Metro plans to offer buyouts to avoid having to lay off 1,400 employees as it searches for ways to cut more than $176 million from its pandemic-ravaged budget.
The proposal, one of several cost-cutting measures probably going into effect in January, is an example of the enormous financial strain public transportation agencies are under after the coronavirus pandemic sent fare revenue into free fall.
Transit agencies had hoped Congress’s focus over the next two months would return to passing another round of coronavirus relief, but that appears unlikely following the fraught and contentious election.
President-elect Joe Biden has prioritized transit in his proposed $2 trillion “Build Back Better” infrastructure and energy plan, but any help will probably come too late for Metro.
“We can’t build a budget based on things that may or may not occur,” said Metro General Manager Paul J. Wiedefeld. “We’ve got to go with our best estimate, and unfortunately, we’ve tried as much as we could to sort of run the clock out here. But we just have no more room left. The money’s running out, and we can’t assume that we’re going to get something in the time frame that will help us.”
Metro officials began preparing for this reality in September, when the board endorsed a cost-cutting plan that would have meant layoffs for up to 1,700 employees, shorter service hours and longer wait times for trains in an effort to close what was then a projected $212 million gap for the remainder of the fiscal year, which ends June 30.
The agency has largely been operating on what’s left of the $767 million it received from the federal pandemic relief plan, known as the Coronavirus Aid, Relief, and Economic Security (Cares) Act, which was approved by Congress in the spring.
On the plus side, Wiedefeld said, those federal dollars are now expected to last until March, about two months more than initially anticipated. That also shrinks the fiscal year 2021 operating shortfall by about $36 million, to $176.5 million.
“We’ve continued to keep the pressure on the budget very tight,” Wiedefeld said, “so the good news — relatively good news — is the hole isn’t as deep as we thought initially, because the Cares Act is going to carry us for roughly about another two months.”
Cost-cutting and lower demands for service due to the pandemic have led to savings in overtime, fuel and energy costs. But 80 percent of Metro’s budget is wages and benefits, and the biggest cost savings can be achieved only by cutting personnel. Metro has lowered its initial estimate of positions that need to be cut to 1,400.
Vacant positions among the 12,000-person workforce are going unfilled as much as possible, Wiedefeld said.
“What we’re trying to do is minimize how many of those positions are filled,” he said, “so a number of things we’re doing there — one is obviously vacancies. We have people leave every month, so that draws that number down if we don’t have to backfill it.”
To cut even more, Wiedefeld said, the transit agency plans to offer buyouts of $15,000 to retirement-eligible employees. Metro estimated there are about 2,000 employees eligible.
The program is not “early retirement,” and participants would leave with their full pensions.
“We looked at that, but that’s not the way we’re going,” Wiedefeld said. “We’re going with a retirement incentive. If you’re already at a retirement age, you already know what all your pension benefits and [other] benefits are. That’s all in place. We don’t have to touch any of that.”
If not enough buyouts are achieved, layoffs will start with contract employees before unionized workers.
“I anticipate that we will have to,” Wiedefeld said. “I don’t know. We’ll see. . . . The last thing I want to do is have someone not have a job.”
Those people who are laid off would be hired back if Metro’s financial state improves, Wiedefeld said. Without federal assistance or an end to the pandemic, that is unlikely.
Fare revenue, Wiedefeld said, largely remains flat, stuck at historically low levels as buses and trains remain half to two-thirds full.
There has been some growth since the transit agency restored nearly two-thirds of service in August after five months of skeletal operations to limit rides and protect passengers and operators during the pandemic.
Passenger rail trips were down 71 percent to 89 percent early this month compared with pre-pandemic levels, according to the most recent statistics. Metrobus ridership was 31 percent to 58 percent below normal. Though that’s a significant uptick from this summer’s trip counts, the transit system isn’t seeing a corresponding revenue boost because it’s continuing to provide free bus rides, having riders board through the rear doors to limit contact between bus operators and passengers.
Before the pandemic, revenue this fiscal year from fares and parking was projected to be more than $823 million. That projection has been revised downward to about $183 million.
