Posts about WMATA Budget

WMATA got that $150 million in fiscal 2012 (which ends September 30). A continuing resolution approved last week will continue this funding level through at least March 31, 2013. But after that, sequestration would take hold.

The HTF gets most of its money from gasoline taxes. Thanks to Congress's refusal to raise the gas tax, even to keep up with inflation, there hasn't been enough money in the fund to meet its obligations for the past several years. Thus, Congress has chosen to infuse general fund money into the HTF to keep it solvent.

These general fund infusions may be subject to sequestration, but none of the HTF's obligations to the states and transit agencies will be reduced. The most likely result is that Congress will have to infuse more general fund money into the HTF sooner. The White House Office of Management and Budget (OMB) will have some leeway in applying the sequestration within each federal department and agency.

The WMATA cut is not the only way sequestration could hurt our region. If OMB chooses to apply the cuts retroactively to TIGER grants that the US Department of Transportation has already awarded, this would delay the completion of TIGER-funded projects like bus priority improvements and completing the Anacostia Trail.

Another possible victim is the Silver Line, much of whose funding comes from the Federal Transit Administration's New Starts program, which is not funded by the HTF. Many other capital projects in the region, including the Purple Line light-rail corridor, have yet to receive federal funding, and any reduction in the amount of money available for grants would put them even farther back in line.

The only alternative to sequestration is another grand debt-reduction deal from Congress. But such a deal could hurt some programs more than sequestration would, in order to preserve others. Even transit-friendly members of Congress from Maryland and Virginia may vote to axe Metro in the end if it means preserving other pots, such as Pentagon spending, that provide huge sources of employment for their constituents.

While members of Congress are campaigning in their districts throughout October, consider taking an opportunity to remind them how important investments in infrastructure that reduces traffic congestion and enhances mobility in a sustainable manner are to you and to the region's economy.

You can also make the point that we could avoid this whole sequestration mess altogether if they could muster the gumption to raise taxes on the wealthiest Americans, place a small tax on financial transactions, or finally raise the gas tax.

Besides, deficit spending really isn't a bad thing, especially with the economy in recession.

Nearly every year, labor and benefits costs increase based on WMATA's labor agreements, determined by arbitration, and some other costs like fuel and energy have also often increased. Meanwhile, fares don't automatically increase, and area jurisdictions don't automatically promise to put in more money each year to cover rising costs.

This creates a small projected deficit in the first public iterations of the WMATA budget. Most years, the jurisdictions have agreed to increase the amount of operating funding they provide, but that is always in doubt until they pass their final budgets in the spring, and in some years executives of Virginia, Maryland or DC have threatened to withhold funding.

The current WMATA board policy states that fare increases should only occur every other year, though severe budgets in the recession has led to fare increases even in some consecutive years. A particularly bad shortfall led to a mid-year increase in 2010 to close an unexpected drop in revenue. If WMATA does not get enough funding from jurisdictions and decides not to increase fares, then it must consider service cuts in order to balance the budget.

This surplus could also complicate WMATA's position in negotiations with its largest labor union. While WMATA argues that it cannot afford to increase wages and be the sole contributor to pension funds, it is also announcing a surplus over the previous year of operation. Arbitrators, not WMATA or local governments, set wage and benefits levels.

The arbitration panel could decide that Metro's financial position is not that bad, and may reject the idea of holding wages constant or requiring Local 689 workers to contribute to pension funds. These costs would increase the projected shortfall, and would require additional funds from governments or riders to keep the budget balanced.

Calling this a "surplus" may mislead some riders. It does not mean that Metro "made money" in 2012, but rather that its budget projections were gloomier than reality. Similarly, DC Public Schools might conceivably spend less one year than projected and end up with a surplus, but it's still getting most of its money from the District's general budget, not turning a profit from education.

It does, however, seem that WMATA could have told its board or the public about this a little earlier. Kytja Weir writes in the Examiner,

Metro had known it probably would have a surplus before finalizing the fare increases and higher subsidies. But Chief Financial Officer Carol Dillon Kissal said that she couldn't use the savings then because it was only a forecast. ...

Metro typically presents a stark forecast with a budget hole that needs to be filled with increased fares, service cuts or higher subsidies. But it was the second year in a row that Metro ended the year with a multi-million dollar surplus. In a report released last week, the agency said it had a $46 million surplus in the previous fiscal year.

