’Tis the season — the budget season — for Metro, and, as usual, it won’t be jolly. The annual public process of figuring out spending and revenue for Washington’s transit system officially got underway Thursday with a proposal to raise fares — a plan guaranteed to cause teeth-gnashing among commuters who already pay the highest subway prices this side of San Francisco.
In a budget outline presented to Metro’s board of directors, the agency’s staff projects a $38.5 million boost in subway revenue (to a total of $682 million) during the fiscal year that begins in July. Nearly half of the added revenue would come from fare hikes that General Manager Richard Sarles calls “modest.” As Metro translates it, the average cost of a train ride, now $2.90, would go up by a dime — an increase of 3 percent.
But the average fare that Metro cites has little real-world meaning. It’s a product of grade-school math: total fare revenue divided by the number of fares paid. In practice, depending on which stations riders regularly commute between, some people could face fare increases significantly higher than 3 percent.
“I can never speculate on how people are going to react,” said Sarles, who will hear customers’ views on the proposed fare increases at public hearings on his budget plan this winter and spring. “I’ve seen a couple of comments on TV in the past week — man- and woman-on-the-street things — saying, ‘Aw, that’s not so bad.’ ”
If history is a guide, though, Sarles will also hear plenty of gripes, especially from riders who think the rail system generally performs poorly.
Why does it cost what it costs to ride Washington’s subway?
As in other cities, money from rail riders and bus riders pays a big chunk of Metro’s annual operating expenses, which are projected to total $1.76 billion next fiscal year. (That’s separate from the $1.14 billion Metro wants to spend on capital improvements, which are not financed through fares.) Bus and subway revenue — plus MetroAccess van fares paid by customers with disabilities — would cover about half of the $1.76 billion, with nearly all the remaining money coming in the form of government subsidies.
As for the subway, the projected $1 billion cost of keeping it running accounts for more than half of the proposed $1.76 billion operating budget for the entire system. The rest of the money would come from eight local jurisdictions (with the District paying the most), the states of Maryland and Virginia, and the federal government.
Since there’s always a limit to how much money governments will agree to contribute to the transit agency, Metro officials said, covering the rail network’s expected operating costs next fiscal year will require $682 million in fare revenue. By comparison, subway fares in the current fiscal year are expected to total $664 million.
Thus the proposed price hikes.
Metro’s current operating budget is $1.65 billion, meaning the agency is predicting a 6 percent rise in the cost of running the transit system next fiscal year. According to Sarles’s budget proposal, labor expenses will account for most of the increase, including more money for wages, health benefits and pension contributions. He told reporters Thursday that he thinks the budgeted labor costs, totaling $1.3 billion, are reasonable.
The transit agency agreed in 2012 to new four-year contracts with the three unions representing most of its employees. “When you look back at the wage settlements that were made,” Sarles said, “they were very modest, and they were right in line with what’s going on in this region.”
Although subway fare revenue would climb by $38.5 million next fiscal year, to $682 million, not all of the increase would be due to higher prices. Fare hikes for rail patrons would produce $17.5 million in added revenue. The remainder would come from an expected increase in ridership, mainly on the new Silver Line, which is set to open next year.
Metro has complex formulas for deciding how increases would be distributed across the subway’s elaborate fare chart. But if the agency’s number crunchers have already calculated the exact new fares, Sarles hasn’t made them public. Since Metro last raised prices, two years ago, subway fares have ranged from $1.70 (for a short hop at an off-peak time) to $5.75 (for a long trip during the morning or evening rush hours).
Those varying fares, based on time and distance, are a big part of why Metro’s rail passengers generally pay more than most subway riders elsewhere in the country.
The subway systems in Washington, San Francisco and Atlanta, all built in the 1970s, are the newest in the country. The other major systems — in New York, Boston, Chicago and Philadelphia — opened decades earlier, some dating to the dawn of the 20th century. Back then, the electronic-fare-gate technology needed for a time-and-distance fare system didn’t exist.
In New York, the flat fare for a subway ride is $2.50, no matter if a trip takes five minutes or half a morning, whether it goes for seven blocks or crosses three boroughs. Boston ($2), Chicago ($2.25) and Philadelphia ($2.25) have always had flat fares, as well. Even though more advanced fare-technology has long been available, transit analysts said, commuters in those cities are so accustomed to simple fares that they wouldn’t stand for a change.
Although officials in Atlanta could have gone with a time-and-distance pricing system when the subway there opened in 1979, they opted for a flat fare, now $2.50. The subway in San Francisco, on the other hand, has a fare system similar to Metro’s — but pricier. There, a basic fare can run as high as $7.15 (and nearly $11 with an airport surcharge).
“I believe the reason the distance-based, time-of-day-based system was introduced here was to provide for some kind of equity,” Sarles said. “If you’re going to take a long ride in the peak hours, you’re going to pay more.”
These days, Metro spokesman Dan Stessel said, federal civil rights law would prohibit a big-city subway system from implementing a flat fare. It would be too regressive. In Washington, for instance, a flat fare would mean that a K Street lobbyist riding a rush-hour train to work from his Bethesda home would pay the same amount as a low-wage, late-night cashier traveling one stop to his job in Anacostia. “Not going to happen,” Stessel said.
The flat-rate fares in other cities were grandfathered in under federal law, he said. As for Metro’s variable fares, they’re here to stay. With 86 stations, there are 7,310 possible trip combinations in Washington’s subway — soon to be 8,190, after the opening of five stations on the Silver Line next year. And with prices ranging from $1.70 to $5.75, Metro has about 80 possible fares.
In a typical year, Metro collects about 67 cents in subway fares (give or take a few pennies) for every dollar it spends to operate the system. That “fare recovery ratio,” as transit experts call it, is among the highest in the country. The national average is a little less than 50 cents, according to the Federal Transit Administration.
Some critics of Metro say its fare recovery ratio indicates that the subway system relies too heavily on fares to pay its operating costs. But experts in transit finance say that a subway system shouldn’t be judged only by its fare recovery ratio. In some cases, they said, a transit agency is especially dependent on fares because other revenue sources for its operating budget are unpredictable.
For example, unlike other transit agencies, Metro is at the mercy of political leaders in more than a half-dozen local jurisdictions when it comes to seeking government subsidies. “It’s very difficult to measure one system against another, because it’s not apples to apples,” Sarles said. That’s a sentence he’ll probably have to repeat in the months ahead as customers grill him about the cost of Metro riding the subway here.
Ultimately, he said, it comes down to this: “Look at the service they get. Despite the complaints, the service is pretty darn good.”