Greater Greater Washington

WMATA faces $90 million budget gap

WMATA faces an estimated $90 million budget deficit (PDF) for next year, assuming the same level of service, fares, and jurisdictional contributions.


Photo by Cayusa on Flickr.

The budget gap includes a 10% growth in MetroAccess usage, increased fuel and energy costs, and ongoing labor and health care cost increases, including the 3% annual increase mandated by an arbitrator last year. Metro also projects a small decrease in system revenue based on a new regional bus pass revenue sharing agreement, where Metro will provide some of the bus pass revenue to local bus operators that provide free rides.

Another part of the increase comes from restoring $30 million in preventive maintenance which was transferred from the operating budget to the capital budget last year, and carrying forward a $16 million deficit from 2010, which was in part the result of reduced ridership, and in part due to the 2010 "snowpocalypse."

The projection also includes another $25 million in cuts to staff, excluding the safety department, beyond the $165 million already cut in recent years.

As, sadly, we have been facing each year, Metro will need to start thinking about tough choices between service cuts which would deprive riders of needed service, more fare increases which would squeeze riders already on tight budgets, and jurisdictional subsidies which local governments would have a hard time affording.

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David Alpert is the founder and editor-in-chief of Greater Greater Washington. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He now lives with his wife and daughter in Dupont Circle. 
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. 

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The Metro board has to rethink MetroAccess. It's spiraling cost has become something that the system just can't afford. Do other transit systems (such as BART, the MTA in New York, Chicago's and Boston's transit authorities) provide a comparable service?

by Bob on Nov 1, 2010 10:24 am • linkreport

@Bob: Yes, it's required by federal law.

A recent change in policy scaled back Metro's paratransit service to be closer to what federal law requires. It's not likely to change much further.

by Michael Perkins on Nov 1, 2010 10:32 am • linkreport

Well, I did my part this weekend: went into Dupont metro at 10:45, as trains went by fully packed and the crowd on the platform got thicker and thicker, my party of four just left and walked out. Metro got $1.60 out of each of us, and didn't even give us a ride.

If they had been running normal rush hour frequency and 8 car trains for the rally, I'm sure they would've pulled even more revenue.

David or Michael, are special events like this rally a potential revenue generator to metro, or does the cost of scheduling extra trains and operators swallow up any extra cash generated?

by wil on Nov 1, 2010 10:55 am • linkreport

@wil:
Well, I can't speak for this particular event, but during the Inauguration, Metro ran 17 hours of consecutive rush hour trains. They also ran extra service during the preceding weekend, which had lots of Inaugural events.

The Inauguration and preceding 3 days cost Metro and additional $5.28M to put on.

During that same time, Metro received approximately $3M in fares.

So that means that Inauguration, with all of its additional riders and additional service meant Metro lost about $2M, although they later got some funding from the Feds to pay for at least some of the cost.

Now, as for the Stewart/Colbert rally, Metro did not provide much additional service, which would mean that their costs were about the same as a normal Saturday. They did have much higher ridership, though. So I suppose it's possible that this had a positive effect on revenues, but I really don't know.

by Matt Johnson on Nov 1, 2010 11:05 am • linkreport

Good comment Matt J. I would have assumed that the extra cost and ridership would have evened out.

This is a serous problem because metro is close to the point where more cuts would make the experence so horrible people will just stop using it. I am just about at that point myself.

There has to be a comftorable medium betwen service, cost, and government subsity. At the Obama's event could the have cut service by say 1 million and still had good service? I actualy remember service on that day being very good.

Is there ways to cut the cost of running the metro, etc.

by Matt R on Nov 1, 2010 11:28 am • linkreport

I've seen suggestions elsewhere that Metro should have charged rush-hour fares and/or charged for parking at its garages on Saturday. Considering the agency has a budget gap, charging extra when a sizable portion of riders are system strain-inducing visitors would seem to be a more palatable option than further fare increases/reduced headways/smaller trains for the everyday users. That's not to suggest the $90 million budget gap would have been solved this weekend, just that any little bit helps. Seems like a missed opportunity.

by Aaron on Nov 1, 2010 11:36 am • linkreport

@Matt R:
Yes, there are ways to cut costs on the Metro. None of them are pleasant, although some might be more palatable than others.

