009 3:50 pm • linkreport

Michael: Re 5A and B30 - every time I take these buses I think that they should have a vending machine. Since they go to the airport, people usually get there early to make sure they don't miss the bus - and there are only a couple stops (i.e. vending machines) to be serviced. Any idea how we as riders might try to get WMATA to do this?

by egk on Sep 10, 2009 9:54 pm • linkreport

@Michael

Would you happen to know why WMATA got rid of the old passes about 15 years ago which did allow bus and rail service, plus the monthly bus passes and many other pass combination's.

If WMATA had there way the fares would probably be $1.35 bus cash/smartrip no transfers, no discounts for bus/rail transfer and no type of passes and 2 or 3 dollars more for all rail fares.

I say WMATA should get rid of metro access but not until they can get there s**t together.

Half of the stations have elevators at the wrong entrance when there is more than one take Gallery Place the elevator should be at the H street entrance where all the buses stop, the elevators at many deep stations are nowhere near the majority of bus stops take Bethesda, Friendship Hgts, Van Ness, Medical Center etc.

Anyone in a wheel chair transferring to a bus at those stations has to go through a bunch of B.S. to get to the area where the buses actually stop at. that creates a program for disabled people to transfer to and from the bus/rail.

I have been on many buses where the wheelchair lifts don't work or brake during the lift.

Heck does anyone know the answer to this; has there ever been a day when all elevators were working.

Why didn't they just build two elevators in stations from the beginning or left the space to do so at a future time was it carelessness not giving a damn about disabled people or being cheap.

The system seems like its trying to discourage people with disabilities from taking it by having them go through as many obstacles as possible

by Kk on Sep 10, 2009 10:58 pm • linkreport

Would you happen to know why WMATA got rid of the old passes about 15 years ago which did allow bus and rail service, plus the monthly bus passes and many other pass combination's.

There are no board reports available online before 2005 and I moved here in 2001, so I don't have any recollection or history on this. My guess is it was a revenue enhancing measure.

If WMATA had there way the fares would probably be $1.35 bus cash/smartrip no transfers, no discounts for bus/rail transfer and no type of passes and 2 or 3 dollars more for all rail fares.

I don't know if this is the case, when the Board speaks they certainly state that keeping fares low is a goal of theirs. It's hard for them because they don't control their funding stream when it comes to subsidy.

I say WMATA should get rid of metro access but not until they can get there s**t together.

They can't get rid of Metroaccess; it's federally mandated.

Half of the stations have elevators at the wrong entrance when there is more than one take Gallery Place the elevator should be at the H street entrance where all the buses stop, the elevators at many deep stations are nowhere near the majority of bus stops take Bethesda, Friendship Hgts, Van Ness, Medical Center etc.

According to the history book of Metro, "The Great Society Subway", elevators were shoehorned into the system after it was mostly designed. I guess they put elevators where it was technically feasible without disrupting the design work already done, rather than where you would want the elevator if you were designing from scratch. Recall that this design work was done in the late 1960s/through 1970s, two decades before ADA.

by Michael Perkins on Sep 11, 2009 6:55 am • linkreport

Had metro been a public company, they would have declared bankruptcy to void themselves of the enormous pension liability, or switched to a standard 401K program long ago.

Metro’s pension has been fully funded by WMATA since inception. No union worker has had to contribute 1 dollar towards their eventual retirement, or $1 dollar out of any paycheck for their health benefits until this year, and now it’s a symbolic pittance Total insanity. Even K streets wealthiest law firms force their highest earning partners to contribute to their health and retirement benefits.

Good for Metro Union employees I guess, but that isn’t remotely realistic for anyone else, anywhere and we can see via WMATA’s yearly budgetary issues, solely due to their uncontrollable pension costs that WMATA will soon have to join the land of common sense in that regard as not even the mass transit system with the highest fares in the nation and second highest ridership can make enough money to cover those obscene costs. The excess pension costs were 33 million in 2009, and 37 million in 2010 (don’t have the recent numbers), and the scary thing is, Metro is an incredibly young system that’s only dealing with its first generation of pensioners.

The pension benefit cost at retirement (per employee) for WMATA is an astounding $400K.

For comparison to other local union pension benefits, the average pension benefit for Montgomery County is 220K. The cities of Alexandria and Arlington are 250K, and pensioners who worked for these jurisdictions aren't exactly destitute and living in the street.

Another serious problem is that Metro’s base return assumptions do not reflect reality. Benefit costs expensed vs incurred are a great example. Funding of the absurdly rich pension plans assume such things as a base 8% yearly return on investment (a total fraud since the plans have never come close to half of that on a sustained basis) and other items. Who gets a sustained return of 8% per year, every year in perpetuity? No one, and Metro’s return has been short more than not and when that happens we have to kick in the difference.

Also, determining ones pension based on ones overtime, and not base salary is just a recipe for flagrant abuse, which “surprise surprise” happens all the time. Calculating your pension based on your 4 highest years including overtime is just a massive incentive to, hmm, rack up overtime

by Anons on Jan 3, 2014 10:34 am • linkreport

Add a Comment

Name: (will be displayed on the comments page)

Email: (must be your real address, but will be kept private)

URL: (optional, will be displayed)

Your comment:

By submitting a comment, you agree to abide by our comment policy.
Notify me of followup comments via email. (You can also subscribe without commenting.)
Save my name and email address on this computer so I don't have to enter it next time, and so I don't have to answer the anti-spam map challenge question in the future.

or