Metro Considers Increasing Rail Fares
Monday, December 11, 2006
Metro faces a $116 million budget shortfall the next fiscal year, raising the possibility of fare increases, reduced bus and rail service and higher contributions from area taxpayers, according to budget documents and interviews with board members.
Officials are considering several Metrorail fare changes, including higher charges for riders traveling at the peak of rush hour and discounts for riders who take reverse commutes, according to board members who were briefed by budget officials in the past two weeks. Board members said they were not given specific amounts for proposed fare increases, which would be the first in three years.
Service changes being considered include opening the subway at 8 a.m. instead of 7 a.m. on weekends and closing some station entrances on weekends, which would help reduce staffing and overhead costs.
The proposed changes are part of a $1.2 billion operating plan that will be made public Thursday during the board's budget committee meeting. The fiscal 2008 spending plan, which would take effect July 1, also includes 5 percent raises for about 1,600 Metro managers. The proposed budget is about 9 percent higher than the current one.
The shortfall is partly the result of escalating costs and ridership growing slower than projected. In the first quarter of this fiscal year, rail ridership growth was nearly flat. Instead of the 2 to 3 percent expected gain, ridership barely increased from the same period last year, baffling officials.
Some of the budget gap is the result of management decisions made in previous years. Board members have chosen not to replenish reserve funds to pay injured workers and those who successfully sue the agency. Officials have been warning board members that the drop in reserves would have to be made up in the new budget.
Rising health-care charges for the system's 10,000 employees, union-negotiated raises, the expense of operating new rail cars and added oversight for MetroAccess, which transports the disabled and the elderly, have also driven up costs sharply.
Metro's operating expenses are paid through three sources: passenger fares, revenue raised by the agency through advertising and other sources and taxpayers in the District, Maryland and Virginia.
"We have to have the will to implement the difficult changes that are going to lead to an improved system," said Charles Deegan, who represents Maryland on the Metro board. "We have to look at the entire fare policy. There is some need for a fare increase, but we also want to provide discounts for people using SmarTrip" electronic fare cards, he said.
Deegan, who is expected to assume the board chairmanship in January, also said Metro needs to explore other revenue options, including selling its downtown headquarters near the Verizon Center. A sale could reap $120 million, he said. The agency could build a new headquarters building on Metro-owned land elsewhere and rent out office space. "That would give you an income stream that would cover your utilities costs and the upkeep of the building," he said.
This week's meeting is likely to be the first in a series of lengthy budget negotiations. Before fares can be raised, however, Metro is required to hold public hearings.
As part of the proposed budget, Metro officials recommend covering more than half of the shortfall -- or $64 million -- by increasing revenue, including through possible fare hikes. Money to cover another third of the shortfall would come from taxpayers through the subsidies paid by jurisdictions where Metro operates. The budget calls for those subsidies to total almost $500 million, an 8 percent increase from the $461 million budgeted for the current fiscal year.