Greater Greater Washington

Closing WMATA $72 million gap could include increased local contributions or even station naming rights

According to the latest budget summary released this morning, WMATA's budget starts this season requiring $72.5 million in jurisdictional contributions, unless the region is willing to stomach fare increases, service cuts, or wacky one-time revenue sources like selling station naming rights.


Photo by Beechwood Photography on Flickr.

A number of factors contribute to the deficit, including the cost of wages and fringe benefits, and lower system revenues as a result of lower-than-anticipated ridership growth, which Metro attributes to the economic climate.

WMATA also hopes not to repeat last year's one-time fix of transferring $30 million in preventive maintenance to the capital budget. However, on the other end, it moves $30.5 million in specific projects for overhauls to rail and bus maintenance shops to the capital budget.

At this point, WMATA is not making any proposals about how to close the gap, and the budget document by default shows it as a jurisdictional subsidy increase. Board members and local jurisdictions will have to decide if they can come up with the extra money, which is about 3 times as much as they added last year, or will have to swallow unpalatable service cuts or even higher fare increases.

During the Board discussion, non-public official members Peter Benjamin from Maryland and Mort Downey from the federal government expressed interest in at least exploring further the option to cut late-night weekend service and/or the Yellow Line extension to Fort Totten.

The presentation also lists some more radical ways to raise revenue, including selling station naming rights, which would bring in $1-2 million one time. Other one-time fixes include monetizing leases for development on Metro property to get all the money up front instead of a little every year, and skipping the plan to restore preventive maintenance money to the capital budget.

Metro's board will be reviewing the budget in more detail and approving a final budget before the fiscal year starts in July.

Support us: Monthly   Yearly   One time
Greatest supporter—$250/year
Greater supporter—$100/year
Great supporter—$50/year
Or pick your own amount: $/year
Greatest supporter—$250
Greater supporter—$100
Great supporter—$50
Supporter—$20
Or pick your own amount: $
Want to contribute by mail or another way? Instructions are here.
Contributions to Greater Greater Washington are not tax deductible.

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. 

Comments

Add a comment »

You're leaving out the elephant again: Revenue is down $20 million.

I guess those fares are a lot more elastic than "experts" thought.

by charlie on Jan 13, 2011 10:33 am • linkreport

It's not *down* $20M, it's just falling short of their projections by $20M. So it's a little more elastic than they thought, not a lot more.

by David Alpert on Jan 13, 2011 10:39 am • linkreport

No, I think it is down.

They projected revenue to be the same as 2011; riderdown down but revenue up with fare hikes.

Now revenue is down 20 million, which means both ridership and revenue are down, no?

Rather hard to track:

From november:

FY11 budget reveue: 734 (budget)
FY12 buddet revenue: 735 (forecast)

from today (as I read it) fy12 revenue 710 (forecast)

which might sugget that the FY11 budget numbers are soft too.

by charlie on Jan 13, 2011 10:48 am • linkreport

It also could be due to the fact that economic growth has not been as strong as predicted, which doesn't have anything to due with fare price elasticity.

by Michael Perkins on Jan 13, 2011 10:50 am • linkreport

@Mperkins; that is part of eleasticy; raise prices on a good that isn't very needed and in hard times use of that good will fall.

Also, citing "economic growth" while the DC area has the only decent economy in the country is a bit weak.

I remember trying to crack the numbers in the fall. I suspect gas price (substitute good) that is removing the incentive to take long trips on rail is what is driving the revenue decrease.

by charlie on Jan 13, 2011 10:54 am • linkreport

That slide can be confusing. It shows the changes from the last time they ran the budget projection. It's not the change from the last budget. See how the revenues being down is in the section entitled "changes from Nov. forecast"?

by David Alpert on Jan 13, 2011 10:56 am • linkreport

No, actually, it's not. Elasticity calculations imply the old "ceteris paribus" assumption. Which isn't always the case. There's a contribution of ridership decrease that's due to price increase, and there's a contribution that's due to gas prices, and there's one from macroeconomic conditions. Only the contribution due to price increase can be called "elasticity" in the sense that you're using it, and it's hard to separate from the rest.

