The biggest chunk of the $176 million shortfall is $99 million from increased personnel costs. Also, Metro used a one-time budget trick last year to reduce the fare increase: fares went up in January 2008, but Metro actually applied the money collected from January to July to the next fiscal year’s operating revenues, running from July 2008 to July 2009. Since they can only use that trick once, there’s a shortfall of around $36 million.
The plan WMATA will present tomorrow eliminates $103M of the gap. Management and the Board then face the tough decision of what service to cut, or whether to increase fares just a year after the last fare hike. WMATA could ask its member jurisdictions to provide a "cost of living" increase of 2% in the budgeted subsidy, which would reduce the shortfall by another $10M, but those jurisdictions aren’t flush with cash either.
In the plan, Metro will cut 292 of their over 10,000 employees. These cuts will keep WMATA’s personnel costs from increasing by almost $100M this year. Out of the eliminated positions, most (70%) will come from rail and bus divisions, with about twice as many lost in rail as in bus. Most of the rest will come from administrative divisions (28%).
It’s hard to tell from this presentation whether most of the eliminated jobs are slots that just haven’t been filled, or whether they are workers who will be laid off. According to a recent article in the Washington Post, when Metro was considering cutting 900 jobs, the split was approximately half and half. Now that the number of eliminated positions appears to have shrunk, perhaps most or all of the proposed staffing cuts will come from unfilled positions. It’s unclear from the previous discussion whether the 900 eliminated jobs include those that result from service cuts.
Other smaller cuts would increase the number of workers per supervisor, reorganize the staff with fewer levels of supervision, reduce overtime, and take advantage of today’s low fuel prices. They also propose "employ[ing] technology-driven approach[es] to traffic/ridership measurement", which, according to Metro, should result in more accurate data collection. I hope WMATA will be forthcoming in sharing this data with the public.
In addition, Metro will defer non-personnel expenses, such as materials purchases, when possible. This should concern riders because it just pushes the problem down the road rather than actually cutting back on costs. It doesn’t eliminate the need for fare increases or service cuts, merely defers them until next year. Also, if the reduction in supervision allows poor customer service or unsafe practices to arise or continue, it could reduce the quality of WMATA’s operations.
The largest increase in personnel costs this year, $44 million, comes from wage increases for unionized employees. WMATA budgeting treats those as sacrosanct. But in these hard times, unions all over the country are being asked to do their part to help keep costs down. For example, in Montgomery County the firefighters’ union agreed to cuts in order to help the county balance its budget, nationally the Teamsters agreed to wage cuts of 10% in order to help keep their employers afloat. All Headline News reports that Boston has asked its city worker’s union for a wage freeze in order to help balance the budget. Bridgeport, Connecticut workers have agreed to a two-year wage freeze as well as a five day unpaid vacation (furlough). Would it be fair to ask the unions to compromise and agree to a cut in wages or at least a cut in wage growth rates? Perhaps a one-year wage freeze. The cuts might save some jobs compared to having to lay off workers or cut service, which would lay off even more workers.
Since Metro’s previous proposal from early January, an "other" expense of $22 million has disappeared. With that unexplained change, WMATA appears to have met their goal of eliminating $103 million from cost cuts. That leaves $73 million of shortfall. The previous proposal estimated that closing the gap with service cuts will cut expenses by $87 million and decrease revenues by $14 million. The new presentation does not provide any specific proposals for service cuts. Alternatively, the Board could decide to raise fares or the subsidy provided by local governments. Representatives of WMATA and member jurisdictions have been discussing and debating this very question of where to get the last $73 million, and if cuts are involved, what to cut. Look for much more debate on these issues in future board presentations.