Posts about Metro Matters
Maryland has announced they will pay their share of capital money under Metro Matters for FY 2010 and support funding a new FY11-16 agreement at the $5 billion level.
The proposed new agreement also provides more assurance that jurisdictions will pay for projects, but there are still some questions about the details and whether a jurisdiction can back out too easily.
WMATA management has released some of the details of the current proposal, to be presented to the Board Thursday. It includes most of the provisions of the earlier option III that requires jurisdictions to match federal grants but calls for annual discussions regarding funding levels for "system performance," additional local contributions over and above matches to federal grants.
Each year, WMATA would adopt an annual work plan containing nine broad categories and a specific list of projects. They would provide an estimate of required local funds for the succeeding fiscal year. Once the work plan is approved, jurisdictions would be required to pay for those projects, and keep the money coming as the projects proceed.
However, it's still unclear how the annual review relates to the the six-year commitment to $5 billion. Could a jurisdictions simply push for a lower annual work plan one year, reducing their overall progress toward a state of good repair without making it up in the future?
Under the proposed agreement, WMATA would also need to secure a line of credit. This would cover any short-term cash flow issues between when WMATA has to pay for work on a project and when they bill jurisdictions. Jurisdictions will pay when WMATA expends the money rather than with a fixed, quarterly upfront payment. WMATA estimates a relatively low cost of $5 million over the FY 2011-16 time frame to cover this line of credit, since they will only need to draw on it for short periods of time.
This reduces jurisdictional capital payments in the near term, as expenditures lag obligation, and then increase them over the long term, as projects really get underway. Jurisdictions had previously criticized the fact that much of the Metro Matters money was sitting around unobligated.
As a result, WMATA will have to work harder to obligate and expend funds, which makes sense. GM Richard Sarles has proposed hiring additional staff to accelerate the contracting and compliance process.
It also means that rather than regular fixed amount payments that can be planned and budgeted for, jurisdictions will have to prepare for potentially widely varying payments based on actual expenditures.
The WMATA Chief Financial Officer can approve re-programming of projects within each category, but when the level reaches 50% of a category, they will have to notify the WMATA Jurisdictional Coordinating Committee and get approval from the Board is required. Unexpended funds from completed projects will be rolled into the following year.
Debt service and "state of good repair" projects have first claim on all funds for which they are eligible. Multi-year projects will have first call on available funding sources in the out years.
The crucial issue in this Metro Matters renewal will be whether the terms of the "annual review" will permit subversion of the six year plan. Except for that potential loophope, this agreement seems to be a good one. The six-year $5 billion funding level is likely the highest amount that jurisdictions can afford at this time. Provisions that require WMATA to obligate and spend its capital funds at a higher rate are welcome aspects of the proposed agreement.
The O'Malley Administration has backed off its attempts to reduce capital funding for Metro.
Ann Scott Tyson is reporting that the state will reinstate its FY2010 capital payment of $28 million, and commit to a new agreement maintaining the $5 billion long-term capital program. That's the level of capital spending that had been expected all along until Maryland suddenly pulled the rug out.
In exchange, WMATA officials will provide greater transparency over how it's spending money, and try to speed up its rate of obligating the money toward actual projects. Both of those reforms can only be good for riders, jurisdictions, and Metro alike.
The specific structure of the new capital funding agreement wasn't addressed in the article. The most recently released proposal had only required jurisdictions to match federal funds, but allowed them to make a decision each year about whether to continue or withhold their support. Because of that uncertainty, WMATA would need to secure a line of credit so it could promise to pay for projects, which would cost about $5 million.
One of the advantages of the former Metro Matters agreement was that with the long-term commitments for funds, WMATA could obligate projects knowing the money would come in. The jurisdictions should agree to a similar structure here. The previous agreement did have some weaknesses, in that the projects to be funded had been worked out in 2005 but priorities changed from 2005 to 2010. However, a new agreement could address those problems without also creating dangerous uncertainty.
We'll be monitoring the details, but this is a big victory for transit advocates. Sierra Club, the Coalition for Smarter Growth, the Action Committee for Transit, Transit Riders United of Greenbelt, Greater Greater Washington, and many others pushed the O'Malley Administration to take this issue seriously.
