A new, 1-cent regionwide sales tax would cover Metro’s long-term funding needs, according to a private presentation Wednesday to the Washington region’s top three elected officials.
But the three split sharply over whether such a levy is a good idea.
D.C. Mayor Muriel E. Bowser (D) made a passionate, public plea for a tax or other dedicated revenue source for Metro at the first regional summit in two years with Maryland Gov. Larry Hogan (R) and Virginia Gov. Terry McAuliffe (D).
She noted that the District has already endorsed a 0.5 percent regional sales tax for Metro if the two states go along and added, “Maybe that would have to go up.”
But Hogan was cool to the idea, saying such a levy would be “pretty difficult.” To ensure his position was clear, Hogan’s spokesman phoned a reporter hours after the event to say the governor “has no plans to support a tax increase, regional or otherwise.”
McAuliffe was in the middle. He declined to take a stand on a tax, on the grounds that it was premature, but he promised to be Metro’s “biggest cheerleader” on funding if the agency set and met targets for progress in safety and reliability.
The meeting appeared certain to revive a decades-old debate over creating a regional levy to give Metro a steady stream of revenue to help cover its operating deficits and invest in new rail cars and other upgrades.
Metro is the nation’s only major transit system that does not obtain a significant amount of its money from a tax or other dedicated funding source. Instead, it must seek money each year from the jurisdictions it serves.
Multiple studies in Metro’s 40-year history have pointed to the lack of dedicated funding as a primary reason for the underinvestment that has contributed to its safety lapses and chronic unreliability.
A main obstacle has been political opposition to tax increases — especially in Virginia, historically, and now in Maryland, as well. Another barrier has been the difficulty of getting the three jurisdictions to agree on a common approach.
“We need to come up once and for all with a way to pay for [Metro],” Bowser said. “Let’s do it next year.”
Bowser, Hogan and McAuliffe met privately with staff following a joint appearance before a large audience of business executives and civic leaders at the annual Capital Region Business Forum at the Washington Hilton hotel.
At the closed meeting, they heard a briefing on Metro’s financial needs from District Chief Financial Officer Jeffrey S. DeWitt. Metro General Manager Paul J. Wiedefeld also spoke.
The 1-cent regional sales tax was described by DeWitt as one of three “possible funding gap solutions” for Metro, according to a four-page working paper distributed at the meeting and obtained by The Washington Post.
Such a tax would raise about $500 million a year, which would allow Metro to issue bonds that would cover its needs through 2026, the document said.
The two other possible funding solutions suggested in the document appeared unrealistic.
One was annual increases in passenger revenue of 13.5 percent, either through increased ridership or higher fares. Ridership has been dropping, and fare increases are a tough sell with the nearly daily service disruptions.
The third option was yearly increases of 8.2 percent in subsidies from the District, Maryland and Virginia. Such added costs would face strong political opposition, especially from Virginia and Maryland.
Hogan noted that Maryland already contributes nearly $500 million a year to Metro. “At this point, that’s as much as we’d like to spend, until we see some things improve,” he said.
The document from DeWitt also described the impact if funding were not increased, calling it the “consequences of doing nothing.”
Current delays would “continue indefinitely,” passenger safety risks would increase, and traffic congestion would worsen.
“Economic growth in the region will likely slow,” the paper added.
DeWitt’s presentation to the three officials followed similar briefings he has delivered to the D.C. Council and to other local officials and business groups. He is also helping lead a working group appointed by the Metropolitan Washington Council of Governments (COG) to study Metro’s economic value to the region.
COG hopes the region can agree on a plan for dedicated funding in the next six to nine months and then propose it to the Virginia and Maryland legislatures in early 2018.
The analysis was based on a number of assumptions about future ridership, subsidies and inflation. It also lowered the total cost by assuming Metro would spend only $12 billion on capital investments in the next decade rather than $18 billion as the agency would like.
Among other things, that would mean delaying plans to add a second rail tunnel under the Potomac River to connect the Rosslyn and Foggy Bottom stations at a cost of more than $2.5 billion.
There would still be enough money for “railcar replacements, track system upgrades for 8-car trains and passenger system upgrades,” the document said.
Bowser said she urged the governors to agree to a timeline for setting targets for Metro to show improved performance and thus lay the groundwork for approving dedicated funding.
“We can kick it down the road, and if we do, we’re going to be in a much worse situation than we are now,” Bowser said. “I want to be the mayor who works with these governors to solve this.”
McAuliffe emphasized the need for the region to set specific goals for Metro.
“Before I can even conceive of going back to my legislature, we need some metrics back,” he said. “We said this to Paul [Wiedefeld]: ‘You get the reliability up, you deal with the safety issues, I will be the biggest cheerleader. . . . We need to come up with a funding formula for Metro that works.”
Hogan noted that Metro’s problems with safety and reliability began long before he or the other two elected officials took office.
“Unfortunately, this is a system that appears to have been broken for a long time with nobody in charge,” Hogan said. “We can’t afford to throw good money after bad, but we’re going to continue to invest in things that make sense.”
In theory, Montgomery and Prince George’s counties could raise taxes themselves — without the state kicking in money — as part of a regional effort to help Metro. But Hogan promised to discourage such an effort.
The Metro board chairman, Jack Evans, said he was disappointed with the governors’ response. Evans, who also is a D.C. Council member (D-Ward 2), has pressed vociferously for months for increased funding for Metro.
“The idea that Metro has to show results before it gets funds is a non-starter,” Evans said. “Paul [Wiedefeld] has shown results, and Metro has shown results,” he said, referring to the accelerated maintenance program known as SafeTrack.
Evans continued: “It’s time for both Maryland and Virginia to step up on both operating funds and a dedicated funding source.”
A rift also emerged between the District and Maryland’s positions on whether to raise fares to help cover a projected operating deficit of $275 million in the fiscal year beginning July 1.
Evans has said the District’s two voting board members would veto any fare increases, because, in the District’s view, fares are already too high.
Hogan rejected that position, saying Metro needs to consider fare increases as well as reducing costs and obtaining more money from the federal government.
The last regional summit was in September 2014, with McAuliffe, former D.C. mayor Vincent Gray (D) and Hogan’s predecessor, Martin O’Malley (D).
Bowser, Hogan and McAuliffe have met jointly regarding Metro, but under different circumstances. Transportation Secretary Anthony Foxx met with them in July 2015 to press them to work together more effectively to fix the transit agency’s problems.