It might have been possible to raise fares less. On the other hand, budgeting too conservatively just leads to a surplus, while budgeting too aggressively can force a sudden mid-year service cut or fare hike to fill an unexpected hole. In some past years, board members did more to pressure the agency to estimate higher. Sometimes that worked out, and riders saved money; other times, it led to last-minute crises.

This is only the beginning of WMATA's budget season. Over the next 7-8 months, WMATA staff, the board, and the public will discuss budget. Staff will first present the board with its forecasts for FY2014 (July 2013-June 2014), and CEO Richard Sarles will propose a budget in January. After that, the board will decide on whether to send any fare increase or service cut proposals to the public for comment around March, and in May or June will approve the budget for the coming year.

WMATA spokespeople did not yet return a call for comment from late this morning.

When asked about specifics of the repair timeline, CEO Richard Sarles has only said, "It'll be done when it's done." That answer certainly avoids setting any expectations that the agency might fail to meet, but it doesn't address a much deeper and critical question:

Will we ever get out of the proverbial woods?

WMATA knows how much its current employees are paid and can estimate the rate at which their compensation will increase. It knows or can project how much their pensions and benefits will cost. It's not impossible to estimate how fuel and electricity will change over time. Also, we can approximate how much it will cost to maintain equipment and keep it in a state of good repair.

In many industries with physical machinery, there are best practices in asset lifecycle management. For any part, one can predict how many of them have to be replaced per year, how many years each lasts on average, and how much each costs.

With this information, it should be possible to project WMATA's costs into the future. For a particular year, the estimates may be off in any direction for any of the variables, but over time, we should be able to make realistic estimates.

Divide the time by the cost and you get a dollar figure per year. Maybe one year will be higher if many things happen to break at the same time, but if the overall projection is on target, other years ought to cost less to balance it out.

What good is this? It's important because WMATA can't keep telling riders, year after year, that costs have increased unexpectedly. In 2009, it was because the pension contributions had gone up due to the stock market decline. Then fuel prices were rising. Health care costs were spiraling. Ridership was off because of the downturn. The arbitrator granted bigger raises than expected. And so on.

At some point, if costs keep exceeding projections, then something is wrong with the projections.

We're coming out of a bad economic time. Before, in good economic times, the budgets balanced more easily, fare increases weren't so large, Metro could put less into their pension funds, and local governments didn't have to keep paying more. But when they did that, they just pushed the problem off to the future.

Local governments will have to increase their contributions each year. Fares will have to rise over time. But how much, in the long run?

Riders deserve to see a long range plan that says, in effect, the following:

• Until 20XX, Metro will be in "catch-up mode." After that, they'll be in "keep it working" mode.
  
• During catch-up mode, Metro needs $x million in capital funds per year, increasing at a rate of x% per year. After that, they'll need $y million in keep it working mode (less than in catch-up mode).
  
• If we can still afford the catch-up mode funding once Metro reaches a state of good repair, then we can start using the surplus to pay for some projects to deal with the high passenger loads that there will be by this time, like adding physical walkways between Metro Center and Gallery Place, new entrances at busy stations like Foggy Bottom, or new lines or tracks in the core.
  
• If Metro doesn't get enough money in catch-up mode, then that mode will have to last longer. If it doesn't get enough in keep it working mode, then it may have to go back into catch-up mode.
  
• In keep it working mode, to maintain the existing service, given wages, pensions, fuel, health care, and so on, Metro will have to increase its budget by z% each year. A certain percentage of that can come from riders, while jurisdictions should plan on increasing their Metro contributions by the remaining amount necessary to reach the z% per year.
  
• In good years, Metro will use the extra money to top up its rainy day fund; in bad years, it'll spend money from that fund.

Many businesses do this type of planning as a matter of course. Households and financial advisers do the same to plan for retirement. Riders and local leaders should ask for the same from WMATA, an entity which provides a fundamental service that residents and visitors depend on every day, and which also benefits the region in enormous ways that we often take for granted.

From talking to some WMATA employees, my understanding is that many but not all top leaders want to be able to project like this. Some of the information about asset lifecycles they have, while some they hope to collect. It's less clear how much consensus there is over how deeply to share the information with the public.

Such a comprehensive analysis also takes time and cooperation from all departments. It will take pressure from Sarles, the board, jurisdictional officials, riders, the press, and other stakeholders to make this happen.

It would be worth it, though. A well-defined plan like this will build credibility with the public and help ensure WMATA gets the necessary funding to repair its system and maintain high-quality service for the long term.