The press also did an excellent job of reporting on this issue and its import, particularly Kytja Weir at the Examiner and Bob McCartney, Ann Scott Tyson, Bob "Dr. Gridlock" Thomson and the editorial board at the Washington Post. Board members Jim Graham of DC and Chris Zimmerman of Arlington effectively pushed this issue and kept it on the front burner.
There are plenty of ways Metro can improve, and we will be reporting on some of those soon. The operating budget for FY2011 is not finalized and there are still ways to improve it as well. However, it's also clear that jurisdictions can't shortchange transit. It's too important to the economic health of the region and to so many people who depend upon it every day.
Maryland Transportation Secretary Beverley Swaim-Staley wrote an op-ed in yesterday's Post, insisting that "Maryland's commitment to WMATA cannot be questioned" and that "Maryland will deliver for WMATA when needed." She makes several good points and announces greater support from the O'Malley administration for transit, but the deleterious effects on the WMATA capital budget remain, despite her assertions that Maryland "will deliver."
The most promising part of the op-ed appears to say that the state will not require bus cuts to make up its portion of added jurisdictional funding requested by the Sarles budget. Interim GM Richard Sarles' proposed budget, which gained general support from most WMATA Board members on April 22, requests $26 million in increased jurisdictional contributions. However, while Maryland representatives Peter Benjamin and Elizabeth Hewlett said Maryland would meet its share, they held out the possibility that some of that would come from bus cuts in Montgomery and Prince George's Counties.
Swaim-Staley says Maryland will increase its contributions: "Maryland will provide... a 6.5 percent increase in the operating subsidy, consistent with the latest budget proposal put forth by interim general manager Richard Sarles. This subsidy increase provides $9 million to cover the growth of MetroAccess in Maryland and $5 million to reduce the need for service reductions elsewhere." Previously, Maryland had offered the $9 million, so this is a new commitment of $5 million more.
She also defends Maryland's deferring capital contributions:
Maryland has determined that it will defer a portion of its capital funding for WMATA this year, a sum of $28 million, until the money is actually required rather than make an up-front payment to WMATA. The reason is simple. WMATA simply can't spend the capital dollars it already has. In this fiscal year, the agency is budgeted to spend $623 million on capital improvements under the Metro Matters part of its budget. As of April, with just three months left in the budget year, it had spent only 40 percent of that money. The reality is that WMATA won't be able to spend the remaining 60 percent.It's indeed true that WMATA has some unspent capital floating around, but as Craig Simpson argued, it's not quite the mismanagement it sounds like. The Board has discussed ways to either speed up the process or hold back some funds. It's reasonable to discuss ways to fix this problem. However, while it's true the $28 million deferral this year won't slow down repairs and upgrades, the expected deferral for next year, and the suddenly smaller capital budget, will.
This is not unusual for transit properties. Planning, design, engineering and other factors can experience unforeseen delays. But the fact remains, $375 million is in WMATA's bank account, just sitting. Given the impact of the economic downturn, Maryland cannot allow its funds to simply sit. We are using our existing taxpayer dollars to fund shovel-ready, job-creating projects. To divert money from those worthy projects to sit idle in a bank account would be a drag on the regional economy.
Maryland essentially hit the capital budget three times. Just one of the three isn't harmful, but all three together sure are. Swaim-Staley is just defending the one and not addressing the others. She does talk about holding WMATA more accountable, and that's laudable. There's probably some fat in the capital budget. Maryland representatives could say what that is, and outline some specific ideas for reform. But just cutting off funds to replace dangerous and aging railcars won't magically increase accountability. It's just penny pinching.
Until recently, everyone had been expecting the new Metro Matters program to keep funding levels about the same as the 2006-2010 program. That provided about $645 million per year, excluding $200 million in FY10 stimulus money. Add to that the $300 million in "dedicated funds," half from the federal government and half from local jurisdictions, and WMATA would have about $9.5 billion over 10 years.
WMATA has identified capital needs of about $11 billion, leaving it $1.5 billion short. Maybe some of that isn't really necessary, but the $9.5 billion almost certainly is.
