Metro General Manager Paul J. Wiedefeld has spent much of his first year studying how much it will cost to fix the region’s transit system. The price tag is a lot higher than local government officials say they expected or can afford.
The total additional cost for the District, Maryland and Northern Virginia to fulfill Wiedefeld’s goals to improve safety and reliability over the next three budget years exceeds $1 billion, according to new Metro forecasts.
That includes a hefty 36 percent increase between now and 2020 in the annual subsidy the three jurisdictions pay to cover Metro’s operating deficit. That adds a total of $641 million to the governments’ costs over the three-year period, compared to what they’re paying now for operations.
It also represents a jump of nearly $600 million from the April forecast for how much the governments contribute for capital investments, such as new rail cars and track repairs.
Metro expects to seek larger annual operating subsidies partly because Wiedefeld sped up spending under the accelerated maintenance program known as SafeTrack. In addition, fare revenue is down because of lower ridership.
The system’s swelling needs have alarmed the region’s elected leaders and other senior officials. Without some new spigot of funds for Metro, they say, they will have to cut spending for years to come for competing priorities, such as education, police, or roads and bridges.
“People just don’t know how they’re going to fund it,” Fairfax County Executive Edward L. Long Jr. said. “One of the things we [regional officials] started talking about is, without another revenue source from the feds or the state or somewhere else, what things would we have to start giving up? . . . Everything from schools to rec centers could be on the table.”
Jeffrey S. DeWitt, the District’s chief financial officer, noted that an unanticipated $37 million increase in the city’s proposed contribution to Metro’s operating budget for next year equaled the entire cost of running the Department of Motor Vehicles.
“You can’t wipe out a whole agency to pay for [Metro], so you’ve got to do something,” DeWitt said.
The region’s governments aren’t required to give Metro all that it’s asking. They say they will look hard at what Metro plans to do with the money and where the system might find savings.
But they also said it is critical to preserve Metro, the core of the region’s transportation network. They also said they would like to support Wiedefeld, who has won bipartisan applause for his assertive steps to instill a safety culture, improve financial management and catch up on overdue maintenance and rehabilitation.
If the region doesn’t find the money, analysts said, it risks repeating a historical pattern in which the jurisdictions shortchanged general managers who said large infusions of cash were necessary to rebuild the system as it wore out.
One of those general managers was Richard A. White, who delivered a famous warning in 2004 that Metro risked a “death spiral” unless substantial investments were made. He got less than half of what he said was needed and hopes the region won’t make the same mistake with Wiedefeld.
“The decision is, do we keep kicking the can down the road, as we’ve done for the past couple of decades, or do we get serious and rally around someone who has established good credibility in a year on the job, and answer the bell and provide the support that he is asking for,” said White, now acting president of the American Public Transportation Association.
Wiedefeld offered a similar assessment.
“We have a $40 billion investment [in Metro], and it’s 40 years old,” he said. “As we replace that, there’s big numbers going forward, and they grow with inflation. . . . Either we start to wrestle with this so it’s where we want it to be, or we just push it down the road.”
According to Metro’s new forecasts, the District’s total contribution for operations and capital would jump from $467 million in the current budget year to $735 million in fiscal 2020. Maryland’s total would rise from $479 million to $727 million, and Virginia’s would increase from $332 million to $574 million. (Metro’s fiscal years run from July 1 to June 30.)
The projected 36 percent jump in the annual operating subsidy by 2020 is more than three times higher than the increase of less than 12 percent foreseen in the District’s budget.
DeWitt recently wrote to D.C. Mayor Muriel E. Bowser (D) and the city’s council warning that Metro’s needs were rising much faster than the city’s tax revenue.
“These figures are far above our growth, and the problem only gets worse,” DeWitt said. “It means something has to be cut, somewhere, out of your budget every year through the three-year forecast.”
Metro officials said the regional governments shouldn’t be too surprised, because Metro had warned that the gap between revenue and expenses was widening.
The outlook is also daunting for the capital budget, which pays for investments in equipment and upkeep.
There, the jurisdictions face a double whammy. First, Metro has underinvested for so long that many of its rail cars and other hardware are close to the end of their service life.
“We’re on borrowed time on some of that equipment,” Wiedefeld said.
The new capital plan, presented Dec. 1, proposes that the jurisdictions contribute a total of $4.24 billion over the next six years. That’s up by more than $1 billion from the previous six-year budget approved in April.
The largest share of the money would go to buy new 7000 series rail cars to replace outdated ones. Substantial amounts would also pay to upgrade power systems, repair tracks, maintain escalators, and sustain the bus and paratransit fleet.
In addition, under Wiedefeld’s direction, Metro is spending a much higher percentage of its investment budget each year.
In the past, the jurisdictions got a significant financial break because Metro was spending only about two-thirds of the money it had available. Now, that “discount” is gone, as the spending rate is about 90 percent.
The investment budget, much of which is funded by long-term debt, does not ask for everything Metro would like to have. It wouldn’t pay to run eight-car trains throughout the system or to permanently repair chronic leaks in a Red Line tunnel.
Metro said in a presentation to the board that the budget “acknowledges regional funding constraints and Metro’s commitment not to request more than can be delivered.”
But the scale of the request still represents a severe strain for the top officials who are being asked to fulfill it.
Maryland Transportation Secretary Pete Rahn was pessimistic about satisfying Metro’s estimate that Maryland kick in $373 million more for capital over six years than the state had been projected to contribute in the preceding budget.
“That’s a steep price, and it’s going to be very difficult for us to be able to meet that sort of expectation,” Rahn said.
He noted that a drop in gas-tax revenue forced Maryland in the fall to cut its six-year transportation budget by more than $700 million.
“It’s a horrible time for us, given the revenue that we’re seeing presently,” Rahn said.
Rahn and other officials expressed cautious hope that the federal government might come to the rescue, as President-elect Donald Trump has supported a massive new infrastructure program.
Some of that money might conceivably come to Metro. But officials were concerned that many of the proposals being floated focus only on creating tax credits or other new financing mechanisms to pay for infrastructure. They say the real need is for fresh federal spending, which many in Congress resist because it could widen the budget deficit.
“We don’t need financing, we need funding,” Rahn said.
For many officials in the region, Metro’s increased requests highlight the need for a regionwide sales tax or other form of dedicated funding for the agency. But political opposition to tax increases and differences among the jurisdictions have blocked past efforts to create such a revenue source.
“These [requests] are really big numbers — there’s no question about that,” said Jay Fisette (D), vice chairman of the Arlington County Board and chairman of the Northern Virginia Transportation Commission. “Most of us know we have to find a solution that includes a new dedicated funding source. We haven’t wrapped our arms around what that solution is yet.”
Wiedefeld has tried to stay out of the debate over how to fund Metro. He prefers to leave that contentious issue to the Metro board. But he noted that there has been long-standing concern over the agency’s finances.
“This isn’t new,” Wiedefeld said. “There’s been talk for years that the financial structure of this system is not very strong. It just isn’t.”