Photo by Pocheco.

WMATA has around $226 million in capital dollars sitting in the bank at any given time, since their capital spending lags behind the actual money coming in from governments. At last week’s Finance Committee meeting, Board members debated whether to use this money for operating costs or try to speed up capital projects.

Prior to the Metro Matters capital funding agreement that began in FY06, WMATA had a particularly poor track record of actually spending the capital dollars they had. This was partially because capital funds came from annual appropriations by the jurisdictions, which WMATA couldn’t count on ahead of time. Therefore, they couldn’t obligate (sign contracts) to spend that money until they’d saved up enough funding for the whole project, which often takes place over many years.

When the jurisdictions ratified Metro Matters, it meant that five years of financing was available and funds could be obligated based on these financial commitments. As a result, the percentage of funds obligated increased from an average of about 39% of funds available at any given time to about 82% under Metro Matters. Actual expenditures (payments for contract installments or work performed over a number of years) increased from about 31% of funds available to about 72% under Metro Matters.

This still, however, leaves a fairly large balance in the capital fund at any given time. For example, at the end of FY 09, WMATA had $226 million in unexpended capital funds. Of these, about $146 million had been obligated and about $80 million was unobligated and unexpended.

This doesn’t mean that the $80 million had no purpose. There are projects designated to get that money. But it does mean that the money isn’t being put to work at the moment, except for interest payments that WMATA receives. And by the time WMATA spends that money, it will have gotten more from jurisdictions.

It’s not mismanagement. If you’re doing an IT upgrade and find that the project that you had been planning for has been eclipsed by technology, you have to put it off, re-write the specs and re-advertise the contract (unobligated and unexpended). On the contract compliance end, if you find a railcar doesn’t meet specifications, you’re not going to make final payment (obligated but unexpended) until it does.

You can also do no more than you have resources for. You can’t take all the the contract compliance personnel away and put everybody to work on the front end letting contracts.

At last week’s meeting, federal member Mort Downey suggested that WMATA might obligate its funds by a percentage greater than 100% in order to maximize the use of capital dollars and accelerate capital spending since actual expenditures trail obligations by a significant margin.

On the other hand, DC member Jim Graham suggested that jurisdictions could redirect this balance to operating funds by contributing a little less to capital and spending the savings on operating contributions instead. Doing that wouldn’t stop any capital projects.

The points of view of both board members have validity. If WMATA is able to accelerate its obligations (contracts) for capital projects, more will get done sooner and at a lower cost. If WMATA adopts a more realistic obligation/expenditure timetable, then jurisdictional capital contributions could be reduced (freeing up some money for operating) without delaying capital projects. In view of WMATA’s dire capital needs and stressed operating budget, perhaps there’s a middle ground that satisfies both points of view.

Craig Simpson is the Legislative and Political Representative for ATU Local 689. Opinions posted here are his own and not the offcial position of ATU Local 689.