Knowing that Maryland (and the other jurisdictions, to a lesser extent) faced short-term budget problems because of the economy, WMATA offered to "back-load" the next capital budget, with smaller payments now growing to larger ones in future years. It would also have scaled the entire budget back to total about $9 billion over 10 years, leaving a $2 billion gap.
However, when Maryland announced it wanted even smaller commitments, WMATA again scaled back the capital budget by $460 million over 6 years, delaying or canceling many projects including replacing the 1000-series railcars, upgrading power systems to accommodate 8-car trains, which are necessary to avoid overcrowding, and the test track and commissioning facility needed to get 7000-series cars into service fast enough to open the Silver Line on time.
This doesn't sound like Maryland "deliver[ing] for WMATA when needed." Cutting important projects out of the 6-year plan isn't keeping what's needed. If Maryland wants to push for an agreement where they actually pony up money closer to the time it's actually needed, but which maintains the previous 10-year spending timeline, fine. The previous Metro Matters agreement doesn't need to be renewed exactly as is.
However, the O'Malley administration can't ask WMATA to cut its repair and upgrade schedule for vital components and then say the state will be there for WMATA. It just doesn't ring true.
The way to ensure the state will fund a project is to make a firm commitment. With the Intercounty Connector, the state borrowed against its future tolls and federal aid, making it impossible for them to reverse course even when the economy turned and their budget situation became dire. They shouldn't shortchange transit by forcing WMATA to beg for jurisdictional dollars every year when highway projects that are bankrupting the Transportation Trust Fund get their guaranteed share.
The O'Malley administration should sign a commitment to provide funds up to at least the $9 billion level on some schedule, a commitment that would withstand any shifts in circumstances. Anything else doesn't deliver.
Metro needs new railcars soon, but efforts to order new cars have hit a few bumps. MWAA, which is managing the Silver Line project, is objecting to costs, and Maryland's cuts to capital spending could imperil the needed commissioning facility at Greenbelt. If Metro can't buy and commission new cars, the Silver Line might not be able to open in 2013.
MWAA balks on railcar costs
On Thursday, the Washington Post reported on objections about railcar costs by the Metropolitan Washington Airports Authority, which is building the Silver Line.
Before the line can open, WMATA needs 64 railcars to operate the segment. The first 64 railcars of the 7000 series will be paid for by the MWAA, but purchased by WMATA.
Additionally, Metro is purchasing 300 cars to replace the 1000 series. Because of the size of the order, Metro is getting a bulk discount. The cost for Metro's additional railcars will be about $2.5 million per car.
The rub, as far as the Airports Authority is concerned, is that they're being saddled with the design costs. This means that their cars will average $4 million apiece. Unfortunately, they only budgeted for $3 million per car, and they're balking at the higher cost.
MWAA believes that the design costs should be spread evenly across the entire order, since the 7000-series will benefit the entire rail system and not just the Silver Line.
The Airports Authority says spreading the design costs evenly across the 64 railcars for Tysons, the 300 for 1000-series replacement, and the 64 cars for the Dulles/Loudoun extension would bring the average railcar price to $2.7 million. That would increase the cost to Metro by about $60 million, but would decrease the cost to MWAA by about $166 million.
Officials at MWAA say that unless Metro eliminates the $75 million increase in the overall price of the first 64 cars, they won't okay the purchase.
If MWAA decides to go it alone on the purchase, they probably won't end up getting a better deal, and they will certainly delay the arrival of the cars.
Commissioning facility delayed
Another rough patch for the 7000 series are delays to the Railcar Commissioning Facility. Because of the volume of railcars being purchased and the short timeframe, Metro needs to construct a commissioning facility.
This facility is expected to cost $60 million, and will be located at the Greenbelt Rail Yard. It will include a 2.25 mile test track between Greenbelt and College Park. It will allow WMATA to process 16-20 new railcars per month and will eliminate the need to single-track revenue trains while cars are being tested. The test track will run along the west side of the Green Line from Greenbelt Yard to Paint Branch Creek, just north of College Park Station. No new land will be needed for the commissioning facility or the test track.
