On Wednesday, the Washington Post editorial board sparked a regional discussion by calling for the consideration of a heretofore radical idea: that Congress should consider imposing a financial control board on WMATA. That suggestion was amplified by WMATA Board Chair Jack Evans, who signaled his support for the idea.
In a round-up of what Greater Greater Washington contributors had to say on the topic, I argued in favor of considering the idea while Stephen Hudson and Matt Johnson took the opposite point of view. But what surprised me in the aftermath of Evans’ comments was just how many of his board colleagues and regional politicians were either open to the idea, or outright supportive of it.
To be clear, most were at least somewhat skeptical — which is not surprising, given the many potential implications and complications of such a move — but only a select few were explicitly opposed. That this suggestion wasn’t roundly dismissed tells me that the financial situation at WMATA and the prognosis for regional cooperation in its recovery are probably even worse than it appears.
Political leaders aren’t typically in the business of relinquishing their own power, so the fact that some are openly calling to punt their responsibilities paints a pretty damning picture of just how far apart the jurisdictions are on a collective vision for a dedicated funding source and a solution to the expense side of Metro’s structural financial challenges.
WMATA’s problems are nothing new
The 1967 Compact, the document establishing WMATA and laying out how Maryland, Virginia, and the District of Columbia would govern it, is the root of many of the system’s current challenges with its many veto points. The first evident example of the Compact’s shortcomings was how the jurisdictions responded to the Stark-Harris bill of 1979.
The bill authorized federal dollars for the buildout of 89.5 miles of the Adopted Regional System — the official master plan for 101 miles of Metrorail service that was approved by the Compact partners and the federal government — which was completed in 2001. Stark-Harris authorized substantial federal support on the condition that the jurisdictions each enact a “stable and reliable” ongoing source of revenue to fund debt service, ongoing operations, and maintenance costs.
The annual ritual of WMATA going hat-in-hand to the jurisdictions, requesting ever-larger subsidies from a hodgepodge of statutorily-designated pots of revenue (general fund, gas tax, etc.) and mostly getting the minimum to keep the buses and trains running, demonstrates that this region has never truly found a “stable and reliable” revenue source.
Over many years, this budgeting process has encouraged the deferral of expenses without an immediately evident impact — such as the prefunding of WMATA’s pension liability and preventative maintenance spending — in favor of keeping up-front jurisdictional contributions as low as possible.
Clearly, the same old solutions are off the table
We can no longer afford to ignore the consequences of the last 40 years with patchwork solutions. Numerous reports and expert testimony over the years have made plain that a lack of dedicated source of funding for the system and the annual low-ball budget games that substituted for it were a major contributing factor to disinvestment in the system’s maintenance. We’ve been reaping the consequences of that for the last seven years, and we will be for many more.
But what’s more frustrating than that is that the decline of the system hasn’t produced any fundamental change in this routine. If the deaths of 10 people, a continued degradation in service quality and reliability, a nationally-embarrassing full-day safety shutdown, and a budget proposal with alarmingly deep service/personnel cuts and fare hikes aren’t enough to shake the sensibilities of the region’s political leaders into forging consensus, then what will?
Nobody wants things to be this bad, but since they are, we need a solution
Nobody should “want” a Control Board. An expectation that Congress would infuse the system with money and assume WMATA’s unfunded pension liability without significant further pain for riders and Metro employees/retirees, in the best case, is pure wishcasting. Likewise, anything that would have such a significant impact on the livelihoods of tens of thousands of people and the lives of the commuting public should not be taken lightly.
But in the absence of regional consensus on a long-term vision for how to bring the system’s tremendous expense growth in line with what the Compact partners are willing to pay, this system will be on the verge of insolvency every time the budget cycle starts.
This year, WMATA faces a $290 million budget deficit. It lacks roughly one of the six dollars it needs just to maintain baseline service, with cuts to Metrorail hours assumed and no late-night bus network improvements funded. The gap between the base subsidy and expense growth over the next ten years is only expected to widen further, the system is hemorrhaging riders, and it has $2 billion in unfunded pension obligations.
Unless you assume that riders will come flooding back in large numbers or that the Compact partners have an appetite for covering large deficits with a double-digit growth rate in subsidies, then these projections aren’t alarmist: they’re realistic.
That’s to say nothing of the system’s further capital needs — $12 to $18 billion worth, according to the District’s CFO — which will need to be funded just so that Metrorail safety and reliability aren’t further degraded, much less improved.
What will take the place of the Passenger Rail Investment and Improvement Act (PRIIA)—which is funding a ten-year, $3 billion capital investment in the system with 50% federal money—when it expires before the end of the decade? Do we expect a GOP-led House of Representatives to be nearly as forthcoming with federal contributions in the future as a Democratic House was when PRIIA was passed, especially since the area’s congressional delegation may well lose its last remaining Republican member next week?
If we don’t do something drastic now, will we even have Metro in the future?
Lastly, if the budget picture looks this dire in economically sound times, then what can we expect it to look like the next time a recession hits?
Do you believe based on the track record of the last 40 years that the Compact partners are up to the task of resolving these monumental challenges under the current governance structure? And if you think that they are not, then do you believe that the jurisdictions are capable of finding consensus on how to change that governance structure and dig the system out of a gigantic financial hole without outside intervention?
I hope that the answer to at least one of those questions is “yes.” A federal control board taking the place of the currently, locally-accountable board of directors in overseeing management and clinically matching revenues and expenses is not optimal — but in the absence of math that adds up, it may be necessary and is almost certainly preferable to a continued, slow decline.
The viability of Metro over the long-term depends very much on us recognizing the alarming financial state that the system is currently in. If federal receivership is the only way for us to confront the hard choices that must be made to get the system on solid financial footing and ensure future improvement in safety and reliability, then I believe that we have no choice but to consider it.