With less than two weeks gone by in the new year, thousands of Metrorail commuters — mainly federal workers — who had been receiving up to $245 a month in fare subsidies from their employers have yet to feel the pinch of a drastic reduction in the benefit that took effect Jan. 1. But they’ll start to feel it soon enough.
Just ask Stephen Crim, who has done the math.
“Until you run the kind of analysis that I did, you don’t really know what the impact is actually going to be,” said Crim, an urban planner with Arlington County government. The new maximum monthly allowance has been cut to $130, and Crim, using reams of Metro ridership data, has calculated the effect on individual commuters. “I was surprised by the magnitude of the change,” he said last week. “I’m thinking, ‘Wow!’ ”
In 2013, under Internal Revenue Service rules, companies were allowed to set aside as much as $245 monthly from an employee’s pay, before taxes, if the worker wanted to use it for transit fares or parking. The parking allowance is now $250. But the fare benefit has dropped to $130 amid disputes on Capitol Hill over tax reform.
Some employers — the federal government being the biggest — give workers a direct payment to cover commuting costs instead of taking it from their pay. Metro riders who receive that direct benefit will feel the worst pain, dollar-wise, with the maximum monthly allowance now reduced to $130. And those were the folks, including the local army of federal employees, on whom Crim focused his recent computer analysis.
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“These kinds of price changes, people are very sensitive to it,” he said. Echoing transit officials, who have been highly critical of the reduction, Crim predicted that many Metro riders who receive the direct benefit will opt to drive to work, taking advantage of the higher parking subsidy, especially those who travel long distances.
Consider two busy subway stations, Metro Center and Pentagon, which are crowded every morning at rush hour with federal employees bound for their offices.
According to Crim’s report, when the maximum direct transit subsidy was $245, the typical worker exiting at the Pentagon station paid nothing out of pocket for Metro each month unless he or she commuted from Rockville or Shady Grove. On average, for workers headed from those two stations to Pentagon, the monthly out-of-pocket expense was $17 and $1, respectively, the study found.
In making his calculations, Crim said he used Metro ridership data to factor in the amount of money that many rail commuters typically pay in bus fares to reach the various stations where they begin their train trips each workday.
With the subsidy cut to a maximum of $130, his analysis shows, workers traveling to Pentagon from 44 stations will incur out-of-pocket costs — for instance, $116 a month for riders coming from Shady Grove, $132 from Rockville, $106 from Glenmont, $88 from Vienna, $63 from Franconia-Springfield and $53 from Dunn Loring.
The situation is similar with Metro Center. When the maximum allowance was $245, the only workers who had to reach into their wallets to cover the fare were those traveling from Shady Grove (an extra $1) and Rockville ($7). With the benefit reduced, the study found, workers headed to Metro Center from 39 stations face a new monthly expense.
Coming from Landover, for example, it’s $35; from Greenbelt, $66; from Largo Town Center, $57; from West Falls Church, $49; from Franconia-Springfield, $98; and from Dunn Loring, $64. Topping the list: $122 from Rockville.
(To calculate the out-of-pocket costs for travel between any two stations under the reduced direct subsidy, go to wapo.st/metro-benefits.)
“If these numbers were being proposed by Metro as a fare increase, people would be screaming,” said Crim, who works for Mobility Lab, the research arm of Arlington County Commuter Services. “So we’re trying to call attention to it.”
Keeping the transit allowance at $245 had bipartisan support in Congress. But it was included in a bill packed with other tax benefits that were scheduled to be phased out at the end of 2013. As legislative wrangling over broad tax reform continued without a resolution, the higher transit subsidy expired, and the allowance reverted to $130. But it could be restored to $245 later this year, lawmakers said.
In the meantime, Metro officials are worried about losing customers. In 2012, when the transit subsidy fell to $125 amid a spending fight on Capitol Hill, ridership declined by nearly 3 percent, resulting in a $9.5 million revenue loss, the transit agency said.
“It is critical that Congress extend the benefit to provide transit riders and agencies with more certainty on the cost of riding and operating transit,” Metro General Manager Richard Sarles told the agency’s board of directors in November, when he proposed a nearly $2.9 billion budget for the fiscal year starting next summer.
In his spending plan, the subsidy issue is listed under “risks and uncertainty,” because it could leave Metro with a lot less operating revenue than the budget has projected. At the moment, Sarles said in an interview, “it’s too soon” to tell what impact the subsidy cut is having on ridership and revenue. “Two weeks or so after this month is out, we’ll have some numbers, and we’ll look back and see what the effect is,” he said.
Included in his budget proposal is a 3 percent increase in rail fares. Garnering public support for a fare hike is seldom easy. And it might be especially difficult this time, since the subsidy reduction, in effect, is already a fare increase for thousands of riders.
The proposed 3 percent fare hike will be the subject of public hearings scheduled for late this month and early February, before the board votes on the issue.
“I think it’s just unfair,” Sarles said of the subsidy cut. “Here, in an urban area, you encourage people to use public transportation. . . . To have a parking benefit that is almost twice the transit benefit, it doesn’t make any sense to me.”