Many escalators around the world stop when they're not being used, and have more efficient motors than Metro's aging escalators. Solar panels or solar laminates could cover the roofs of Metro railyards, maintenance facilities, and garages.

Other transit agencies have trained operators to accelerate and brake more fuel-efficiently. Many have installed tire pressure gauges that actively and constantly communicate tire air pressure data to the maintenance facilities. That lets them keep buses at optimum tire pressure and fuel efficiency, which saves significant fuel. Fuel is a very large cost item in Metro's budget, especially with fuel prices rising.

WMATA already has set a standard to make new facilities LEED Silver, like the Shepherd's Parkway bus garage under construction. Its new buses are cleaner and more efficient than the old, and the 7000 series railcars use LED lights, regenerative braking to get energy back like hybrid cars do, better HVAC systems and a design that reduces the need for some polluting processes to clean them.

Sustainability faces obstacles

It's often difficult for transit agencies to energetically adopt sustainability programs. Some agency staff think of transit as intrinsically pro-sustainable, compared to other modes of travel, so they might not feel that sustainability is the higest priority. There can be resistance from the rank and file to newfangled, ivory tower ideas that don't recognize the rough reality of engineering and operations.

Transit agencies also, perhaps understandably, end up prioritizing the day-to-day crisis management over strategic programs. At the moment, WMATA's the overwhelming emphasis is on system safety and renewal capital projects. That means that "soft," "green" projects can find it hard to compete for the capital funds available, even when there's a powerful economic business case behind them.

Another obstacle is the relationship between labor and management. Many sustainability programs might involve changes to people's job responsibilities, which means that management has to negotiate for a change rather than simply establishing and implementing the program.

For example, if WMATA monitored the fuel efficiency performance of each bus driver to help them save fuel, would the union oppose this as another form of management breathing down workers' necks? Would WMATA be able to reward employees that saved the most fuel and money?

Even for non-union workers, transit agencies lack many of the tools private sector companies have to reward individual initiative. A private sector employee responsible for annual cost savings might get a bonus as a result, in a transit agency that same employee might simply get an employee appreciation mention in a weekly newsletter. Weighed against the possibility that any given sustainability initiative might "rock the boat" for bosses or colleagues, a public pat on the back doesn't offer enough to outweigh the possible headaches.

Sustainability initiatives that come from one department might create savings in another department. But the department that initiated the program might not benefit from the savings, reducing the incentive. Also, divisions within public or private sector organizations often covet the size of their respective budgets and the control that spending authority gives.

A department which saves money might view this as reducing "their budget" instead of looking at the benefit to the agency's bottom line. The affected department could well resent the sustainability initiative and the employees elsewhere in the organization who pushed the idea through.

Making sustainability happen takes leadership from the top

Despite all these barriers, it's more important than ever that WMATA take a strong leadership role in sustainability, backed up by strong management policy and action. In a budget season when the agency is asking for substantial fare and subsidy increases, the public needs to hear that WMATA is taking every possible action to provide transit services more cost-effectively (not to mention more safely and reliably).

WMATA is also entering negotiations with its labor unions for the next round of labor contracts. It's critical that the issues of efficiency and productivity be on the table in a central, pivotal way. It's not unreasonable for labor to ask for wage increases; it's completely unreasonable to ask for such increases without also committing to improving productivity and efficiency in quantifiable ways.

WMATA management could start most sustainability initiatives without any Board action. Richard Sarles and his management team could unilaterally adopt many measures and communicate the values described here. But, perhaps for many of the reasons listed above, Metro's management has not yet made sustainability the visible issue it could and should be. That means they need support, and pressure, from the region and the board.

To date, only 2 WMATA Board members have expressed much interest in sustainability: Tom Downs and Mary Hynes. They should both be commended for trying to make this issue a priority for the agency, and hopefully they will continue to do so. Their colleagues should join them in pressing for more sustainability, productivity, and efficiency.

Now that the revenue outlook has improved, the riders should get a break on the fare increases they are facing. Transit riders have paid a significant share of the increases in transportation costs for twenty years during which fares have steadily risen without a single increase in the gas tax.

Fixing Metro will be impossible without adequate resources. Riders stepped up to the plate in 2010 to pay a substantial fare increase. The fairest approach now is for the member jurisdictions to maintain the funding commitment already planned in the 2013 Metro budget. We call on local governments, the District of Columbia, and the states of Maryland and Virginia to focus on reinvesting in and restoring what was once, and can be again, one of the world's top transit systems.