Unfortunately, due to the inability or unwillingness of Maryland to commit to a new capital funding program, Metro is deferring the Commissioning Facility and other projects. This will severely hamper the ability of Metro to test and accept new railcars, and inconveniences passengers.
Without the facility, Metro will only be able to accept 8-12 railcars per month and riders on the Green Line will face single-tracking for long periods, although not at rush hour. With the facility, Metro said they could accept the full order of 748 7000 series cars in 5 years. Without it, only half as many cars can be accepted per month. That could mean that it would take a decade to commission the new fleet.
Delays due to the lack of a commissioning facility will keep new railcars from riding the rails. It will delay new cars for the Tysons extension and it will delay replacement of the aging 1000 series cars.
Delays could threaten Silver Line
Time is running short to order the new 7000 series cars for the Tysons extension of the Metro. Without fleet expansion, the line may not be able to open.
The railcars take time to manufacture and be tested. The 4 prototype cars are expected to arrive in Greenbelt in December 2012. The remaining 60 cars for Tysons are expected to begin arriving in Summer 2013. Without a commissioning facility, Metro will only be able to process 8-12 cars per month. Best case scenario (12 cars per month) means the 60 cars will be ready in November. Of course, Metro's own schedule doesn't call for the base order of 64 cars to be complete until April 2014.
With the Silver Line expected to open in December 2013, any delays could mean that not enough cars will be ready. The line can probably open with fewer than the full compliment of railcars initially, because it will take time for demand to increase, but the fleet does need to increase to some degree initially in order to keep from cannibalizing service on other lines.
Delays could crop up because of manufacturing or acceptance delays, or especially if WMAA goes it alone on the railcars. And that worst-case scenario could mean that even if the rail line is finished, opening could be delayed until enough railcars are made available.
This happened in Atlanta. The initial MARTA segment was supposed to open in December 1978, but the lack of railcars, which were delayed at the manufacturer, pushed the start of service back to June 1979. Even then, service was limited to only a few hours each day, with no weekend service.
This is the real threat facing the Silver Line. The region cannot afford to defer projects like the Commissioning Facility, nor can it afford squabbling over funding. All three of the jurisdictions need to step up to the plate and fund Metro.
And Metro needs to smooth feathers with MWAA. This hiccup over costs needs to be worked out as soon as possible. While the Silver Line has a contingency fund, this dispute is really about the equity of the bill, not the amount. And Maryland needs to fully fund Metro so that as new cars arrive in the area, they can be put into service with all haste.
An editorial in today's Washington Post warns that the O'Malley Administration's withdrawal of capital support is putting Metro "on a slippery slope."
[Th]e $1.46 billion budget that Mr. Sarles has proposed for the fiscal year starting in July would meet current maintenance needs partly by raiding $30 million from the pot of money that's supposed to pay for upgraded trains, buses, equipment and facilities.
Granted, that's just 5 percent of annual capital spending. But for a transit agency whose infrastructure is as aging and accident-prone as Metro's, it's a foolish move and creates a budgetary hole that will be difficult to fill in the future.
Mr. Sarles was apparently led to this budgetary gimmickry mainly by foot-dragging by one of Metro's funding partners, the state of Maryland. Virginia and the District have indicated that they're prepared to find additional funds so that Metro needn't raid its capital budget. ... It's troubling that Maryland won't dig slightly deeper to safeguard Metro's future. ...
It's equally disturbing that Maryland appears to be edging away from its promise to meet Metro's long-term infrastructure needs, which are estimated at $11 billion over the next decade. ... In its latest projections, Metro slashed its capital budget for the next six years by almost 10 percent, to about $4.6 billion, making it increasingly unlikely that it will reach the 10-year, $11 billion target for modernizing the system.
Metro, sorry to say, is on a slippery slope, and Maryland is pushing it downhill.
Arlington County has finalized their budget including more money for WMATA, the Post reported this weekend.