Just a few ways that Metro could cut costs:

  • Close one entrance at a station with multiple ones.
  • Unstaff entrances during certain times.
  • Clean stations less frequently.
  • Close station bathrooms.
  • Eliminate duplicate rail lines (BL/OR) after a certain time, forcing riders to transfer at the last common station.
  • Run shorter trains.
  • Run fewer trains.
  • Close earlier.
  • Open later.
  • Close certain stations on weekends.
  • Close their call centers.
  • Close their service centers.

Those were just some of the approaches Metro could take. Many have already been taken by other transit agencies. Unfortunately, they tend to reduce ridership, which lowers revenues and necessitates more cuts.

by Matt Johnson on Nov 1, 2010 11:40 am • linkreport

Two ideas spring to mind: charge peak fares for special events and permit alcohol advertising.

Also, it's time to really turn the screws on jurisdictions on bus prioritization. Even without transitways or dedicated lanes, service could be quickened and a fair amount saved by re-timing lights, adding queue jumpers, re-positioning stops, etc. Those adjustments could cost some capital, but they'd save in operating every year.

I'm pro-union, but the 3% raise is unfortunate at a time when inflation is lower than that and WMATA's budget is hurting.

by Gavin on Nov 1, 2010 11:48 am • linkreport

FIRE SARLES.

by Redline SOS on Nov 1, 2010 12:23 pm • linkreport

@Aaron
I agree completely. I like the idea of charging rush hour prices during events, everyone last weekend would have paid it without question if it also meant more rush hour like service. Same with parking.

Perhaps they can make weekend parking cost less but still charge. $3 seems reasonable.

by Matt R on Nov 1, 2010 12:39 pm • linkreport

Some suggestions for increased revenue:

- Increased advertising. So many of the boards along the ceiling edge of railcars & buses go unused, along with a number of pylons within the rail stations. I'm unsure how they bid out their advertising contracts, but if their rates are too high: in my opinion, even a little revenue (perhaps on a shorter contract) would be better than none at all.

- Increased retail. Last time I went through Farragut North I recall the retail there being vacant, and there are a bunch of other large open areas at/around stations which could fit in some retail -- be it full shop, small stand, or even a mobile cart. Food might raise issue with the "No Food" rule, but even magazines, newspapers, and other trinkets targeting the commuters &/or tourists. When I spent some time in Ukraine, I got most of my groceries from the babushkas selling inside the Metro stations; and most major cities are abount with magazine, newspaper, souvenirs, & t-shirt merchants.

by Bossi on Nov 1, 2010 12:45 pm • linkreport

Well, here we are again ... and again talking service cuts and fare hikes.

But the real issue, as usual, at the heart of WMATA's financial troubles is the system's out-of-control personnel costs. Yet when this point is addressed, and usually obliquely at that, the response is usually little more than hand wringing. Distressingly, until the backbone is found to bring these costs under control (and, yes, that may mean taking on the unions), WMATA's budget woes will continue, year after year, with no end in sight.

It's been only a few months since David Gunn reported to the WMATA Board that the financial outlook in terms of revenue versus costs was "unsustainable." Sorry. What was that again? Unsustainable! Once more time, please? UNSUSTAINABLE!

Uh, yeah. Got it.

by InArlington on Nov 1, 2010 12:54 pm • linkreport

Advertising revenue is about to go down, not up.

WMATA contracts out to CBS Outdoor. They then sell the ads. The market for advertising has dropped substantially in the recession and a renewed contract will generate significantly less revenue for WMATA.

I'm all in favor of more advertising as a means to close the budget gap, but people need to realize that this is a drop in the bucket, not a real solution.

by Alex B. on Nov 1, 2010 12:58 pm • linkreport

@Alex B-

I put those out there just as some additional suggestions, as eventually a lot of drops fill a bucket :)

by Bossi on Nov 1, 2010 12:59 pm • linkreport

@Aaron, @Matt R

The tricky part about charging higher fares for an event is...what counts as an event? Certainly something like this past weekend's rally on the Mall or the inauguration could make sense, but what about sporting events that put a lot of stress on the system? What about certain concerts? Would WMATA set up a special commission to determine what events will cost riders more? What happens when an event receives rush hour pricing status and feels that this will reduce attendance?

by Brent on Nov 1, 2010 1:00 pm • linkreport

@Bossi,

That's a fair point, but I want to make sure people are aware that current ad revenue is in decline - it is part of WMATA's problem.

