photo by nevermindtheend.

Metro’s 2011 budget starts out about $100M in the red from a preliminary analysis, but the General Manager has to submit a balanced budget to the Board by December. Here’s some things he should consider:

Revenues: A fare increase is unavoidable this year. Metro should increase all fares by some base amount, about 5%. For SmarTrip bus fares, this is about a nickel, maybe a dime. For cash bus fares, $1.50 is a reasonable increase that makes the cash payment easy to manage in exact change. Less than 15% of Metrobus riders pay cash, according to Metro’s data (weekday and weekend). For Metrorail, off-peak fares should increase a dime at the low end to $1.45, and a fifteen cents at the high end to $2.50. Peak Metrorail fares should increase fifteen cents at the low end to $1.80, and the maximum fare should increase fifty cents to $5.00.

Parking fees should increase by a minimum of 5% (about 25 cents). Parking garages that are completely full should have higher parking fees to manage demand. Even the bike locker fee should be increased by $5 (to $75 per year), with higher increases targeted to stations that have a waiting list.

The fare increases should include a broad-based component, ensuring that all riders contribute to keeping Metro’s budget balanced, and a targeted component to overcrowded Metro services (like parking, peak rail and bike lockers), and segments that are relatively price insensitive (like peak-hour commuters). If the SmarTrip technology allows it, Metro could consider a “peak of the peak” rail fare that’s higher during the most crowded hour of the 4-hour peak period and a little lower, but still higher than the off-peak fare, during the “shoulder” period. That would encourage commuters to spread out their usage as much as possible. Another price-insensitive group is tourists. The New York City subway has been raising the base fare more than the unlimited pass fare, which most residents use. Metro could provide a discount for SmarTrip usage on the rail system. There’s already a discount on buses. This kind of fare increase should raise around $65M, about half of the amount raised by a much more targeted fare increase in 2008. Since Metro already assumed a $34M fare increase, that’s $31M more than previously stated.

Contributions: Last year, in one of the worst economies since WWII, Metro’s funding partners were able to contribute an additional 3%, or $16M. This year, with the economy starting to recover, we should expect the same or more. It is not fair or equitable to expect Metro’s customers, who do not select the members of the Board or participate meaningfully in Metro’s governance, to bear the primary burden of keeping the transit system solvent through fare increases or service cuts.

If the Board is unable or unwilling to hold down cost growth in areas like employee compensation (up $53M a year) or paratransit (up $20M), then the Board should be able or willing to go to its local governments and ask for the money those increases require. In discussions, Board members often treat this cost growth as unavoidable, but the experience with BART shows that it is possible to constrain the growth of labor costs, and the staff has repeatedly discussed ways to reduce MetroAccess costs. With the riders expected to contribute about 10% more than last year, it is only fair that the subsidy should be increasing at about the same rate. Metro’s funding partners should contribute no less than the increase in paratransit service, or $20M, but really it should be closer to $30M, or about 6% of the subsidy last year (subsidy levels typically increase every year, while fares increase only some years, which is why it’s not 10%).

Cost reduction: According to this presentation, reducing MetroAccess to the mandated 3/4 mile ADA corridor would save $2.8M per year or more. Another idea would be to ask jurisdictions to stop dropping their own federally subsidized paratransit programs, and directing their constituents to use MetroAccess, as the District did last year. Metro could also mandate a 2-3% cost reduction effort in all departments except public safety, which would save about $3M per year. The board could decide to implement the "escalator to stairs" concept, with a delay between when the escalators are no longer maintained and the capital expense to convert them to stairs, saving them up to $1M per year. They could implement the cost reduction strategy of closing underutilized station entrances on Metrorail, as proposed last year for a savings of about $1M per year. Local and state DOTs could speed up buses on the busiest lines by creating bus-only lanes or “queue jumpers.” There are already proposals to speed up the busy Q2 line in Montgomery County, for example. WMATA estimated Spreading out bus stops to one every fifth or quarter of a mile, in areas where they are more closely spaced, would also speed buses. WMATA estimates that if all bus routes in the priority corridor network could speed up by 3 mph, they would save $40-50 million a year in operating costs. As a last resort, they could continue to propose cutting Metrobus lines that underperform, or jurisdictions could offer to take them over, as Fairfax and Arlington Counties did last year. Finally, they could cut Metrorail service frequency outside of rush hour, going to 15 minute headways on weekdays and Saturdays during the daytime, which could save another $7.5M per year. Any of these service cuts are painful, but the budget gap is huge.

The total of everything above is about $75M per year, leaving another $25 million of gap. That doesn’t count the bus priority improvements, which require local cooperation. The GM and the Board are going to have to find even more cost reductions, whether more subsidy increases, more fare increases, more cuts, or local bus priorities. It’s going to be a tough budget year.