Image by Matt’ Johnson licensed under Creative Commons.

Last Wednesday, Metro’s General Manager released his plan to pull WMATA out of its downward financial spiral and make operations sustainable. The plan focuses on Metro’s big, multi-year safety and capacity projects as well as properly scheduling and and completing them on time. Addressing funding for both means both raising new money and getting costs under control, and if that doesn’t happen, Metro service could worsen and ridership could keep dropping.

Wiedefeld’s plan comes in response to Metro’s precarious financial situation: the agency’s costs are hundreds of millions more per year than what it brings in from fares and advertising/sales, and the amount of money that Metro asks DC, Maryland, and Virginia to chip in continues to increase year after year. The jurisdictions supporting Metro decide how much funding to give to the transit agency each year, and the amount varies year to year. There’s never a good picture of how much funding Metro can rely on after the current year, which hurts budgeting and project planning.

If the jurisdictions where Metro operates don’t give the agency enough money to fill holes in its budget, then it has no choice but to raise bus/rail fares and/or cut service, both of which it had to do this year. Adding to this conundrum, ridership has been going down the past few years due to the various service and reliability issues.

What’s the issue, and why the proposal?

Metro’s trains and tracks primarily have suffered a mixture of underinvestment and lax project management/quality assurance. Track defects that should’ve been found weren’t, and safety systems like Automatic Train Operation have been pushed off into the future.

Metro needs a steady stream of funding each year to ensure this stops happening, and Wiedefeld says the current situation, where Metro has to beg for money to fund some of these projects from its supporting jurisdictions, has become “financially unsustainable.”

Wiedefeld’s plan lays out the difficulties Metro faces and will continue to face in the future. The agency projects that due to increasing costs and lower ridership, it will go from needing the $980 million yearly subsidy it receives today to needing $1.6 billion per year 10 years from now. Metro is seeking a change to its business model in order to stem the increase in these costs, and to attain reliable multi-year funding to ensure large capital projects can start and finish on time.

WMATA needs to ensure that track, railcar, and bus maintenance is done on time when it needs to be, otherwise the agency will inevitably be stuck in the mud where it’s been for the past few years with emergency after emergency. The projects that aren’t essential in the moment are typically the first ones to be cut when budgets shrink. But those programs - namely, preventative maintenance activities - are some of the most important to ensure that little issues don’t keep piling up over time and evolve into large systemic issues.

Here are the plan’s main proposals

A few of the major points of the plan include:

  • Increasing the size of Metro’s annual capital budget from the ~$1 billion that it is today to $1.5 billion. This money goes toward large projects like buying the 7000-series railcars, the 150 escalator rehab program (which is larger in scale than most people first think), and train power upgrades. To do this, WMATA would need to find a new revenue source that comes from taxes or somewhere else.

  • Modifying new employee benefits by changing from a pension-style retirement plan to something closer to a 401K, and potentially contract out new positions

  • Putting a 3% cap on annual growth of jurisdictional contributions; this would help the jurisdictions better predict their expenses year after year, and it gives Metro a baseline from which they would need to work when putting together their budget. It’s part of the political game, where the jurisdictions get an assurance that their Metro costs won’t drastically increase, but the money might be a little more guaranteed for Metro when they ask for it

You can read the entire plan here.

Image by WMATA.

Metro can’t properly budget for long-term projects without long-term stability

The funding is needed to help start covering all the projects Metro says they need to accomplish, which will cost $15.5 billion over the next 10 years. Some of the projects that Metro lists in their presentation include the 7000 series car purchase, station rehab and lighting upgrades, new bus and rail maintenance building construction, and the new 700MHz radio system that Metro needs.

The agency actually says it has closer to $25 billion in needs over the next 10 years, but they cut that number down to $15.5 to limit it to only the “critical safety and reliability projects” that the agency needs to perform.

Without the extra capital budget funding, Wiedefeld says the agency would continue running in a state of disrepair, disruptions and delays would continue, and important projects wouldn’t be able to be completed on time, if at all. Essentially, Wiedefeld predicts Metro’s performance from the last decade would continue. That’s not sustainable at all.

The plan includes options for cutting costs as well

Asking for a new stream of funding without offering anything in return would be an impossible sell, and Wiedefeld knows that. Metro has to prove that it uses its money wisely before any area politician would likely be willing to put forward the motion of the funding. Wiedefeld has begun to show just that, with a generally problem-free SafeTrack program with relatively few issues to speak of post-construction, and his reorganized quality assurance team which reports directly to him.

The plan notes that labor costs have gone up at an average of 4% per year between 2011 and 2015, and fringe benefits have gone up by 7%. The two of these combined make up 74% of all of Metro’s yearly costs, so those increases are a significant amount.

Contracting out some of Metro’s new services like the second phase of the Silver Line (existing jobs can’t be contracted out, but new ones could be) is one of the options Wiedefeld wants to use. Metro looked at other agencies’ uses of outsourcing as examples of how the practice could help it save money. One example used, the LA Metro (slide 20), says that 10% of their bus service was contracted out and ended up being 43% less expensive per mile.

Bottom line: Metro is in serious financial trouble if nothing changes

Bluntly, Metro can’t survive like it does currently for much longer. This year, to close the current $290 million budget shortfall, Metro’s supporting jurisdictions agreed to pay more money and the agency raised fares and cut service. Next year’s budget shortfall likely will be as large, if not larger, especially with the continued ridership drop from SafeTrack.

Wiedefeld is working on the system’s reliability and service issues through SafeTrack and the various track and railcar maintenance programs he’s initiated in the year and a half he’s been at Metro. The system seems to be responding, and Metro’s Office of Performance noted that they’ve seen improved system reliability numbers.

It’s up to the jurisdictions to not only ensure full oversight of the agency by setting up the Metro Safety Commission, but also to properly fund the agency so it can try to provide reliable and convenient mass transit for all in the DC area.

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Stephen Repetski is a Virginia native and has lived in the Fairfax area for over 20 years. He has a BS in Applied Networking and Systems Administration from Rochester Institute of Technology and works in Information Technology. Learning about, discussing, and analyzing transit (especially planes and trains) is a hobby he enjoys.