Photo by NoHoDamon.

The State of Maryland has asked WMATA for permission to defer $28.7 million in promised capital contributions for two years, since their Transportation Trust Fund is in such dire straits they can’t afford to make the payment on time.

At yesterday’s oversight hearing before the DC Council, WMATA officials referred to a letter they’d received on January 28th making the request. Under the Metro Matters agreement which provides for capital contributions from the funding jurisdictions, any jurisdiction can defer a capital contribution but must pay interest in the interim.

According to the letter, it will not impact the WMATA capital program since, as we’ve discussed before, WMATA is not spending all the capital dollars as fast as they are coming in. However, the money Maryland wants to defer was for FY2010, the current budget year that will soon end. Maryland is also expected to fall short on its FY2011 contributions, and WMATA is making plans to defer some capital projects based on that, as it would impact the capital program.

Councilmember Jim Graham, who was chairing the hearing, was upset with WMATA for several reasons. While they received this letter on January 28th, they did not forward it to the Board until March 30th, and didn’t release it publicly at all.

More importantly from Graham’s point of view, he has been wanting to let DC defer some of its capital contributions, and apply the money toward operating expenses in FY2011. There was a big debate at the Finance Committee about whether it’s okay to do that at all. Representatives from Maryland and Virginia were pushing back against Graham. Now, suddenly, we discover that Maryland is doing exactly that.

There are some nuanced differences. Using capital dollars for operating expenses in FY11 will kick the can down the road to FY2012, when WMATA would face a similar budget deficit if its revenues and expenses are all mainly the same. I’ve argued before that it’s okay to do this once or twice, but jurisdictions have to promise to pay back the cost, in cash with interest or with equivalent bus priority savings. Maryland is promising to pay it back, while that wasn’t a clear-cut portion of Graham’s suggestion.

Still, Graham’s frustration is entirely understandable. He’s been advocating for policies for months, and WMATA and Maryland didn’t reveal some very material facts very much pertaining to those policies.

Maryland needs to deal with its transportation funding problems. It pays for transportation out of a Transportation Trust Fund that’s broke. And with the Intercounty Connector, it obligated decades of future federal transportation aid and tolls from elsewhere in the state. In FY10, they had to cut nearly all road maintenance, until the stimulus restored many of those projects. But the stimulus isn’t happening again.

Northern Virginia also has a transportation funding crisis, but its jurisdictions are at least considering property tax increases to pay for transit. Property taxes aren’t really the best funding mechanism, but Maryland has no funding solution whatsoever except for borrowing from the future.

Update: Based on new information, I added the paragraph about Maryland’s expected FY11 deferral on top of the existing FY10 deferral.