The members of the Transit First Coalition are the Action Committee for Transit, Alexandria Transit Riders Alliance, Amalgamated Transit Union Local 689, Arlington Coalition for Sensible Transportation, Audubon Naturalist Society, CASA de Maryland, Clean Water Action, Coalition for Smarter Growth, Crofton First, DC Night Riders, Greater Greater Washington, MCGEO—UFCW Local 1994, Prince George's Advocates for Community-based Transit, Progressive Maryland, Save Maryland Area Rail Transit, and Transit Riders United of Greenbelt.

The Coalition for Smarter Growth has a page for you to email your WMATA board members and local officials to ask them to use money to reduce fare increases as much as possible.

On transportation, he's budgeted $9.1 million additional for WMATA to maintain service. The agency was asking for $17 million additional from DC this year, so this only fulfills about half; unless this increases, WMATA may have to raise fares more than expected or cut service.

Some of the money would come from expanding performance parking, which is an excellent idea. Unfortunately, this number also includes taking the away the money from existing performance parking zones, which was dedicated to local improvements in the affected neighborhoods.

There's ongoing funding for streetcars including, in another slide, an item (without a specific number) about starting a new rail safety program to go with the streetcar.

It looks like the long-stalled traffic camera program will finally get moving, with $5.8 million of budget to buy cameras.

That's not really spending, though, since the program more than pays for itself in fines unless drivers start dramatically obeying the law far more often. The budget estimates $30.6 million in revenue.

Can drivers stop 82% of their speeding, running red lights, blocking the box, not yielding to pedestrians in crosswalks, and more? If they don't, DC will get the revenue; if they do, our streets will be a lot safer for everyone.

Just like last year, housing affordability didn't fare so well. Gray's budget moves $19.9 million from the Housing Production Trust Fund, which finances new construction of more housing in areas where the market value of land isn't enough to attract private investment.

That money will go to the Local Rent Supplement Program, but DCFPI says that just plugs a hole from taking away other money. In the end, people in need will still get help with housing, but we won't get a new supply of affordable housing.

The revenue section also includes $12 million from changing the inflation adjustment for tax deductions on the income tax and property taxes. However, the Mayor said that if additional revenue comes in, he would spend $1.1 million to restore a tax exemption for out of state municipal bonds.

This doesn't seem to make a lot of sense; why penalize people earning income and owning homes to give a tax break to people with larger investment portfolios? Other states do not exempt other states' bonds and there isn't a local policy we advance by just giving out this tax break.

Additional funds should go toward restoring the HPTF, if not actual budgeted money. Remember, last year the Council devised a priority list for how to use any new "unanticipated revenue," then ignored it and cherry picked items off the list. The housing fund was the second highest item that didn't get any money. Now DC has a surplus for this year, and the housing fund isn't getting it either. How long will DC leaders ignore this important priority?

Other housing programs covered with federal funds will lose money because of federal budget cuts.

There were a variety of other cuts in many departments, especially social service areas.

The budget also commits to continuing planned high school modernizations at Ballou, Cardozo, and Dunbar and finishing planning and design for Ellington, Coolidge and Roosevelt. It also funds the planned new middle schools in Ward 5 and adding and modernizing more middle schools in the future.

Almost alone among transit agencies in the United States, you have no dedicated revenue sources, and you are subordinate to, and dependent upon, multiple jurisdictions across state lines. In recent years, the situation has been complicated further by the increased role in governance by the federal government and by the state of Virginia, neither of which contribute to the formula by which the daily operations of the system are funded.

The system is aging, its maintenance needs are growing—and still, the region looks for you to expand service. So, I appreciate the difficult choice the Board will have to make, and recognize that a fare increase may be unavoidable this year.

No one wants to raise fares. I used to say that raising fares is the next-to-the-last thing the transit agency should do. What's worse is cutting service or maintenance. That you must not do.

As one who has sat where you sit, and who will have to vote on your final budget as part of his jurisdiction's part in the approval process, here are my recommendations:

1. Don't put it all on the riders; don't let governments off the hook. Ask compact jurisdictions to accept some of the responsibility to meet the need. Press for greater support from the state: Now that they have imposed themselves on the governance of WMATA, displacing local representation, they should be expected to help Metro close its budget gap.

The same can be said for the feds. They vote on the budget. They depend heavily on the system on a daily basis for the delivery of their work force, no less than they depend on the delivery of electricity and water to their buildings. The system is substantially designed around the needs of the operations of the federal government. They should be contributing to the operating costs of the agency as a routine matter. The WMATA Board should press for inclusion of the federal government in the funding formula.

