Ridership Off, Metro Braces for Cuts to Fill $22 Million Gap
Friday, October 9, 2009
Metro is projecting that declining ridership will create a $22.4 million budget shortfall this fiscal year, forcing managers to urgently search for cuts in coming weeks.
The transit agency's chief financial officer, Carol Kissal, told the board's finance committee Thursday that the estimated gap is based on ridership in July and August. If ridership does not bounce back by December, she said, the cuts could grow.
"I think it's prudent to get ahead of the game on this," she said.
No decisions have been made about the cuts, and Thursday's discussion was more about the extent of the problem than the solution. Fare increases would be off the table, because they require public hearings and could not take effect in time to matter for the current fiscal year, which began July 1. A fare increase is planned for next year, based on early projections of a $144 million budget shortfall without one.
Metro General Manager John B. Catoe Jr. said he will act swiftly to cover the $22.4 million needed for this year but did not offer details. Aides said he would spell out his strategy at the finance committee's Nov. 5 meeting.
"We do not have time to wait," Catoe said. "This is an issue we need to deal with very quickly. There is a drop in revenues, and we're going to have to make reductions in our expenditures to match those. We will notify the board of what the specific actions are, but we should have something over the next few weeks. Some are immediate. Some are longer range."
Earlier this year, when Metro's board was finalizing this budget, accountants estimated cost savings from a variety of potential service cuts. Lengthening the interval between trains by three minutes (from 12 to 15) from 6:30 to 9:30 p.m. and by five minutes (from 15 to 20) from 9:30 p.m. to midnight, would save only $4.1 million over a year. Neither service reduction went into effect.
Kissal attributed the ridership declines to three factors: higher unemployment rates, which mean fewer people taking mass transit to work; lower gas prices, which make it cheaper to drive; and the June 22 crash that killed nine people and reduced capacity on the Red Line, the rail system's busiest, by about a third, creating delays that drove people to seek alternatives.
Metro forecast that ridership would grow 3 percent across the board this year, compared with last year. Instead, rail ridership is down about 3 percent, and bus ridership is off 5 percent overall during the first two months of the fiscal year. Meanwhile, more people are using MetroAccess, the paratransit service, which raises costs.
Average weekday ridership on the Red Line fell 10.4 percent in July and 8.3 percent in August compared with last year, officials said. Other lines had declines of 2 to 5 percent.
"We're not sure about attributing that just to the accident, or if we should attribute some of those declines to the economy," Kissal said.
Fewer paying customers translated into $4.3 million less than expected in July and August. It reverberated in other ways, too: Metro earned $500,000 less from parking fees in August than the $4.4 million the board budgeted for. The board also banked on an extra $10 million from eliminating paper transfers, but accountants now think it will be $6.8 million.