County Board member Chris Zimmerman, who is also Arlington's representative on the WMATA Board, specifically talked about transit funding:
"Arlington is saying if the other jurisdictions will step up to the plate, we will be willing to ensure that we don't retract service [and] that we don't cut back on the investment in the infrastructure by raiding the [Metro] capital budget, as is potentially on the table," said [Zimmerman] ... He said he believes Northern Virginia is committed to doing so, but is not sure about the District and Maryland.As Craig noted this morning, Maryland is currently looking at making extra bus cuts rather than increasing their contribution. Interim GM Richard Sarles' budget proposal asks Maryland for $13.9 million, of which $3.5 million will come from the state and somewhat less than $3.8 million could involve bus cuts.
The rest will have to involve state or local money. The Maryland legislature passed a bill to limit taxes for Park and Planning that would cost Prince George's $18 million. According to a source familiar with the situation, a potential deal is in the works for Governor O'Malley to veto it in exchange for the County using some of the local funds it saves to close the WMATA budget gap.
Weir also notes that "The board is using the annual $300 million to displace about $138 million of the local contributions by jurisdictions, says Jack Corbett, of the MetroRiders.org transit group. "Congress intended this as new money, not replacement money," he said.
Congress approved $150 million a year in new capital money as long as it was matched by jurisdictions, one-third from each. Some, including Corbett, expressed fears at the time that jurisdictions would just count some of their existing capital "overmatch" from Metro Matters toward their $50 million. At January's RAC meeting, I specifically asked WMATA Board Chairman and Maryland member Peter Benjamin whether Maryland would do this; he said they would not. Clearly, a lot has changed.
At today's DC Council budget hearing on DDOT, Committee Chairman and DC WMATA Board member Jim Graham strongly emphasized that DC does not want to see the capital budget cut and he is not pleased with the sudden windfall of capital money DC won't be giving WMATA.
Graham also said the WMATA General Counsel has issued an opinion on a technical but important question: Whether Maryland's lack of payment for capital obligations in FY2010 is a "failure to pay" or a "failure to appropriate." Apparently, Metro Matters says that if a jurisdiction doesn't pay what is promised, WMATA can borrow the money on its behalf and charge interest, but if the legislature of that jurisdiction just never appropriates the money, they can't. There was some question about which it was, and for at least some of the money, the General Counsel believes it's a "failure to pay."
I'm trying to get a copy of the letter. As is sadly the case with most of this sordid saga, it was handed out to Board members in executive session. This is a legal opinion so it could be valid, but WMATA management and the Board continue to keep many details from the public.
The press has been thoroughly covering the impact of interim WMATA GM Richard Sarles' proposed modified FY2011 operating budget, which has significant and immediate impacts on riders, but the much more important story from yesterday's Board meeting is how the O'Malley Administration kneecapped prospects for repairing Metro's aging infrastructure.
To almost everyone's surprise, the 5-year capital program discussed yesterday suddenly had $460 million less for the next five years than previously planned. Board members and jurisdictional staff alike have confirmed what we pretty much knew: this is all coming from Maryland.
DC and Virginia are prepared to contribute their share of capital improvements necessary to replace aging and potentially unsafe railcars, fix elevators and escalators, upgrade power systems to accommodate 8-car trains, replace buses, and more.
However, because the O'Malley Administration decided they don't want to contribute, WMATA has scaled back the expectations from all three jurisdictions. DC's Jim Graham said, "DC is going to get a windfall that we don't want."
WMATA has identified over $11 billion in capital needs for repairs and upgrades to maintain the current system over the next 10 years. The new plan only funds about $4 billion for the first 5 years, leaving $7 billion for the second half of the decade. It's very unlikely that after making much lower commitments, area governments will suddenly be able to dramatically scale up their contributions.
On Wednesday, Congress held a hearing on WMATA safety; if I'd known about this in time, I would have told the committee that the biggest threat to the safety of federal workers right now is the bad fiscal management and poor priorities of the O'Malley Administration. Hopefully no more people will die because of obsolete railcars, failing track signals, or crowded platforms because of Governor O'Malley.
As Craig explained yesterday, WMATA staff also presented three options for renewing the Metro Matters agreement, all of which are much worse than the current agreement, dropping the long-term commitments for capital funding that has helped Metro make much more progress on repairs than it could before. DC and Virginia were prepared to renew that agreement with only minor changes; the O'Malley Administration has sabotaged that as well.
