Metro officials on Thursday unveiled a budget likely to please riders but one that left some board members skeptical about whether the transit agency could truly avoid fare increases and service cuts when revenue is down and ridership is declining.
The proposed spending plan marks a sharp departure from just a few months ago, when officials hinted that they might have to raise fares or cut service to balance the books. But pushback from board members representing the District and the hiring of a new general manager appear to have forced the agency’s financial managers to rethink their approach.
“This is a great opportunity, in some ways, to use the budget to take a breath and look at where we are,” said Metro’s newly-installed general manager, Paul J. Wiedefeld. “It is a good strategy right now until we get our arms around where we are.”
Indeed, the proposed budget for the fiscal year that begins July 1 includes no fare increases or service cuts, nor does it ask local jurisdictions to increase how much they contribute to Metro’s operations. The plan, however, does include several initiatives aimed at winning back riders that could affect Metro’s already shaky bottom line.
One customer-friendly initiative, for example, would allow a 15-minute “same station entry/exit grace period” to end Metro’s policy of charging riders who enter a station and leave it within minutes — most often during service disruptions. That would cost the transit agency an estimated $2 million a year.
A proposal to start peak morning fares an hour later — at 6 a.m. instead of at the system’s 5 a.m. opening — also would have financial implications.
But the initiatives fall in line with Wiedefeld’s pledge to create a more customer-friendly system.
“Metro is viewing 2017 as a reset,” said Dennis Anosike, Metro’s chief financial officer. He said the pause will give Wiedefeld, who officially began his job Monday, more time to review Metro’s operations and determine his priorities.
For the next fiscal year, budget officials are projecting a 5 percent decline in revenue — from $938 million to $890 million. Overall, the budget calls for $1.7 billion in spending for daily operations, $845.3 million of which would come from contributions from the local jurisdictions served by Metro. The proposed overall spending plan is roughly $3 billion.
Anosike said the agency would bridge the gap between revenue and expenses through a combination of strategies. It will depend more heavily on grant money from the Federal Transit Administration that flows to its capital program. Not all of those federal dollars are spent each year, and budget officials say that roughly $64 million could be used to fund preventive maintenance costs that were previously paid out of the operating budget.
An additional $2 million in savings would come from cutting administrative expenses, and $20 million in savings would come from a “board efficiency work plan.”
But some board members were skeptical about the numbers presented.
Michael Goldman, who represents Maryland, said he had concerns about the credibility of the proposal, adding that some elements “defy logic.”
Board Chairman Mortimer L. Downey said that taking money from the capital program to fund operations sets a bad precedent. “I think we’re setting ourselves up for a long-term problem,” Downey said. “The fact that we haven’t been able to use the money that’s there [in the capital program] doesn’t mean that the needs aren’t there. It just means we haven’t been reducing our backlog.”
But board member Harriet Tregoning, who represents the federal government, said she understands the need for a timeout. Given the loss of rider confidence in the system, she said it was unrealistic to think that the board would be successful in pushing through a fare increase or asking local jurisdictions for more money.
“I don’t see this as a drastic change to how we’ll be funding in the future, but in some ways, a pause means we double-down next year,” she said.
In an interview after the meeting, Wiedefeld said he understands Downey’s concerns and pledged that using the capital funds for operations would be a “one-time thing.”
“Mort is correct,” he said. “It is a slippery slope. [But] it is money that is just sitting there. It’s a relatively small amount, and my commitment is that this is a one-time deal.”
Meanwhile, a presentation to the board’s Customer Service and Operations Committee that showed a sharp drop in customer satisfaction among Metro riders prompted heated exchanges. When asked by a board member to explain the factors behind rider dissatisfaction, Deputy General Manager Rob Troup noted that as many as 70 rail cars are sidelined. Having fewer cars can mean crowding and delays, but Troup offered assurances that efforts are underway to repair cars more quickly.
That drew a sharp response from board member Leif Dormsjo.
“Statements that things are getting better or things are moving in the right direction are false statements,” said Dormsjo, director of the D.C. Department of Transportation. “Things are not moving in the right direction. I think we need to be more candid, more transparent, more honest about what’s going on here.”