by Michael Perkins on Jan 13, 2011 10:57 am • linkreport

I know metro was designed stylistic to be clean and relatively simple, but of the many subway systems I haev rode around the world, metro has by far the least advertising. Yes all things being equal I would like to minimize advertising but all thigns aren't equal.

by nathaniel on Jan 13, 2011 11:01 am • linkreport

Simple, the Feds can x-fer money from sprawl inducing highway expansion...I suggest skipping the sneaky de-facto widening of I-66. ;)

by John on Jan 13, 2011 11:07 am • linkreport

Metro gets plenty of free advertising. They are in the news almost every day.

by Lou on Jan 13, 2011 11:07 am • linkreport

@perkins; right. I am saying lower gas prices are a substitute good, nothing to do with elasticity, but more responsible than the bad economy for decreased revenue.

However, I do think the bad economy can be factored into the elasticity part. Part of the problem is the transit elasticity equations assume commuting to work, which is pretty elastic, but you can see that a lot of train and bus trips aren't work related.

@Alpert; yes that slide is confusing. And I can't find a directory for their presentations. I was using

http://wmata.com/about_metro/board_of_directors/board_docs/110410_3DOperatingBudgetGuidance.pdf

(linked from your Nov article)

which seems to have run the fy12 numbers once already.

by charlie on Jan 13, 2011 11:09 am • linkreport

Station naming rights would be the lamest and tackiest thing since Sarah Palin.

Could you imagine the

"Lockheed Martin Pentagon Stop", or the
"Bloomingdales Friendship Heights" station.

Gag me...

If metro is unwilling or unable to neotiate the terms of the incredibly spendy and posh Union relationship they have, then their other option is simply to raise fares again.

The "jurisdictions need to provide more money" canard is tiring and pointless at this point because all the local jurisdictions are still tapped out.

And lets be honest, with the median income of metro rail riders exceeding 100K, the complete joke that is bus fare collection (I would bet atleast 10% of bus riders don't pay), there is plenty of room for Metro to remedy their cash flow problem without thinking too hard.

by freely on Jan 13, 2011 11:11 am • linkreport

The new GM should get tough with the union come contract renegotiation time. Just tell them that unless they junk the old contract and make major concessions (10% pay cut, pay for performance, removal of the ridiculous work rules, greater hiring/firing flexibility), Metro will do the same thing to them that Reagan did to the air traffic controllers back in the day.

by Phil on Jan 13, 2011 11:19 am • linkreport

IIRC, decreased advertising was one of the causes of the budget shortfall. It seems that Metro can't sell the advertising space that it already has.

Also, the mandatory SmarTrip bus passes should greatly reduce one of the main sources of fare evasion on the buses.

Station sponsorships would need to be approved on a case-by-case basis. For instance, "Nationals Park" would be 100% Okay, while "Lockheed Martin Pentagon" clearly wouldn't. I'd probably be fine with "Gallery Place-Verizon Center," and if the NoMA BID wanted to throw more money at Metro than they already have, they can rename the NY Ave station after their neighborhood.

I'd also prefer "U St - Ben's Chili Bowl" to the station's current name.

by andrew on Jan 13, 2011 11:24 am • linkreport

The real problem here is that Metro's long-term budget outlook is unsustainable, thanks to our friends at the ATU.

In the last budget (or the one before that, not that it matters):
Health Care expenditures grew by 6%
Pension expenditures grew by 9%

That's simply unsustainable- GDP doesn't grow that fast in the long term.

Somebody has to do the responsible thing and put the ATU in its place, because the union is sucking the life out of Metro.

by EJ on Jan 13, 2011 11:25 am • linkreport

No reasonable union would ever accept a 10% pay cut across the board, and staffing reductions should be completely off of the table until the overtime issues are resolved.

