The region's political and business leaders created a committee yesterday that will look at new ways to fund Metro, including some type of dedicated tax, to prevent a financial meltdown of the transit system.
The panel, established by the Metropolitan Washington Council of Governments, the Greater Washington Board of Trade and the Federal City Council, is expected to analyze Metro's financial needs and issue findings by December.
"We're at a critical point in keeping the wheels on Metro," said Robert T. Grow of the Board of Trade. "We've reached a tipping point: There's the age of the system, the fact that more and more people are riding it, the Orange squeeze," he said, referring to crowding on the Orange Line. "We've got to face the music and come up with a way to adequately fund it."
The selection of the 13-member panel is expected to be finalized next week, officials said.
A Brookings Institution study released in June found that Metro is facing a financial crisis because it is the only major transit agency in the country without a significant source of dedicated funding.
Transit systems in New York, Boston, Chicago, San Francisco, Philadelphia and elsewhere are guaranteed a portion of a gas tax, sales tax or some other revenue to help pay their costs, but Metro has to plead for financial aid each year from the District, Virginia and Maryland.
As Metro reaches middle age and must refurbish stations and replace and rehabilitate rail cars, buses and other equipment, its financial needs are exceeding the means of the local governments, said Robert Puentes, senior research manager at Brookings and author of the study. The transit system says it needs at least $1.5 billion over the next six years to maintain the current level of service and to handle crowding.
Fares and fees were stable for eight years until the Metro board raised them last year. They were increased again June 27. Fares pay about 55 percent of Metro's operating costs, and the rest is paid by a combination of subsidies from Virginia, Maryland and the District, as well as advertising revenue and other sources. Metro's operating budget is $940 million.
Metro receives a set amount of the gas tax levied in Northern Virginia, but that accounts for only 1.6 percent of the system's costs.
"Compared to other systems, [Metro] relies excessively on general fund revenues from its state and local partners," Puentes wrote. "This is, of course, a difficult problem for any transit agency. But for the fourth-largest agency in the country, such over-reliance is extraordinary."
Metro, which carries 1.1 million people on its buses and trains each day, is the fourth-largest transit system in the country, behind those in New York, Los Angeles and Chicago. Among subway systems, Metrorail is second to New York in passengers carried. Metrorail carries more riders each year than the Philadelphia, San Francisco and Atlanta subways combined.
Metro Chief Executive Richard A. White has lamented that his agency's pressing financial needs are going unmet. He has warned that without an infusion of cash, Metro is poised to tumble into a "death spiral" similar to the deterioration experienced by the New York subway during the 1970s.
Reliance on subsidies from local governments leaves Metro vulnerable to the vagaries of the political and economic climate in each jurisdiction, making it difficult for transit managers to plan for long-term projects and forcing transit to compete for dollars with education, public safety and other local needs.
Puentes estimated that a 1-cent regional sales tax in metropolitan Washington could generate $400 million a year -- covering the entire cost of the annual local subsidies. In his report, Puentes also discussed gas taxes, parking taxes and payroll taxes, among other possible dedicated revenue sources. Almost 20 percent of New York City's transit budget of $6 billion in 2001 came from dedicated funds. Nearly one-third of total funding for the nation's largest transit systems came from dedicated sources in 2003.