Reach for your wallet

And climb aboard Metro.

TWO MONTHS ago, Metro announced that it faced a deficit of $144 million for the fiscal year starting next July -- about 10 percent of its projected operating budget of $1.46 billion. Translation: Expect fare increases and service cuts in 2010.

Now the transit agency's financial troubles are deepening, as a result of fewer morning subway riders (read: soaring unemployment in the Washington region) and an arbitration panel's questionable ruling last week that Metro's 7,700 unionized workers should get solid wage increases even as the vast majority of public employees in this region have been hit by pay freezes, layoffs and furloughs. Translation: Expect substantial fare increases and service cuts in 2010.

That's the bad news. The good news is that at least for the time being, Metro has it better than other transit agencies around the country.

For years Metro has whined -- and this page has clucked sympathetically -- that it was the only major transit system in the country that lacked a dedicated, dependable source of funding, which usually takes the form of a tax (sales, gas, titling, etc.) earmarked for local subway and bus service. With no such deal, Metro was a mendicant, forced to panhandle for its annual subsidies from Virginia, Maryland and the District.

What a difference a catastrophic recession makes. As the economy has nosedived, state and local tax receipts have followed. For at least half the transit systems around the country, that has meant reduced funding from state, local and regional sources. And in most of those cases, funding has dipped sharply -- by more than 20 percent.

By contrast, Metro's patrons, which together contribute several hundred million dollars annually to help the transit agency balance its budget, have generally held steady. Granted, they have not increased their contributions by much -- certainly not by as much as Metro would like or by as much as they have in good times. Still, by and large they have managed to help stave off even more painful fare hikes and service trims on the subways and buses.

But hold the celebrations. For one thing, the arbitration panel's decision to grant three consecutive 3 percent annual pay raises to more than three-quarters of Metro's 10,000 employees (plus other benefits) will cost the transit agency $104.5 million over four years. That alone is the equivalent of about a 30-cent increase in fares over four years -- even if Metro appears to have anticipated it. Add to that the agency's long list of other short- and long-term problems -- the dip in ridership revenue; the exploding population of elderly and disabled passengers demanding service from the costly (and federally mandated) MetroAccess paratransit service; the plummeting value of Metro's pension funds, which are tied to the stock market; the fact that officials have already identified most of the easy cost-cutting moves -- and the outlook is bleak. Don't be surprised by round-trip daily fares that jump sharply in 2010 for both bus and subway service.

It's fair to wince. But keep in mind that the future costs of driving in this region are also likely to soar, not just because of higher prices at the pump but also with the spread of more (and more expensive) toll roads, as well as congestion pricing, where toll rates rise as traffic does. So while riding subways and buses will undoubtedly get dearer, it's likely to remain a bargain when measured against the competition. Small comfort, but comfort nonetheless.