A 10% cut would force most people to have to make serious alterations to their lifestyle, and probably cause them to go looking for other jobs. Filling vacancies isn't cheap, and Metro can afford to be more selective when it pays higher salaries, which would hopefully also attract safer and more efficient workers. A 10% pay cut could very well end up costing the agency money.

The fact that Metro has an actual labor shortage suggests that those jobs aren't as attractive as everyone seems to think they are.

by andrew on Jan 13, 2011 11:28 am • linkreport

Exactly how will smartrip prevent bus fare evasion?

Most of it is see is black youths who board in the back and the bus driver is too scared to do anything. And SmartTrip gives you the best option for fare evasion-- just ride once every 2 hours and you can ride for one fare all day.

Pensions; the big problem was WMATA had to make up the pension gap (from loss in stock market) in one year instead of spreading it over 10 years or so. Since the stock market is back, spreading it over time is less expensive.

by charlie on Jan 13, 2011 11:28 am • linkreport

-Eliminate COLA for existing WMATA retirees. Shift the retirement burden to the employees state of residence or the federal government.

-Convert immediately from defined benefit, to defined contribution retirement. Take the hit now, save the system down the road.

If you change the retirement structure, you'll get a massive wave of retirements from people just sitting around waiting until their retirement not doing much. It creates more room for younger employees to move up, lowers the medium term salary burden and eliminates the retirement burden.

by Sheep on Jan 13, 2011 11:38 am • linkreport

@Sheep has the best solution I've heard.

Metro has a cost problem not a revenue problem. They need to bring the costs in line with decreased ridership. That means someone is going to have to take a stand with the Union. I'm really tired of being taken to the cleaners by all the public sector unions. The teachers union, ATU, etc etc.

by Jim on Jan 13, 2011 11:50 am • linkreport

How about stripping the names back to the original, short ones. If some neighborhood wants to add a monument/memorial/museum/whatever, they can pony up.

So I hope that Benjamin Banneker, George Mason, GW, and, of course, the African-American Civil War Memorial can all pony up. And WMATA should charge by the letter.

by ah on Jan 13, 2011 12:23 pm • linkreport

Until the year 2009, I never knew that unions were responsible for:

1) US Automobile manufacturer's near death experience
2) States going near bankrupt
3) Poor performance of US Schools
4) and now Metro's current state of affairs.

Anyone knows the average salary of union workers?

by HogWash on Jan 13, 2011 12:41 pm • linkreport

@HogWash:

No, no. You have to look at the outrageous pensions the unions extorted over the years, as well. You know, before there were 401k's and such, and management negotiated these pensions in order to keep the money and kick the can down the road... ;)

Obviously, unions aren't responsible for the poor performance of US schools. But the teacher's unions *are* a stultifying influence on any kind of reform--as far as teacher accountability goes. That is, after all, what they exist for.

Every teacher I've ever known *knows* who the (few) shitty teachers are in their school. They know. But every year, those bad teachers are allowed to stay and keep teaching. It's a source of frustration to the effective teachers, but what are you going to do? They want those protections in place for all teachers, even if it means some kids need to lose a year of education.

The best idea I've ever heard for teacher evaluation is that you implement peer review, and every year the teaching staff votes 5% of the teachers at a given school "off the island."

So much for vindictive principals and inscrutable and nefarious chancellors.

by oboe on Jan 13, 2011 1:06 pm • linkreport

Instead of selling naming rights to stations, lease them. And hang on to the old signs in case the lease is not renewed.

Also, I have no objections to the Lockheed Martin Pentagon. It would show a degree of honesty otherwise lacking in our government

by kenf on Jan 13, 2011 1:23 pm • linkreport

@Oboe, so the outrageous pensions were the reason for the auto manufacturers going down? Or at least contributed to it. Ok, that may be true. But don't you find it odd that no other reason that the unions is the accepted reason why the companies were failing.

Don't you also find it odd that the only accepted answer as to why schools are failing is because (as Rhee duly/wrongly noted) of the unions. THe unions do serve to protect their members but I think we have done ourselves (more importantly the children we claim to care so much about) a disservice by allowing the issue of "reform" to ONLY focus on teachers.