Opening up more space for ads might help eliminate declining ad revenue as a part of the problem, but it's a long ways away from actually solving anything.

by Alex B. on Nov 1, 2010 1:05 pm • linkreport

Matt, Metro as a policy won't destaff a station entrance. They did that many years ago and had problems with vandalism and even people trying to break into the farecard machines.

by Dharm on Nov 1, 2010 1:09 pm • linkreport

How can that work in New York but not here? Surely they would be more prone to vandalism and people trying to break into machines. Or are theirs more theft-proof?

by David Alpert on Nov 1, 2010 1:10 pm • linkreport

I think the biggest issue with de-staffing an entrance is turnstile jumping. the transit agencies that destaff entrances I've seen either follow the "prison entrance" model where you go through a giant cage turnstile (impossible with a stroller) or the "proof of payment" system, where the station entrance is merely a red line painted on the ground, and a handy fare validator machine close by.

by Michael Perkins on Nov 1, 2010 1:20 pm • linkreport

In Arlington, Metro's agreement workers are prohibited from striking under federal law. If Metro can't reach a deal with a union, then it goes to binding arbitration. Metro took the last major deal with the ATU to binding aribtration. They didn't get what they liked and are suing to get the arbitration decision overturned. What more do you want them to do?

by Metorider on Nov 1, 2010 1:22 pm • linkreport

Is Metro leaving revenue on the table by NOT enforcing -- writing ticket$ for -- eating, drinking, playing loud music bans on the trains?

by Lisa on Nov 1, 2010 1:24 pm • linkreport

@Dharm:
I am aware that Metro won't use unstaffed entrances as a policy. But other transit agencies have moved in that direction, and it is one way Metro could cut costs. That's why I mentioned it.

by Matt Johnson on Nov 1, 2010 1:24 pm • linkreport

I am curious as to whether there were any sort of stats on the actual number of people who don't pay for bus rides that they take. We're talking about the possibility of people jumping the Metro turnstiles, but what about people who are given a free ride on the bus. I have only just started taking the bus, and have seen two people not pay and be waved through on the S2 each time I have been on it in the evening.

I imagine Metro focusing on that particular mode of transportation might bring up cries of discrimination, and I am not entirely sure how to increase the percentage of paying riders to total riders.

by Brent on Nov 1, 2010 1:41 pm • linkreport

@Brent

Any stats on missed fares (either intentional fare jumpers or accidental ones from something like a broken farebox) are hard to come by because most of that ridership data is collected via fare payment.

In short, that data is all estimated.

by Alex B. on Nov 1, 2010 2:11 pm • linkreport

@Metorider

What more can WMATA do, you ask?

Well, for one, they can base pensions on base salaries, rather than on wages boosted by overtime work. WMATA employees know the system well and are gaming it by working a lot of overtime prior to retiring.

Second, WMATA should set a minimum retirement age to qualify for a full pension. As it is now, employees who work 25 years earn a full pension, no matter what their age when they decide to retire. At first glance this seems okay, but the math looks awful from a budget perspective. Say, for example, an employee is hired at age 23, works 25 years, then retires at age 48. The problem for the budget becomes evident if such employee then lives to be 80, 85, or older. Even if the employee lives to be only 75, he or she will have collected more years of pension payouts than years worked (27 vs. 25). The solution: a minimum retirement age in order to quality for full pension. How about age 65? Moreover, if retirement age reform is not forthcoming, there may come a time when WMATA has more people receiving pensions (and health benefits) than working.

Pension reform is also necessary. Almost all state and local governments as well as many municipal institutions across the country have been way too generous with their pension plans. The bills are now coming due. It's the main reason why California is broke and New York is soon to be. It's also the reason why the MTA in the NYC region is struggling mightily as are many other transportation systems, of which WMATA is case in point. A modest paring of payouts is reasonable and necessary.

WMATA should also consider shifting from a pension retirement system to a 401k type of plan. Everything needs to be on the table, and open for discussion and evaluation.

Just the basic step as basing pensions on base salaries will be beneficial in bringing the budget in balance. It won't do the whole trick, of course, but this rejiggering will save millions down the road. This is a matter which should be pursued this year, not simply pushed away. If the willpower is there, it can be done. Yes, it may take a few years for reform to take hold, but the time to begin the process is now, not tomorrow, and certainly not sometime.

by InArlington on Nov 1, 2010 2:26 pm • linkreport

Find a GM who will dare take on the union and the problem may be solved. There are more than enough people who will be willing to drive a bus or train at any wage that the unions are no longer needed. Unions are a major waste of time and have no place in this century and should be evolved out of existence if anything.