“Ridership pretty much is flat,” Wiedefeld said. “Goes up a little bit, but as you know, it’s coming up a loss because we’re not getting revenue. We’re not collecting fares.”
Metro plans to resume fare collection and front-door boarding of buses in January, when other cost-cutting measures take effect.
Those had included cutting Metrorail service hours by two hours, shutting the system at 9 p.m. Monday through Thursday. But Wiedefeld said the agency reversed course because of public opposition. Riders also objected to a proposal to cut station staffing to just one manager, saying they wouldn’t feel safe.
“People obviously like having someone there,” Wiedefeld said, “so that was one thing we said — ‘Well, let’s bring them back.’ ”
The transit agency also bowed to complaints about instituting “turnbacks” or limiting the number of trains sent to suburban Maryland stations on the Yellow and Red lines.
Wiedefeld also restored $5.5 million in proposed cuts to Metrobus service by redeploying more buses to routes that have gained riders over the past three months.
The cost-cutting measures could continue indefinitely because budget projections for the next fiscal year, which starts July 1, also look bleak,
Collectively, transit agencies across the nation have asked for $32 billion in federal aid in addition to the $25 billion they received in the first round of money from the Cares Act. Democrats have been pushing for a second economic relief package of more than $2 trillion. Congressional Republicans have rejected the proposal, saying only a much smaller package is needed. It’s unlikely that any action will be taken during the lame-duck period before Biden is sworn in Jan. 20.
Rep. Gerald E. Connolly (D-Va.), chairman of the House subcommittee on government operations and a longtime Metro advocate, said the Senate seems unwilling to budge.
“I don’t see any incentive in the lame duck for them to do what they were unwilling to do before,” he said.
Most transit systems rely on subsidies, and Connolly said he knows there’s little they can do to stave off service cuts or layoffs without federal help.
“They can’t really do it viably without federal stabilization funding, just plain and simple,” Connolly said. “The enormous amounts of money that it takes to just maintain the systems that are being utilized by mass numbers of the traveling public I think just demand federal intervention to keep them at the ready once we recover from this pandemic.”
Once Congress realizes just how many federal workers and other employees rely on transit, Connolly said, members of the Senate may have a change of heart, understanding transit’s role in the economy.
“There are economic consequences for not acting,” he said.
Even service cuts and layoffs may not be enough for transit systems to survive. New York’s Metropolitan Transportation Authority is seeking a $2.9 billion loan from a Federal Reserve short-term lending program as it confronts a deficit projected to be more than $12 billion for the remaining fiscal year.
Joseph Seliga, a consultant with law firm Mayer Brown’s government practice and infrastructure investment team, said transit agencies may need to consider similar plans, then hope some of the money can be made up — possibly with money Biden has pledged.
“There are a number of choices that transit agencies are going to have to make and are making,” Seliga said. “So what we’ve seen is a combination of cost reductions, as well as utilizing different forms of financing to be able to generate the liquidity that they need to continue to function from a cost-savings perspective.”
Wiedefeld said Metro has considered all options. But the transit agency has not reached out for any type of loans, said spokeswoman Sherri Ly.
There is hope among some with the election of Biden, nicknamed “Amtrak Joe” by some for his daily commute between his home in Delaware and the Capitol.
Biden has pledged to spend $2 trillion on initiatives to improve infrastructure, create auto industry jobs, transition to clean energy power sources and build 1.5 million homes.
Money would also go to transit, helping create “zero-emissions public transportation options” for cities with at least 100,000 residents, according to his proposal. The additional funding would help improve or create light-rail networks, rail and bus lines and infrastructure for pedestrians and bikes.
According to the plan, Biden also intends to create a program that would give expanding communities money to “build in public transit options from the start.”
Once the pandemic ends, that’s good news, Seliga said. Until then, transit systems will continue to operate on the brink.
“I believe that there is reason to be optimistic in terms of the traveling public coming back to transit and utilizing transit as the country is able to recover from the impacts of covid and return to some level of stability, hopefully at some point in 2021,” Seliga said.
“That takes us back to the need for some federal action in order to put transit agencies in a position where they are not negatively impacted by covid in such a way that over the long term, even with a return to normalcy over time, they aren’t playing catch-up for years to come,” he said.