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Posted at 02:34 PM ET, 12/01/2011

Metro CFO: Fare hikes ‘likely’

Metro riders should get ready to pay more.

Chief Financial Officer Carol Kissal said passengers will “likely” see fare hikes next year as the transit authority faces a $124 million budget shortfall.

“I will say that fare increases are coming,” Kissal said. “They won’t be as aggressive as they were a few years ago.”

Metro is proposing a number of options including making the now complex fare system easier to understand for riders, raising rates 10 cents on both the bus and rail networks, and implementing a zone system on trains that’s based on how far riders travel.

Kissal said the agency is not proposing any cuts for next year’s budget.

The board would make a decision on increasing fares in the early months of 2012, and any changes would go into effect in July. Public hearings would also precede any action.

The expected $124 million budget gap for fiscal 2013, which starts July 1, follows last year’s budget gap of $66 million, which area jurisdictions filled with additional subsidies.

They could also face paying more next year, Kissal said, with just $60 million coming from increased fares. However, many governments have faced their own financial troubles.

In 2010, Metro implemented the most expansive fare hike in its history, including “peak-of-the-peak” rates for riders who travel during the rail system’s busiest times. While ridership dropped some, few passengers changed their patterns to travel during cheaper times, Metro officials said.

Officials have said the main driver of Metro’s projected $124 million deficit is the pension costs. Of the authority’s 11,000 employees – 85 percent – contribute nothing to their pension, leaving Metro as the sole contributor, they said. And given the recent economic downturn where pension funds took a major hit, Metro now has to make up the cost.

“We suffer from a large pension and health cost,” Kissal said.

Metro is expected to renegotiate its contract with Local 689, the union that represents 10,000 of its employees. Kissal said no pay increases are planned. Metro workers recently received a court-mandated 9 percent wage increase for the past three years..

“Some of the packages we have may be too rich in terms of what we can do in the future,” Kissal said.

Next year, Metro is also expecting revenue to drop to $809 million, down from $812 million expected for this year.

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By  |  02:34 PM ET, 12/01/2011

Categories:  Metro

 
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