It's disappointing that WMATA staff just went along with this. They didn't raise the alarm to the Board, saying that the capital program was being compromised; they just went and trimmed the program. When questioned, interim GM Richard Sarles agreed that WMATA needs the money, but said that they are working from what's available. Clearly frustrated, Arlington's Chris Zimmerman said "The money is never there, you have to go get it."
When Sarles came in, there was much hope that he could make the tough decisions since he wouldn't be afraid to lose his job. Maybe he still will internally, but he doesn't seem willing to push back against the "race to the bottom" situation where the cheapest jurisdiction dictates the quality of transit service for its own residents and the rest of the region.
It's also disappointing that Board Chairman Peter Benjamin has been pushing this plan to sacrifice safety, and doing so in secret. There weren't any public hearings on the capital budget. In fact, Maryland kept secret the fact that they had requested to defer some FY2010 capital payments for months, and WMATA staff were complicit in keeping quiet. While Benjamin was loudly pronouncing that taking money from capital was "mortgaging our future," on behalf of the O'Malley Administration he was simultaneously telling WMATA that Maryland wouldn't make its payments.
The WMATA Board should not permit this utter capitulation. We know why Maryland is in trouble: they mortgaged their transportation solvency to build the ICC and widen I-95. Now they want to put the pain of these choices on everyone who wasn't contributing to traffic by riding transit, and everyone who doesn't even live in Maryland.
The Maryland legislature passed a bill to form a committee to recommend long-term transportation funding solutions, to report back after the election. If Governor O'Malley and other state leaders don't want to make the tough calls now, they should do the same thing they did for the road projects: borrow the money themselves, instead of making WMATA do it, and pay that money back with the funds raised if the Legislature can pass a fix next year.
The three jurisdictions can still renew the Metro Matters agreement as is, with direct contributions from DC and Virginia as they are prepared to do, and borrowing from Maryland that is a state obligation rather than a WMATA obligation. If Governor O'Malley isn't willing to do this, voters should seriously question whether he's capably leading the State of Maryland or not.
The consensus emerging from months of negotiations between area jurisdictions that fund Metro is for fewer dollars for capital projects and diminished guarantees that the dollars committed will actually materialize.
The WMATA board will be updated today and presented with three possible capital funding agreement renewal options. All them provide fewer dollars and fewer guarantees than the current Metro Matters agreement.
All involve WMATA purchasing a line of credit to pay for certain projects and then billing the local jurisdictions. And all include lower funding commitments from jurisdictions immediately, starting with $95 million less than originally budgeted for FY11.
Under the Metro Matters agreement, jurisdictions agreed to certain levels of payment for certain projects (though the projects could be changed or moved by agreement). The agreement worked well. WMATA obligated and spent capital funds at a much faster rate than before Metro Matters.
After years of poor maintenance, system repairs began to move in the right direction. The jurisdictions planned in advance for the payments that would be due and the system worked well until this year when the O'Malley administration decided not to make its payments in a timely way, then began resisting renewing its commitments.
The options for the next agreement include:
- No funding agreement, line of credit instead: WMATA would take out a $900 million line of credit ($500 for railcars, $400 general). Pros: This would permit multi-year projects, provide jurisdictions with flexibility, and allow for increases in capital funding. Cons: It means a reduced jurisdictional commitment, allows for decreases in capital funding, and the cost of the line of credit could be as much as $55 million.
- Partial agreement for long-term contracts only: Jurisdictions agree to fund some longer term projects, and WMATA takes out a $250 million line of credit to support annual program. Pros: It permits savings for multi-year projects, gives jurisdictions flexibility, and allows for increases in capital funding. Cons: It creates separate classes of projects, may privilege ribbon-cutting projects over basic maintenance, allows for decreased capital funding, the cost of line of credit could be about $12 million, and there's an incentive to "pack" projects into partial agreements to assure their funding.
