Photo by Eric__I_E.

WMATA faces difficult decisions about whether to use capital funds for “preventive maintenance” that is currently paid for by the operating budget. During the recent debate over closing a $40 million WMATA budget gap, Metro Board members Jim Graham and Chris Zimmerman express what seem to be widely divergent public views.

Graham said, “The best option for solving this year’s budget gap is using $16 million in readily available capital funds to relieve pressure from our operating budget.” Graham went on to say that this does not impact WMATA’s capital needs because “Metro’s Chief Financial Officer estimates that the agency will have $60 to $70 million unspent at the end of this fiscal year.”

Meanwhile, Zimmerman said, “We have created a system that many people in this region are dependent on… but we haven’t provided the resources as a region to maintain it. The capital fund in this agency is about the future service. People said over and over again, don’t raid the capital.”

Who’s right?

WMATA currently uses $30.7 million in capital money for “preventive maintenance.” That amount is $10 million more than in FY09. In addition, WMATA is closing part of the FY10 $40 million budget gap with a one-time infusion of another $10 million in stimulus funds that had originally been designated for capital projects that came in under budget. All these actions had the unanimous support of the Board, who either voted for the final budgets or did not object to the use of stimulus funds.

The Federal Transit Administration formula funds that WMATA receives permit the use of capital funds for “preventive maintenance.” Preventive maintenance is regularly scheduled based on the projected useful life of components or parts. Instead of waiting for something to fail and then fixing or replacing it, preventive maintenance changes out the parts or components on a schedule tied to their expected useful life. In theory, this smooths out maintenance costs over time and provides better service to the public due to less failure during operations.

WMATA has projected that it needs $11.4 billion in capital funds for things like buying new railcars and buses, rehabilitating bus garages and rail yards, replacing track and wayside equipment, maintaining stations and other infrastructure projects. If WMATA received local contributions and federal aid in the same amount it receives today over the next ten years plus the new $150 million per year in so-called federal dedicated funds matched by VA, DC & MD, it would generate about $8 billion, leaving it about $3.4 billion short in identified capital needs. These figures do not include any capital upkeep for rail or bus expansion projects nor do they take into account any new safety requirements recommended by the NTSB or any other unforeseen needs.

So what happens if Metro uses $10 or $20 million more to help balance the FY11 $191 million budget gap? There are several issues:

  1. It may actually be useful to utilize capital money for preventive maintenance if this were new preventive maintenance. In other words, if there are areas where the scheduled change-out of parts will reduce failures but where WMATA is not currently performing this, it would make sense to do so. It would have the effect of reducing long-term operating maintenance costs and providing better service to the public by not operating to failure. Doing so may also extend the useful life of some capital assets and the identified capital needs could be re-adjusted accordingly. Over the past 20 years, WMATA has implemented preventive maintenance in most areas. It’s not clear how much more new preventive maintenance there could be.
  2. If it is simply replacing operating funds currently used for preventive maintenance with capital funds, it should first be evaluated in terms of the impact on the project(s) deferred or cancelled. The capital project chosen for potential postponement in FY10 was the rehabilitation of one railyard. If the effect of the postponement only moved it from the end of one fiscal year to the beginning of the next, it would not have a significant impact. This is Jim Graham’s point. But it’s not completely free. It would have a ripple effect in the coming fiscal years unless more money was ultimately added to the capital budget to replace this use.
  3. The impact over time must be considered. This is Chris Zimmerman’s point. In other words, does the use of capital money create an ongoing “hole” in next year’s (or subsequent) budget(s)? WMATA is already using $30 million in capital funds annually for preventive maintenance. If it continues over ten years, this would amount to $300 million, or the equivalent of one year of the so-called “dedicated funding.” Utilizing more capital money could create an ongoing problem that carries into the next year.

Some advocates have recommending paying back any use of capital money by reducing future operating subsidies through bus priority measures. A similar approach could be taken in rail operations by using more eight car trains during rush hour, reducing overall trains but retaining the same capacity per hour. Such a plan would likely have to be phased in over time as WMATA would need to address issues caused by manual operation of trains and its current power capacity that it continues to work to upgrade.

The WMATA Board will decide whether to use any capital funds for operations by weighing these factors and measuring them against the consequences of service reductions, higher fare increases and administrative reductions as well as the possibility of more jurisdictional contributions. There will also be political considerations and significant “horse trading” between jurisdictions in order to reach the compromises necessary to pass a final budget.

In the end, who’s right—Graham or Zimmerman? Perhaps they are both right… and wrong.

Craig Simpson is the Legislative and Political Representative for ATU Local 689, the union representing most WMATA employees. Opinions in this article are entirely his own and not the official position of ATU Local 689.