Metro is suspending plans to extend night service hours, institute special weekend fares and discount bus-to-rail transfers this summer to reallocate funding toward keeping the transit system solvent and avoid layoffs or furloughs while the agency continues to weather the impacts of the coronavirus pandemic.
In a revised budget proposal to be presented for board approval Thursday, Metro officials say federal relief funding of more than $767 million will help the agency finish the current fiscal year with a balanced budget.
But with continued uncertainty about when the Washington region will reopen, the agency cannot afford to start many of the new initiatives it had planned to roll out July 1 as part of a push to attract new riders and sustain the ridership growth it had been experiencing for more than a year before the pandemic hit in March.
“There are so many variables here that any one of these could put our ability to deliver service at risk,” Metro General Manager Paul J. Wiedefeld said in a statement. “While we are deeply grateful to Congress for their support, we will need additional help to get the nation’s capital moving again.”
The revised budget reflects the agency’s shift in focus to recovering from the pandemic. On Monday, Metro released its pandemic recovery plan, which doesn’t anticipate a return to pre-pandemic levels of service until next spring.
Before the pandemic hit in mid-March and the District, Maryland and Virginia began implementing stay-at-home orders, Metro seemed to have turned a corner and was experiencing sustained ridership growth. However, as the pandemic worsened, the agency was forced to repeatedly cut service, including closing 19 stations and shuttering all but a fraction of Metrobus routes to protect its workers.
Officials have actively discouraged riders, saying bus and rail should be used only for essential trips. Since mid-March, rail ridership has plummeted nearly 95 percent and bus ridership is down more than 70 percent, and the agency had been running a deficit of more than $67 million.
The agency also has spent more than than $17 million in unplanned expenses for personal protective equipment and disinfectant and sanitization supplies, contributing to the losses.
So instead of the extended late-night hours many rail riders had been anticipating and a $2 flat weekend fare aimed at making Metro attractive to families, the $2.07 billion operating budget that takes effect July 1 “defers those service and fare initiatives” to cover Metro’s pandemic recovery.
Money left from the federal relief package after balancing this year’s budget — about $438 million — will be used toward fiscal year 2021 operating expenses. The money will help cover wages and benefits, which make up 80 percent of Metro’s operating budget, and the continuing anticipated losses in fare revenue as the agency slowly ramps up service beginning in the fall. Metro said it also helps take some of the pressure off the jurisdictions that fund it, all of which are dealing with declining tax revenue and may have trouble meeting their obligations to the transit authority.
“Thanks to CARES relief funding, we have been able to keep people working and continue to move essential workers as safely as possible during an unprecedented crisis,” Wiedefeld said, referring to the $2 trillion federal coronavirus relief legislation by its official name.
Avoiding layoffs and furloughs was part of Congress’s intent in providing transit agencies with $25 billion in relief aid as part of the package, and Metro officials maintain they will be able to avoid doing so. Adhering to lawmakers’ guidelines will be key as Metro and the country’s other transit agencies seek additional funding in a new relief bill.
“While Congress provided you with broad flexibility in using these funds, we encourage you to protect your front line workers’ safety, wages and benefits and to not postpone your use of this money,” House Transportation Committee Chairman Peter A. DeFazio (D-Ore.) said in a letter to transit agencies last month. “The Committee appreciates the desire by transit agencies to follow the law and we want to make clear that the congressional intent of this funding and the law is to ensure the safe continuation of transit services as well as protecting the transportation workforce from massive layoffs and operational disruptions.”
Metro’s recovery plan calls for maintaining the current reduced service schedule and operating hours until at least the fall, when the transit agency anticipates it could see a significant increase in ridership when D.C. Public Schools open. Officials don’t plan to restore service to pre-pandemic levels — including peak-hour frequencies — until next spring unless a vaccine or covid-19 treatment becomes widely available sooner.
As a result of the pandemic, Metro is projecting revenue in the new fiscal year will be about 53 percent — or $438 million — below projections when the budget was approved, according to documents to be presented to the board Thursday. Based on that, the agency is recommending that all fare and service changes approved as part of the new budget in April be deferred for six months.
Metro Board Chairman Paul C. Smedberg said the budget plan will be reassessed often as Metro navigates its way through the pandemic. “With so many unknowns at this stage, the key to all of this is flexibility,” Smedberg said in a statement. “We plan on financial check-ins along the way and will work with [Wiedefeld] after the 6-month period to make a thoughtful decision on how to proceed. We do not have all the answers now but we will proceed accordingly.”
Metro staff members have proposed reducing expenses through a variety of changes, including the continued reduced service. That, combined with management initiatives such as elimination of vacancies, more efficient use of supplies and materials, and the deferment of all the fare and service changes will reduce the subsidy needed from jurisdictions by $45 million, according to budget documents.
Based on projections, the agency anticipates needing additional funding of $412 million. And because local governments are facing their own budget constraints, Metro is proposing using just over $546 million in Cares Act funding to both cover this year’s shortfall and a one-time subsidy credit of $135 million allocated back to funding jurisdictions.
The capital budget is largely unchanged.
Metro is among 15 of the nation’s largest public transportation systems, led by the New York Metropolitan Transportation Authority, the country’s largest, calling for a second federal bailout.
“We know future stimulus will be needed,” Smedberg said. “The initial CARES Act helped, but a sustained level of support is necessary if transit agencies like [Metro] are expected to continue to provide vital rail, bus and MetroAccess service to the region.”
In a letter last week to congressional leadership, the agencies estimated the nation’s transit systems will need an additional $32 billion.
Among those hit hardest, the San Francisco Bay Area Rapid Transit system projects revenue losses through 2021 of $1.3 billion, the letter said. Sound Transit in the Seattle area is projecting a shortfall of nearly $630 million. And MTA is forecasting losses up to $8.5 billion in 2020, $4.6 billion above the federal aid it received through the Cares Act.
“We come together to request your urgent assistance in providing additional aid to public transportation agencies in the next COVID-19 relief bill,” the letter said. “Since we last wrote, the public health crisis has worsened dramatically across the country, and the full impact on the nation’s economy remains unknown. State and local governments are sounding the alarm to their own budget shortfalls.
“For public transportation agencies, a fuller picture has now emerged of the depth and breadth of COVID-19-fueled revenue losses from dedicated transportation revenue streams, such as farebox, sales taxes, motor fuel taxes, tolls, mortgage-related taxes and other user fees.”
The American Public Transportation Association is also lobbying for more federal funding for transit agencies, asking for $23.8 billion. On Tuesday, the trade group held a news conference involving several transit chiefs to drum up public awareness for its campaign.
Dorval Carter, president of the Chicago Transit Authority, said daily ridership losses for his system since the pandemic are equivalent to the population of Pittsburgh.
“We are losing over $1 million a day in farebox revenue alone,” Carter said. “We continue to see an increase in our expenses as we engage additional costs in cleaning and maintaining our systems for our customers and our employees.”
A coronavirus response package unveiled by House Democrats on Tuesday proposes making almost $16 billion available for grants to public transportation agencies. Almost $12 billion would be directed to agencies serving cities with populations greater than 3 million, with another $4 billion for “agencies that, as a result of coronavirus, require significant additional assistance to maintain basic transit services.”
Ian Duncan contributed to this report.
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