Higher Fares Might Arrive In January

Official to Propose Increase Tied to Rate of Inflation

Metro General Manager John B. Catoe Jr., who scrapped a plan to raise rail and bus fares this year, said yesterday that he plans to seek a fare increase to take effect in January because the agency needs cash.

Catoe announced in March that he was shelving a complicated fare-increase plan that was designed to close a budget gap for this year. At that time, he also said he would propose an across-the-board increase this fall, tied to cost-of-living measures. But he didn't specify when the increase would take place.

Yesterday, Catoe said for the first time that he would recommend that fares go up in January instead of later next year.

The size of the increase must still be worked out. Fare increases would be indexed to cost-of-living measures, such as the consumer price index, and would rise at regular intervals rather than by big jumps every few years, the typical pattern in previous years.

Any fare increase must be approved by Metro's board of directors, which also would need to convene public hearings.

After months of budget discussions, Catoe said, it became increasingly clear that the transit agency needs to act quickly.

"In looking at where we need to be, and the [budget] gap that we had this year, I'm concerned that we need to increase that revenue as soon as possible," Catoe said in a telephone interview last night. He first mentioned the January date on NewsChannel 8 yesterday.

Catoe said Metro's costs are continuing to rise and he doesn't want "to put the agency in the position where we end up in March with not enough dollars to finish the year without dramatic cuts," he said in the interview. "But the final decision is up to the board."

Catoe has repeatedly used the word "fragile" to describe the budget for the coming fiscal year because it relies heavily on one-time fixes.

Before Catoe arrived this year, Metro staff had recommended a controversial fare increase to help close a $116 million budget gap. But Catoe rejected that plan, which would have raised $64 million, and balanced the $1.2 billion operating budget through layoffs, accounting changes and a one-time infusion of $40 million from a court case that Metro won after 17 years of litigation. There is also little cushion in Metro's reserve fund, and "that's assuming that everything will go right," Catoe said.

Some board members reached last night said Catoe's proposal raises questions about how successful Metro has been in balancing the budget for fiscal 2008, which begins July 1. The full Metro board is scheduled to approve the spending plan next week.

"I think this is going to be subject to very rigorous examination," said D.C. Council member Jim Graham, who chairs Metro's finance committee and represents the District on the board. Catoe's proposal would call for raising fares in the middle of the budget cycle, he said. "If there's a problem, we ought to deal with" it sooner than January, Graham said.