Just over a year ago, I become chair of the Finance Committee of the Washington Metropolitan Area Transit Authority board. Fast-forward a year, and although I now chair the entire WMATA board, Metro’s finances are still of grave concern to me, and should be to the entire region. If we do not put the system on a sound financial footing, SafeTrack — and all the inconvenience it is causing — will be for naught.
Metro’s annual budget is $3 billion: $1.8 billion is spent on operating costs and $1.2 billion on capital costs. Of the $1.8 billion in annual operating costs, approximately half ($900 million) comes from fares; the other half is paid by Maryland, Virginia and the District. The federal government does not fund any operating costs.
On the capital side, the federal government contributes $150 million annually as part of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), while D.C., Maryland and Virginia match that funding with $50 million each. On top of that, the two states and the District contribute another $250 million toward capital projects, and Metro, like other transit systems, applies for federal formula funds to make up the balance.
Metro’s financial problems can be summed up in three numbers: 300, 18 and 2.5.
First, $300 million is the fair share that the federal government should pay in annual operating dollars as an equal partner in America’s subway. The feds have the same number of directors on the board as D.C., Maryland and Virginia, and Metro carries 50 percent of the federal workforce every day. If the feds don’t pay their fair share, then either riders will be faced with a significant fare increase or D.C., Maryland and Virginia taxpayers will see a 33-percent increase in their required contribution next year.
Next, $18 billion is the amount of capital funding Metro needs over the next decade. This amount includes replacing all 1,200 railcars, building a tunnel within the Red Line tunnel from Cleveland Park to Medical Center to stop the constant water leakage, upgrading the electrical system to run all eight-car trains and continued maintenance of the system.
Every other major transit system in the country is supported by dedicated taxes. A regional funding source — such as a one-percent sales tax increase, whereby D.C., Maryland and Virginia raise approximately $500 million annually — is necessary to fund our infrastructure needs. Additionally, the feds must double the PRIIA contribution to $300 million per year, to be matched by $100 million per year from each of the three jurisdictions.
Finally, $2.5 billion is the unfunded pension and other post-employment benefit liability facing Metro. Even if Metro does everything right moving forward, the unfunded pension liability will sink the organization, like it did D.C. in 1995. The federal government assumed the District’s unfunded pension liability in 1995 and must assume Metro’s today.
I have outlined Metro’s financial problems and presented the necessary actions to put Metro on a firm financial footing. If these actions are not taken, Metro will be no better in the future than it is today. This generation of federal and regional leaders has allowed Metro to deteriorate from a world-class system to a marginal system. These same leaders now have an obligation to fix Metro. Do we have the courage to do so?