2. In structuring a fare increase, I urge you to consider the following:

1. Don't make it too big; consider possible effect on choice riders (especially in view of adverse federal benefit changes). It obviously won't help anything if we push riders back into their cars.

2. Consider effects on those least able to pay. As you well appreciate, there are many people in this county, and throughout the region, for whom transit is not a choice, but a necessity. For them, a fare increase is simply a reduction in the limited disposable income with which to pay their costs of housing, food, clothing, and medical care.

3. Don't punish the folks who take the shortest trips. Those who accept higher housing costs to live near their work, and to live a transit-oriented lifestyle, are providing a benefit to everyone in the region. Increasingly, they find it difficult to get on to trains that enter their stations already full, and they seldom get to sit down. Theirs is the least-subsidized ride. They should not bear a disproportionate share of the cost.

And finally,

4. Do something for the riders. They bear a larger portion of operating cost here than in perhaps any metropolitan area in the country. They're still going to be asked to put up with delays and service interruptions, even though they'll pay more. Press Metro management to find ways—even small things—to make life a little better for your regular customers.

   One good possibility that has been suggested is improving passes.
   

   1. We need a good monthly pass; not just a 28-day that is simply four times the 7-day pass.
      
   2. It's got to be useful for people who ride in the core of the system—that is, short-trip riders.
      
   3. It's got to be on SmarTrip.
      
   4. It should be a "flexible pass", one that lets riders choose their typical level of fare (which depends on their typical trip length) and select a pass that's works at that level. (Seattle, London and Minneapolis have done this; it is ideal for a system like Metro in which fares are distance-based.)

I thank you for considering these suggestions, and for your service to Metro and the region.

Vienna and Paris, Luxembourg, and many other European cities have come up with an elegant solution for tourists: an all-in-one card. One purchase gets you a no-hassle pass that works on all forms of local transportation—no fumbling with fare cards, hoarding spare change, or figuring out complex local fare plans.

The same card works for admission to local museums and sights, encouraging visitors to get their money's worth by visiting as many local attractions as they can. Often, the card also offers a discount at museum stores, restaurants, and other local businesses.

Passes are usually available at hotels, the airport, subway stops, tourist information bureaus, and even as a pre-trip online purchase. The duration often ranges from 24 hours to one week. They always come with a map or guide (like this one from Helsinki, for example) that touts the benefits of the card, lists all local attractions, and gives local businesses the chance to advertise directly to tourists.

Would it work in Washington? True, all the Smithsonian museums are free. Yet adult admission to places like the Newseum ($21.95), Corcoran ($10), Phillips ($12), Spy Museum ($19.95), Mount Vernon ($15), and the Building Museum ($8) can add up quickly.

Transit brings that total even higher: $6 rail trips around town, the $18 round trip to Dulles on the Washington Flyer, and whatever the replacement for Tourmobile decides to charge can make a Washington vacation an expensive affair. If the card is marketed well enough and sold at the right price point, tourists are likely to jump at the chance to save money, see more, and make their visit more convenient.

While the existing infrastructure surrounding Smartrip cards provides a good jumping off point for an all-in-one tourist card, the cost of adapting Smartrip to a new use could be significant. Beyond the technological hurdles, there's also the issue of coordinating and deconflicting the needs of stakeholders in the local tourism market—not an easy task to be sure.

Yet the long-term benefits for the region are clear. The card would broaden the distribution of tourist dollars by encouraging visitors to see the sights beyond the National Mall. Sales of the card could provide a more predictable source of income to local sights.

Metro would benefit by locking in a larger share of the local tourist market. And tourists would be freed to soak in the sights of Washington rather than worry about costs or logistical hassles.

If Luxembourg can make it happen, surely we can.

Previously, Metro offered a few discounts for frequent riders: a 10% bonus fare for people who bought farecards of $20 or more, a weekly bus pass that cost about 8.5 trips, and the rail fast pass.

The 10% bonus fare was eliminated in 2003. The weekly bus pass discount was eliminated in 2010. Metro now charges 10 times the Smartrip fare for a pass.

For a regular commuter taking 10 trips per week which are long enough to hit the maximum fare, the rail fast pass currently offers about a 10% discount compared to 10 individual trips, as well as free trips after that. This proposal will eliminate the 10% discount and almost certainly drive customers away from using the rail fast pass.

More to follow after the Thursday board meeting.