- Flexible six-year agreement: Jurisdictions make a minimum funding agreement to match federal funds, plus an annual evaluation of additional funds; WMATA akes out a $250 million line of credit to support the annual program. Pros: Allows jurisdictions some flexibility, provides a minimum commitment, allows flexibility of having all projects under "one roof," and allows for increases in capital funding. Cons: This establishes only a minimum commitment, allows for the decrease of capital funds, and requires annual discussions with jurisdictions for additional funds above federal match.
Worse, there will apparently be less money available over the coming years. About $460 million less over the next six years is projected to be available due to decreased assumptions on the availability of federal formula grants and, significantly lower contributions from jurisdictions.
The documents show what important projects WMATA management proposes to defer or cancel based on jurisdictions' recalcitrance:
|Bicycle & pedestrian facilities: Capacity improvements||1.8||-1.8|
|Replacement of bicycle racks & kockers||2.6||-2.6|
|Bus garage capacity enhancements||59.3||-59.3|
|Bus & rail asset management software||25.7||-25.7|
|Test track & commissioning facility||60.0||-60.0|
|Maintaining NextFare system||5.4||-5.4|
|Open bankcard and automatic fare collection systems||15.5||-15.5|
|Police substation: New district 2||12.1||-12.1|
|Service vehicle replacement||34.4||-5.1|
|MetroAccess fleet replacement||63.5||-4.7|
|Switch machine rehabilitation project||6.0||-0.9|
|Bus priority corridor network enhancements||16.9||-4.5|
|Data centers and infrastructures||35.9||-29.1|
|Document management system||15.3||-14.8|
|Sensitive data protection technology||24.5||-5.8|
|Management support software||38.5||-9.9|
|Metro IT OneStop and office automation||29.3||-10.2|
|Network and communications||29.7||-9.9|
|Network Operations Center (NOC)||20.9||-7.8|
|Customer electronic communications &||12.0||-3.8|
|Rail operations support software||35.4||-8.2|
|1000 Series railcar replacement||830.7||-123.2|
|Rail shop repair equipment||24.6||-1.3|
|8-Car train power upgrade||25.3||-1.4|
|Bladensburg shop reconfiguration||39.1||-13.2|
|Building power upgrade||10.0||-6.4|
|Southeastern bus garage replacement||50.0||-4.3|
|Financial planning, project administration, and||24.6||-7.9|
|FCC radio frequency communication changes||21.0||-0.2|
|Bus preventive maintenance||92.2||-17.1|
|Antenna reduction/security enhancements||4.0||-4.0|
|Bus capacity enhancements: Fleet expansion||16.9||-16.9|
|Station entrance canopies||34.9||-34.9|
The new capital budget adds about $300 million worth of new projects. Net, the new capital budget has $460 million less for projects.
All of these will affect service quality in some way that affects riders, but some of the most significant are delaying the replacement of some 1000-series railcars and delaying entirely for five years power upgrades needed to support more 8-car trains, which is necessary to add capacity and reduce crowding.
Before to this latest proposal, WMATA was projected to be about $3.5 billion short of its ten year capital needs, providing level federal and jurisdictional funding and the $300 million per year in federal funds matched by jurisdictions. This latest development pushes that number to about $4 billion short.
Prior to the Metro Matters agreement, the rail system that began operation in 1976 had aged and had fallen into disrepair without funds for replacement and upkeep. The bus system continued to run archaic buses out of prehistoric garages.
Former General Manager Richard White led the campaign for rehabilitation of infrastructure and equipment that resulted in the Metro Matters agreement that provided for partial funding of WMATA's capital needs. The 2005-10 agreement provided for substantial increases in funds along with guaranteed payments to WMATA by the jurisdictions for specified capital improvements.
The campaign continued under John Catoe with the successful passage of WMATA Compact amendments last year that provided for $150 million in federal capital funds to be matched by $150 million in local funds in addition to the Metro Matters funds. These current proposals are a step backwards at the worst of all possible times.
Maryland is opposing renewing the Metro Matters agreement for capital funding, according to a source familiar with the negotiations. This step would significantly handicap WMATA's future
The 2005 agreement provided for reliable, dedicated annual capital funding from local jurisdictions. Before Metro Matters, jurisdictions funded WMATA capital programs on a year by year basis. As a result, they had trouble starting capital projects because they couldn't sign a contract that extended into the future beyond the money they already could count on.