For example, in MS, they lowered the grading system to where an F now scores at 59 instead of 69. Do you think teachers are to blame for this too? Or did the unions press for this in order to save bad teachers?

Every person I have always known knows someone at their job who is a slacker, lazy, irresponsible etc. Yet, year after year, they remain. And "unions" haven't kept them there. It's more systemic than that. So the fact that we have bad teachers shouldn't surprise anyone. Why? Because there is always someone in every sector of employment who takes advantage of the system.

So then we have novel practices that haven't been shown to bear consistent results.

How are Hardy and Sousa Middle schools doing nowadays?
How is Dunbar doing these days?

It's the unions fault right?

by HogWash on Jan 13, 2011 1:51 pm • linkreport

I'm for naming rights only if the integrity of the original station name is kept. The failed "State St-Citizen's Bank" experiment in Boston was a good sign of what WMATA must do. SEPTA in Philly changing Pattison to AT&T was not.

At the minimum, I think companies based near a station deserve first pick at the naming rights. GEICO &Friendship Heights, Discovery Communications & Silver Spring, any nationwide staffing agency & either Farragut, soon enough Choice Hotels & Rockville plus NPR & Florida Ave. This is money WMATA needs to take now.

by Jason on Jan 13, 2011 1:57 pm • linkreport

@HogWash:

Just a couple of quick comments:

@Oboe, so the outrageous pensions were the reason for the auto manufacturers going down? Or at least contributed to it. Ok, that may be true. But don't you find it odd that no other reason that the unions is the accepted reason why the companies were failing.

I've always thought it was unfair (to say the least) that the auto manufacturers (and most other US industries) awarded generous pensions to be paid in the future which basically strengthened their bottom-line during the boom years. Then, when the time came to live up to those committments, they either couldn't or wouldn't live up to them. That may have been short-sighted or tragic, but the real crime is that those pension agreements were used by may on the American right to beat unions over the head with. Oh those greedy unions, what with their expecting the money they were promised decades ago in lieu of retirement funds!

Don't you also find it odd that the only accepted answer as to why schools are failing is because (as Rhee duly/wrongly noted) of the unions. THe unions do serve to protect their members but I think we have done ourselves (more importantly the children we claim to care so much about) a disservice by allowing the issue of "reform" to ONLY focus on teachers.

I will take issue with you here, though. The charge that reform "only focuses on teachers" is self-pitying hyperbole. There are all sorts of components to modern mainstream school reform: early childhood education, innovations in curriculum, changes in the length of the school year, changes to standardized testing, consolidation of facilities, and yes, attempts to professionalize the teacher corps (through standards, increased teacher compensation and also teacher accountability).

The amazing thing about the DCPS reforms under Rhee was just how few teachers were sent packing. To hear some of the more radical elements of the WTU, you would've thought every third teacher was ridden out of town on a rail.

I think the total number of DCPS employees RIFed were something along the lines of 5%--and that includes management and central office staff. Given that basically no one had been fired for cause in about a decade, that number seems pretty conservative.

by oboe on Jan 13, 2011 2:18 pm • linkreport

Yes, I agree that the right used unions as a wedge issue. The unfortunate part is that the left and center bought into it like a hooker in the red light district. I come from a manufacturing state where it was custom for relatives, friends, and the like were able to obtain a middle class life by working at car plants. Sure, there likely should have been changes in the pension system. But I refuse to buy into this accepted notion that these greedy unions, who represented those averaging 50k/yr were responsible.

I will take issue with you here, though. The charge that reform "only focuses on teachers" is self-pitying hyperbole. There are all sorts of components to modern mainstream school reform: early childhood education, innovations in curriculum, changes in the length of the school year, changes to standardized testing

Uhmm, ok but since we're adults here. Can you honestly sit here and say that most conversations surrounding school reform (i.e. why they are failing) was focused on early childhood education and changes in the school year? Heck, we have to go no further than here in DC. At what point doing the elections toxic campaign cycle did you hear references to the "other components of school reform." Believe me, I watched it closely and even a cursory online search reflects my opinion on this.

