The transit agency can legally ask for up to a 3 percent yearly increase from the state of Maryland and cities and counties of Virginia that, along with D.C., provide Metro with the bulk of its annual operating budget. Metro has asked for the increase each year since the cap was passed two years ago, but this year, transit officials say they are cognizant of the financial constraints the coronavirus pandemic has wreaked on tax revenue that regional governments depend on.
“It would certainly help,” said Tom Hucker (D), a Montgomery County Council member who chairs the Transportation and Environment Committee.
Until late last month, Metro officials were staring down a looming deficit of nearly $671 million starting in March because of ridership losses. The transit agency had proposed severe service cuts that included no weekend rail service until Congress came through with a $900 billion stimulus in late December that included $14 billion for transit.
Of that, Metro will receive about $610 million, which should keep buses and trains running at their current levels for about a year.
The federal bailout was a needed injection for households and several industries, but it didn’t directly provide financial help to local governments served by the Metro system.
The annual subsidies that Metro gets from regional and state governments make up more than half of the system’s annual operating budget. Revenue from fares, parking, advertisements and other services make up the rest.
The subsidy increase is capped by Virginia and Maryland at 3 percent. Both states passed a law in 2018 limiting subsidy growth as part of a condition of permanently dedicating and significantly increasing money for long-term capital projects. The District did not adopt the limit, and the cap applies only to Metro’s operating costs.
Metro has annually asked for as much as it can because officials say expenses have risen at least 8 percent annually in recent years, outpacing mostly flat fare revenue growth. The transit system felt so stretched that it had lobbied the states to increase or alter the cap before the pandemic struck.
By not asking for a subsidy increase, Metro could save the jurisdictions tens of millions of dollars, according to Wiedefeld’s latest $1.89 billion operating budget proposal for the 2022 fiscal year, which starts on July 1. An exact figure wasn’t available Monday.
Metro’s proposed budget includes $1.15 billion in subsidies, less than the $1.25 billion Metro had counted on receiving at the beginning of the current fiscal year. That amount was later revised down in November to $1.11 billion.
Even as Metro has been running buses and trains at a reduced level because of lower demand, costs for cleaning, disinfecting and personal protective equipment have risen. Metro officials said they hope to make up the money they wouldn’t receive in subsidies through cost-cutting starting in January 2022, the second half of the fiscal year.
Wiedefeld proposed that Metro would seek to work with unions to defer raises and enact service cuts in the last six months, leaving the agency with a $171.4 million deficit. Officials previously have said they might seek more federal assistance at that time to bridge the gap unless ridership rebounds.
Metro officials said none of the local or state governments asked Metro for a break in their subsidy payments. The agency said it wanted to be cost-conscious toward its funding partners.
“While Metro did not receive a specific request, [Wiedefeld] is aware that our funding jurisdictions did not receive additional revenue in the recent Covid Relief package and face enormous financial pressures,” Metro spokesman Ian Jannetta said in a statement.
Fairfax County Board of Supervisors Chairman Jeff C. McKay (D-At Large) said an increase in Metro’s subsidy request would be tough to swallow this year, particularly when Congress didn’t include local governments in its bailout.
“An increase in the local subsidy at this time would be another expense on Fairfax County residents,” he said in a statement.
The Metro Board ultimately will decide if the transit system can lower its subsidy request. Members will discuss during a Thursday meeting.
Board members said the lack of an additional subsidy could increase the amount of money the agency requests from federal government next year if ridership doesn’t significantly turn around.
But Metro Board Chairman Paul C. Smedberg said the agency needs to consider the financial health of cities and counties across the Washington region as it moves forward with its own needs.
“Having talked to a lot of them and hearing about their situations and comments that were coming up again, it’s just one of the options we wanted on the table,” said Smedberg, who represents Virginia cities and counties on the board.
While the state of Maryland has the direct responsibility of providing Metro with its annual subsidy, local officials in counties and cities Metro serves can provide responses to state transportation officials.
Prince George’s County Council member Todd M. Turner (D-District 4), who also is a member of the Washington Suburban Transit Commission, said a lower subsidy request should be welcomed by state legislators.
“If because of the federal stimulus they’re not going to require that additional payment, I think that will be helpful as long as they can meet their obligations for service and other operational obligations as part of that,” he said.