Put ads on the station walls facing the tracks too. This works on the other legacy systems, it can work here.

Fare increases should be off the table since it would be playing with fire. We in the know may know that it was really 1.5 fare increases in the last year, but the execution made it 4 fare increases in the mind of the common commuter. They've been nickel and dimed, leave them alone.

When you have to go, UNION NO!!

by Jason on Nov 1, 2010 2:44 pm • linkreport

Echo the points above regarding pension reform, this should be on the list of items for review. At $100 million a year, a lot more to be gained from modernizing the pension into a 401(k) system than from a "review of software maintenance contracts"

by David on Nov 1, 2010 3:13 pm • linkreport

Just how are you going to get ride of pensions? Most transit agencies have them and if you try it will go to arbitration and WMATA will likely lose.

by Metrorider on Nov 1, 2010 3:29 pm • linkreport

Metro access and pensions.

MetroAccess needs to be cut down further. We are talking about a very small number of riders who and bankrupting the entire system. I'm sorry -- but we can't afford it.

Pensions are still high as WMATA is restricted on their ability to fund pension plans.

It is interesting that fuel and electricity is so high (150 million). I think there is room for savings there.

by charlie on Nov 1, 2010 4:37 pm • linkreport

@Metrorider

The issue is who serves whom. WMATA's purpose of existence is to provide timely and efficient transportation services at reasonable cost to the public. We the public must hold them accountable.

If the WMATA Board appears unwilling to make the difficult decisions when it is in the best interest of the public to do so, change must be instituted. We already see this happening with the state government of Virginia pushing for board representation. In this instance, to be sure, it's more of a political power play involving financial levers, rather than forging ahead with substantial change, but, nevertheless, it is indicative of what the future might behold.

One way or another change will come about if WMATA continues to tread the path as it has. The Board and management must step up now and have the fortitude to say things can't continue as they are. But this isn't happening, and we have only hand wringing instead.

In difficult times and circumstances, change tends to happen. If WMATA tries to push up fares once again, there may be a backlash in dramatically lower ridership. This will only make matters worse. If they substantially reduce service, there will be frustration and anger. The public will then transfer its irritation and anger to their duly elected public officials.

The federal government is not going to sit idle and watch the system crumble. It might provide some funds for the agency to get by for a year or two, but at some point enough will be enough and, eventually, some commission or another will recommend that WMATA be dissolved.

by InArlington on Nov 1, 2010 4:38 pm • linkreport

Closing stations that are close to other stations on weekends would probably save a bunch, no? Off the top of my head, the following stations probably don't need to be open on weekends:

Federal Triangle
Judiciary Square
Federal Center SW

There should be some sort of formula involved: lowest weekend entry/exit + short distance to another station = close the station on weekends.

I don't ride Metro in the suburbs so I don't know if there are any outer stations that could be closed on weekends.

by Anon on Nov 1, 2010 5:08 pm • linkreport

@inArlington: Dissolve it and do what?

OK, so everyone's fired. Trains and buses stop. What now?

Plus, the operating money comes from the governments of DC, Maryland, Arlington, Alexandria, Fairfax County, Fairfax City and Falls Church. They're not going to give hundreds of millions to some entity unless they have power on its board. It's gone, so the governments stop paying.

Now there are no people to run trains and buses and no money either. What do you want to happen next?

by David Alpert on Nov 1, 2010 5:26 pm • linkreport

@David Alpert

To be more specific: dissolve the current governing structure. If the board cannot find a way out of the humongous budget/operational mess, which it helped create by endorsing contracts and pension plans that are now unaffordable, perhaps some sort of new governing entity is necessary.

Exactly what kind of new governing structure should be developed is beyond my purview, as I'm far from being a management expert. It is nonetheless clear the current governance system is faltering in carrying out the agency's chartered objectives.

The safety lapses of the recent past are just one indication of this. Transit fares that are among the highest in the country, if not the very top, are another. Then there are the jammed packed trains which have a troubling tendency to break down. And, please, it's probably best not to get into the never-ending issues with the system's elevators and escalators.

If all this taken together doesn't point to miserable failure in governance, what does?