Instead, they had to wait to save up money for projects, meaning that the money jurisdictions did contribute would sit idle for long periods of time. Only about 39% of funds were obligated at any time, which rose to 82% under Metro Matters.
In place of a new Metro Matters, according to the source who spoke on condition of anonymity, Board Chairman Peter Benjamin (on behalf of Governor O'Malley) is recommending WMATA establish a line of credit instead and a set capital budget level of $700 million per year. Jurisdictions would determine their levels of contribution each year, but would have some pressure to keep it up so that WMATA could pay back its borrowing.
However, this seems to create a significant danger that jurisdictions would leave WMATA in the lurch. Under the current agreement, Maryland is required to pay more later to make up for any deferrals this year; without an agreement, they would not have such an obligation. Using credit would also seem to cost WMATA more in interest payments if they have to draw upon the credit.
Last year, Maryland moved ahead with an aggressive multi-decade commitment to build a $3 billion freeway. They obligated future toll revenue and future federal transportation aid. The legislature has been unable to agree on a funding source to refill the empty Transportation Trust Fund. It's extremely shortsighted now to oppose a smaller, shorter-term commitment to maintain a vital transportation resource. Governor O'Malley shouldn't make Metro suffer for his administration's and his state legislature's mistakes.
WMATA has around $226 million in capital dollars sitting in the bank at any given time, since their capital spending lags behind the actual money coming in from governments. At last week's Finance Committee meeting, Board members debated whether to use this money for operating costs or try to speed up capital projects.
Prior to the Metro Matters capital funding agreement that began in FY06, WMATA had a particularly poor track record of actually spending the capital dollars they had. This was partially because capital funds came from annual appropriations by the jurisdictions, which WMATA couldn't count on ahead of time. Therefore, they couldn't obligate (sign contracts) to spend that money until they'd saved up enough funding for the whole project, which often takes place over many years.
When the jurisdictions ratified Metro Matters, it meant that five years of financing was available and funds could be obligated based on these financial commitments. As a result, the percentage of funds obligated increased from an average of about 39% of funds available at any given time to about 82% under Metro Matters. Actual expenditures (payments for contract installments or work performed over a number of years) increased from about 31% of funds available to about 72% under Metro Matters.
This still, however, leaves a fairly large balance in the capital fund at any given time. For example, at the end of FY 09, WMATA had $226 million in unexpended capital funds. Of these, about $146 million had been obligated and about $80 million was unobligated and unexpended.
This doesn't mean that the $80 million had no purpose. There are projects designated to get that money. But it does mean that the money isn't being put to work at the moment, except for interest payments that WMATA receives. And by the time WMATA spends that money, it will have gotten more from jurisdictions.
It's not mismanagement. If you're doing an IT upgrade and find that the project that you had been planning for has been eclipsed by technology, you have to put it off, re-write the specs and re-advertise the contract (unobligated and unexpended). On the contract compliance end, if you find a railcar doesn't meet specifications, you're not going to make final payment (obligated but unexpended) until it does.
You can also do no more than you have resources for. You can't take all the the contract compliance personnel away and put everybody to work on the front end letting contracts.
At last week's meeting, federal member Mort Downey suggested that WMATA might obligate its funds by a percentage greater than 100% in order to maximize the use of capital dollars and accelerate capital spending since actual expenditures trail obligations by a significant margin.
On the other hand, DC member Jim Graham suggested that jurisdictions could redirect this balance to operating funds by contributing a little less to capital and spending the savings on operating contributions instead. Doing that wouldn't stop any capital projects.
The points of view of both board members have validity. If WMATA is able to accelerate its obligations (contracts) for capital projects, more will get done sooner and at a lower cost. If WMATA adopts a more realistic obligation/expenditure timetable, then jurisdictional capital contributions could be reduced (freeing up some money for operating) without delaying capital projects. In view of WMATA's dire capital needs and stressed operating budget, perhaps there's a middle ground that satisfies both points of view.
Craig Simpson is the Legislative and Political Representative for ATU Local 689. Opinions posted here are his own and not the offcial position of ATU Local 689.
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