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Virginia Gov. McAuliffe taps Ray LaHood to head panel to study Metro

Ray LaHood, former U.S. secretary of transportation, on March 8 in Washington. (Kate Patterson/For The Washington Post)

The Washington region took a step toward building a consensus on how to fix Metro on Thursday as Virginia Gov. Terry McAuliffe (D) tapped former U.S. transportation secretary Ray LaHood to head an independent panel to study the system’s governance and long-term financial needs.

The move immediately drew applause from top Metro officials and Maryland Gov. Larry Hogan (R) — although Hogan continued to reject any statewide tax increase to support the transit agency. D.C. Mayor Muriel E. Bowser (D) suggested she would welcome the project if it succeeded in creating a regional sales tax or other dedicated funding for Metro next year.

In a related development, Metro General Manager Paul J. Wiedefeld said the region must act this year to find funding to pay for new equipment, repairs and other investments in the system, and to fix what he called its “unsustainable cost model.”

It was Wiedefeld’s most explicit call yet for the District, Maryland and Virginia to act quickly to address Metro’s needs. He spoke as the Metro board approved fare hikes and service cuts starting in July to erase a budget deficit.

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The LaHood initiative and Wiedefeld’s comments signal an acceleration in efforts to deal with Metro’s structural problems, now that the difficult battle over the 2018 budget is over. Metro is at a critical point in its 40-year history, with declining ridership and growing uncertainty over its financial future.

The LaHood panel will tackle the governance and funding difficulties that have hampered Metro for decades. It will consider proposals from past and present to make the Metro board more efficient, adjust labor agreements to reduce costs, privatize some operations and to find one or more new, reliable sources of funding.

In a telephone interview, LaHood repeatedly stressed the need to restore what he called “America’s Metro system” to world-class quality.

“We’ll come up with answers with regard to governance, answers with regard to funding and answers with regard to how we make America’s Metro the best in the world — which it’s not today,” LaHood said.

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His work will coincide with other efforts to evaluate Metro and its problems. The region’s Democratic congressional representatives have asked the federal General Accountability Office to conduct a similar review. The Metropolitan Washington Council of Governments and prominent local business groups also have been studying Metro and making recommendations.

McAuliffe said LaHood’s group could have an impact because he is a nationally recognized transportation expert, and because the panel would be free of political pressures and competition among the District, Maryland and Virginia.

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“We need a top-to-bottom review by the best transportation expert in the country,” McAuliffe told WTOP Radio.

He said LaHood had no illusions that the task would be easy.

“When I called Ray yesterday, he was very clear. He said, ‘Terry, it is a mess you have on your hands,’ ” McAuliffe said Thursday.

LaHood brings a bipartisan background to the job. He served 14 years as a Republican congressman from Illinois and later was transportation secretary for President Barack Obama (D) from 2009 to 2013.

At the Department of Transportation, LaHood played a key role both in securing funding for construction of Metro’s Silver Line and in passing legislation that gave the federal government new authority over transit systems’ safety.

LaHood intends to issue a report from his group by fall. Virginia officials hope that will allow legislation to be approved in early 2018 by the Virginia and Maryland general assemblies to set up new funding mechanisms for Metro.

LaHood, who will have complete control over the panel’s work, said McAuliffe’s staff contacted him about the assignment several days ago.

Virginia is willing to pay the full cost of the effort, although McAuliffe hopes Maryland and the District will contribute. The cost is expected to be in the hundreds of thousands or millions of dollars, according to Virginia Transportation Secretary Aubrey Layne.

LaHood said he planned to recruit staff from DLA Piper, the law firm where he works as a policy adviser, and from people who worked for him at the DOT.

Virginia hopes the LaHood panel will help head off efforts in Congress and the local business community to appoint a federal control board to take over Metro. Layne said a control board might focus only on reducing costs and not on providing resources that the transit agency needs.

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McAuliffe said he also acted in part out of concern that Congress will not extend a federal program that provides $150 million annually to Metro for capital spending. The program expires in two years.

“You hear what’s coming out of Congress. They want us to fix this system,” McAuliffe said. “We have to go to Congress, for them to spend taxpayer money, and say, ‘We’ve got our act together in D.C., Maryland and Virginia.’ We can’t do it in the present governance structure.”

McAuliffe made a point of responding to complaints by critics that Metro’s pay and benefits are too costly. He said the LaHood group would provide an objective view.

“People keep saying our labor costs are high, yet a conservative think tank came out this week and said, ‘No, yours are not high. They’re in line’ ” with other transit systems, McAuliffe said.

He was referring to a study by a data analyst for the American Action Forum, which supports free-market solutions and smaller government.

The LaHood initiative drew support from top officials, including Metro Board Chairman Jack Evans.

“I am heartened to hear that Governor McAuliffe has retained Ray LaHood, who is a well-known, well-respected transit official, to advise on Metro’s funding needs for the future,” Evans said.

In Annapolis, Hogan spokesman Douglass Mayer said, “The governor 100 percent supports Terry McAuliffe in his effort.”

But Mayer was careful to focus his enthusiasm on governance fixes — which are designed primarily to improve efficiency and reduce costs.

“The governor has made clear that there needs to be a heck of a lot more fiscal responsibility and controls in the governing operations surrounding [Metro],” Mayer said. “Hopefully this will be a step in the right direction. We pretty much see eye to eye with Virginia on these issues.”

As for raising taxes to support Metro if necessary, Mayer reiterated Hogan’s position that it would be up to the two Maryland counties served by Metro to decide.

“If Montgomery and Prince George’s make an independent decision that they want to put in additional money, that’s their business,” Mayer said.

McAuliffe said he is hoping for backing from Bowser, as well, but the mayor’s office was cautious.

“This is the first we’re hearing of the proposal, but we will review it and it would be encouraging if it includes a commitment by all jurisdictions to pass a dedicated source of revenue in 2018,” Bowser chief of staff John Falcicchio said.

Separately, at the Metro board meeting, Wiedefeld took a more vocal role than in the past in urging increased funding for the struggling system. Previously, he has left the politically charged issue of funding to the board.

“Metro and the region still face looming financial issues,” Wiedefeld said Thursday. “There are two priorities the region must tackle this year — long-term capital funding needed to maintain safe and reliable service, and Metro’s unsustainable cost model. Simply put, much more needs to be done to address funding needs and control costs that management actions alone cannot solve.”

Evans welcomed the comments, saying Wiedefeld’s voice is critical to securing more funding.

Since becoming chairman early last year, Evans has taken every opportunity to forcefully urge the three jurisdictions and the federal government to drastically increase their financial support for Metro. He has conceded that his pleas were so frequent that they have lost their impact, so he looked to Wiedefeld to carry the message.

“Paul Wiedefeld has enormous credibility in this region,” Evans said. “When Paul makes a statement … it’s going to carry a lot of weight.”

Wiedefeld stopped short of explicitly backing a dedicated revenue source for Metro. But his call for “long-term capital funding” suggests he would favor such a measure. Metro is the only major transit system in the nation that does not receive a significant amount of revenue from a regional sales tax or similar reliable funding source.

Also, Wiedefeld’s reference to Metro’s “unsustainable cost model” may suggest he would favor privatizing some operations, or curbing pay and benefits, or both.

Wiedefeld said he will provide a detailed analysis of the system’s operating and long-term needs next month. He said he has avoided wading into the discussion in the past because his immediate focus has been on turning around the system.

“That’s why I did not engage,” Wiedefeld said. “But clearly, we have to have a voice in some of these larger issues that are being discussed.”