Sure, increased funded would help. But local governments, as well as state officials in both Virginia and Maryland are growing wary. They've pumped increased funds into the system again and again, only to see WMATA develop even greater levels of red ink. The system's like a giant sinkhole sucking up money and always wanting more. And, the money isn't going for capital expansion projects or increased service, but to primarily cover rapidly spiraling personnel expenses, which management and the board have negligently failed to control.

So, as said before, change is coming one way or another if WMATA continues to adhere to its well worn path of business as usual. This is no longer acceptable. If current board members lack the willpower to effect change, for the good of the agency and the transit riding populace they should resign.

by InArlington on Nov 1, 2010 7:15 pm • linkreport

The current Board did not endorse the contracts and pension plans. The costs were imposed by the arbitrator.

The transit fares are not the highest. Metro is a hybrid between a subway and a commuter rail. You can get around DC for less than you can get around Manhattan, on bus and even more on rail. In NYC, Boston, or many other places you have to take commuter rail to get to someplace the distance of Rockville or Vienna, and that commuter rail costs more.

All transit systems cost money, as do all highways. In other cities there's often a dedicated tax so we don't see the money to the same extent.

Basically the difference is that you are aware of what it takes for WMATA and not the similar things going on elsewhere; hence you think WMATA needs to be blown up when the problems are all in the circumstances and not generally in the governance.

by David Alpert on Nov 1, 2010 7:51 pm • linkreport

Actually, InArlington has hit the nail on the head: governance.

Two of the problems -- pensions and MetroAccess -- have direct connection to board members. Board members who are elected politicians -- or appointed by politicians -- have very limited leverage when it comes to telling unions and local jurisdictions to stuff it.

So the pension problem has exploded in the last two years, and other jurisdictions dump disabled passengers onto overly generous metroaccess.

Governance -- and duties of loyalty of board members -- is a huge problem for WMATA.

by charlie on Nov 1, 2010 8:05 pm • linkreport

@ Everyone: Who would it rest on to make guidelines for who is or is not eligible to be on the board. Graham and Zimmerman need to go and elected officials need to be banned, but who would make such a decision? Could a new GM make that unitarily?

@ Anon: Remember the last time closing stations came up and the odd choices of Deanwood, Cheverly, and Morgan Blvd. I can understand trying to stick it to PG, but 2/3 of those choices were not rooted in reality. Also, Federal Triangle has its purpose on the weekends as a bus terminus and a station close to the western half of the Mall, why close it?

I say close Judiciary Square, Federal Center SW, Morgan Blvd (allow for it to be open for FedEx Field events), and Virginia Square. I think a case could be made for Medical Center as well.

by Jason on Nov 1, 2010 9:31 pm • linkreport

I find it funny that WMATA continues to have breakdowns, rail problems, and overcrowded cars -- yet it's trying to expand before solving these EXISTING problems first.

Silver Line should be delayed until EXISTING problems are solved first.

by Get WMATA working first before Silver Line on Nov 1, 2010 10:30 pm • linkreport

In the short term changing the pension structure will not save them any money next year. Lets say they move to a 30 year retirement plan (like Montgomery county teachers. They could not just phase that plan in for next year. They would have to slowly raise the age over 5 or so years.

They same should be said about overtime, but that could be phased in much faster.

There both things that need to be done, but there long term gains. We would still need to make short term changes.

by Matt R on Nov 2, 2010 10:55 am • linkreport

Unfortunately, unless a more sustainable funding source is identified, Metro (and many transit systems across the country) will continue to have to make tough decisions related to its budget.

What metric will they use to make such decisions? A strict cost-benefit analysis of the most immediate bang for the buck, or a long-term consideration of investment that may be more preferable, but that is unlikely to yield immediate, tangible results that politicians desire? Where does social justice fit into this equation?

by Lewis on Nov 2, 2010 4:02 pm • linkreport

I think the union has made it very clear that the bloated pension plan and the fat WMATA benefits package come before rider safety, system efficiency, and fiscal accountability.

With the Silver Line promising to spread DC's financial recklessness out to Northern Virginia, I expect Fairfax County politicians will do a better job standing up to the ATU and this underperforming, overfunded system than the District/Montgomery/PG politicians whose knees wobble at the sight of a union boss. Now, when WMATA workers are willing to come to the 21st century and take a 401(k), instead of having us finance their 1950s-style pensions, then maybe we can talk about more money from the jurisdictions.

by David on Nov 3, 2010 7:26 am • linkreport

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