I also agree that Rhee didn't RIF that many teachers, like 200. Especially when compared to her predecessor who RIF'd 370. And according to the WPost, the person who urged him not to fire even more was none other than Rhee protegee, Kaya Henderson.

But here are a couple of references:
Janey also took flak for firing principals [http://www.washingtonpost.com/wp-dyn/content/article/2005/07/06/AR2005070601072.html} July 7, 2005]. He told The Post that 25 to 40 percent of the system's 140-plus principals "aren't the caliber they need to be."

Janey also moved to close schools. He presented to the board a schedule to remodel more than 100 schools and close or consolidate 19 others [http://www.washingtonpost.com/wp-dyn/content/article/2006/10/24/AR2006102401713.html Oct. 25, 2006]. His plan was not formally adopted, but he managed to consolidate nine schools in the summer of 2006 and was poised for another round of closings in 2007 when Fenty lowered the boom.

This information is easily verifiable and I have yet to see anyone refute these facts. You claim I'm engaging in hyperbole? Yet, here you are claiming that no one was fired for cause in a decade? Now what are you basing that claim on?

I'm happy to debate facts and leave the hyperbole out to hang dry.

And you really think the debate was focused on early childhood education? Wow!

by HogWash on Jan 13, 2011 3:15 pm • linkreport

I would like to correct what I believe is an inaccurate characterization of WMATA Board Chair Peter Benjamin's question about late night bus service. Mr. Benjamin simply asked a question as to whether the $3 million figure shown in the staff budget presentation as the cost of late night bus service on Friday and Saturday overnights also included the late night rail service. Staff told him the $3 million included both bus and rail service even though the presentation material referred only to bus service.

With respect to the off-peak extension of Yellow line service north to Fort Totten, a Board member wanted to know how many people ride or board trains in the Yellow line extension area.

Board members are likely to ask for a lot more data on WMATA's proposed FY2012 operating budget as the five month budget review process gets underway. No one expressed any interest in doing anything beyond gathering data.

by Steve Strauss on Jan 13, 2011 4:12 pm • linkreport

Not much more to add since I'm having some difficulty following the exact numbers, but what would be perhaps useful is to get an itemized layout of what are the costs showing the largest growth. I hear a lot about the pensions, the salaries and so on being the biggest cost growth item, but the way its laid out is difficult to see.

Once you have an idea of where the highest cost increases are coming from, you have a set of items to focus on. And I'm sorry to say that if it's again MetroAccess, then it's time to cut it to the bare federal minimum - especially if the 2 million MetroAccess trips are essentially holding hostage 341 million bus and rail trips.

by varun on Jan 13, 2011 5:21 pm • linkreport

Public sector unions are one of the largest problems in the world. If you don't agree I would encourage you to read the cover story in the Jan 6th edition of the Economist. In case the link below doesn't make it you can find the article on the Economist website.

http://www.economist.com/node/17851305?Story_ID=17851305

by Jim on Jan 13, 2011 7:27 pm • linkreport

The one thing that hasn't been mentioned is the tremendous cost in replacing all of the metro signage if they sell the naming rights. Every train car has multiple rail maps. Every station has columns with station names. What happens in the future if the business merges or is bought out by someone else (ATT/Cingular for example) and then the maps have to be changed once again. The cost will far exceed any short term financial gain for Metro.

by Donald on Jan 13, 2011 8:34 pm • linkreport

I ride metro bus frequently, and I would estimate that I board a bus with a broken fare box about once per week. There are your revenues, metro.

by kelsey on Jan 13, 2011 10:14 pm • linkreport

The problem of ATU bashing and the WMATA board is there is little direct connections. Is (was) Zimmie in the tank for unions. Yes. But when it came time to eviscerate the firefighters union in Arlington he really did it. Same with the others -- I don't see much evidence that ATU or brother unions pressured the WMATA board into the collective barganing agreement.

That agreement, however, is very problematic. Between work practices, hiring (rail only comes from bus) and pension it is strangling WMATA. Let's be honest, though. I don't see Circulator providing a different magnitude of service - and they are non-union.

MetroAccess need to be cut cut cut. I'm sorry, but they deserve the same crap service as the rest of get.

I'd agree that broken bus fare boxes/illegal rides and what not are a significant (more than 10%) of bus fares; however, bus fares as a whole are a small part of WMATA revenue.

by charlie on Jan 14, 2011 9:20 am • linkreport

@ charlie -- It's my understanding that Metro Access generally provides even crappier service than the rest of us get. I've never waited more than an hour for a bus and have the driver tell me he can't locate a major landmark in the city. I do know of that happening to people to depend on Metro Access

It's just extremely expensive crappy service. The question is how can Metro serve those people at a reasonable cost, with a reasonable level of service?

by Kate on Jan 14, 2011 12:21 pm • linkreport

@ Kate; actually, you are right. Between the various creepy rapists they employ and waits, it is crappy service.

That being said, let me be clear: I would be in favor of discontinuing metro access completely. I don't see why we should pay to bus cripples around. Sorry.

However, ADA does mandate some level of service, so I'd look at the following:

1. Reduce service to bare minimum that ADA requires
2. Track users better -- and deny it to people who use it too much. And if they are getting to work on it, make their employers (usually the feds, b/c private sector won't hire those people) pay. Likewise for medical visits. I know medicare has been cutting back on this
3. Find ways to make it more bus like -- regular service.
4. Manage the contract better -- I don't think WMTA is doing a good job on this. Didn't the Cato move on to company that runs this?
5. stop free rides for disabled on regular service

Ugly and brutal? yes. I'm sorry. MeroAccess is destroying transit for everyone else. Needs of the many, etc.

by charlie on Jan 14, 2011 12:56 pm • linkreport

1.
2. This is illegal and Metro got sued for providing such poor service in the past.
3. This is illegal.
4.
5. Metro did this for people that are unconditionally eligible. I thought this was a dumb decision, because you want people to have an incentive to ride the service you're already providing to the public rather than the expensive per-trip service you're not. Metro had a really dumb answer why they wanted to cut this.

by Michael Perkins on Jan 14, 2011 2:09 pm • linkreport

Regarding my points 2 and 3:

tracking users is illegal? Or denying heavy users service? I suspect there is a small core of heavy metroaccess users that is running costs up. Once a week to the doctor. Sorry, but that is really a medical benefit and needs to be managed as such.

And in 3, more bus like service means picking up regular users on a schedule and using the same bus. I don't see how that violates the ada.

by Charlie on Jan 14, 2011 4:35 pm • linkreport

@charlie: Denying users rides is illegal. You're not allowed to track and ration use or deny use based on type of ride. DC has recently de-funded Medicaid supported trips, dumping passengers on Metro.

Metroaccess does allow subscription trips and when possible, it combines passengers together.

by Michael Perkins on Jan 14, 2011 7:05 pm • linkreport

An important element to keep in mind--at its been mentioned at least once on either this site or transportpolitic--that public transportation is more than just a convenience for urbanites or a green alternative. It is a matter of social justice. Issues like limited weekend service, while inconsequential to most, hurt the ability of lower-income workers--who are more likely to work weekends--to get to their work efficiently.

In that same vein, MetroAccess provides a service for people who would be unable to reach the places that they need to. Eliminating it, as charlie viciously suggests, would be illegal and discriminatory.

In fact, when planning was being done for BART and the Washington Metro, dial-a-bus services were found to be far more cost-effective than making an entire system accessible. In DC's case, we chose to go with both, perhaps incorrectly.

The problems of escalator maintenance have been well-documented on this site. If we are going to scapegoate someone, the only option is the dysfunction of the union system in wmata. It would be better, however, to take a holistic approach and see where and what could be cut or improved, rather than taking pot shots at the disabled...

by thesixteenwords on Jan 15, 2011 1:21 pm • 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