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In reversal, Hogan offers $500 million extra for Metro if Virginia, D.C. and feds match it

Maryland Gov. Larry Hogan (R) upended the regional debate over Metro funding Monday by offering to give the transit system an extra $500 million over four years if Virginia, the District and the federal government each do the same.

Hogan's proposal, made in a letter delivered Monday morning to Virginia Gov. Terry McAuliffe (D) and D.C. Mayor Muriel E. Bowser (D), narrowed their differences over funding and appeared to increase chances that the region could agree on a plan to save the agency.

But it remained to be seen whether the other three parties — especially the federal government and Virginia — would go along. Some politicians grumbled that Hogan only made the proposal because he knew it was unlikely to be accepted, and a Metro board member predicted the federal government would balk.

Overall, however, top Metro officials and other regional leaders praised Hogan for taking an important first step toward reaching consensus, while they warned that the plan falls short of a permanent solution.

Hogan’s action marked a dramatic reversal from his position in a contentious, closed-door, regional summit two weeks ago. There, Hogan shocked McAuliffe and Bowser by saying Maryland would not give Metro any additional funds beyond what it already contributes each year.

Metro's SafeTrack maintenance program launched on June, 4 2016, and ended on June 25, 2017. (Video: Claritza Jimenez/The Washington Post)

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On Monday, Hogan reaffirmed the stance he took at the summit against new taxes to support Metro, and he complained that Maryland contributes more than its fair share to the struggling transit agency. But he took a new approach regarding more money.

“The needs of the Metro system are immediate and overwhelming,” Hogan wrote in the detailed, four-page letter. “Given the current crisis, the State of Maryland is prepared to invest an additional $500 million in increased Metro funding over the next four years if the Commonwealth of Virginia, the District of Columbia and the federal government all commit to do the same.”

Hogan's about-face appeared prompted partly by intense criticism of his earlier opposition, officials said, both from other regional actors and from a strongly worded editorial in The Washington Post headlined, "Larry Hogan to Metro: Drop Dead." Hogan is expected to seek reelection next year, and an anti-Metro stance could hurt him in vote-rich Montgomery and Prince George's counties.

But Hogan spokesman Doug Mayer suggested the governor had taken the adamant position at the summit as a bargaining ploy at the start of what he expected to be a prolonged process.

Hogan is “always negotiating,” Mayer said.

Mayer also rejected the idea that Hogan had altered his position, noting that the governor emphasized in the letter his previous stance that the federal government ought to contribute more to Metro. In proposing more money now from Maryland, Virginia and the District, Mayer said, the governor was expanding on his earlier strategy.

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Rep. Gerald E. Connolly (D-Va.) welcomed Hogan’s change of mind and said he believed it came in response to the backlash to Hogan’s position at the summit.

“He has now reconsidered, after the very negative reaction he got, including editorially” from The Post, Connolly said. “But his condition that it be matched, he knows, I think somewhat cynically, is a very tall order.”

Whatever the motivation, Hogan’s offer seems destined to transform the discussion about providing additional resources for the cash-strapped agency.

Hogan’s plan is the first specific proposal on funding Metro to come from a top elected official since Bowser pitched a regionwide penny-per-dollar sales tax nearly a year ago.

Hogan made a point of criticizing Bowser’s proposal, and he noted that McAuliffe opposed it as well.

“The sales tax is a regressive tax, which disproportionately hurts the poorest of our citizens,” Hogan said in the letter.

Mayer said Maryland would cover most of its share of the new cost by drawing on the state transportation trust fund. However, Hogan has in the past resisted diverting money in that fund from roads and bridges to transit.

Hogan said his plan would buy Metro time by giving the region four years “to formulate a long-term, more permanent solution to [Metro’s] fiscal challenges.”

If Virginia, the District and the federal government embrace Hogan’s proposal, it would go a long way toward raising the additional money Metro General Manager Paul J. Wiedefeld says the transit agency needs for new equipment and maintenance to keep the system safe and reliable. Wiedefeld says Metro needs an additional $500 million a year, and Hogan’s plan would match that.

One potential shortcoming, however, is that Wiedefeld has said Metro needs the $500 million in dedicated funding — which means a reliable revenue stream, such as from a tax, that can be pledged to repay bonds so Metro can borrow more easily on financial markets. Hogan’s proposal would not necessarily take that form, so the benefit to Metro would be somewhat less than what Wiedefeld desires.

Both Bowser and D.C. Council Chairman Phil Mendelson (D) said Hogan’s plan was inadequate because it did not provide dedicated funding.

“Our hurdle is to identify dedicated revenue that will bring Metro to a state of good repair. Anything short of that does not get us over the hurdle and to our priorities: safety, reliability and capacity,” Bowser spokeswoman LaToya Foster said.

Wiedefeld called Hogan’s proposal “a very good step,” while noting that the governor recognized that it’s not a long-term fix for Metro’s finances.

“It’s obviously shown leadership. It’s something on the table,” Wiedefeld said during an appearance on “The Kojo Nnamdi Show” on WAMU 88.5 FM.

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A bigger question is whether the federal government and Virginia will agree to the proposal. The District has consistently been the jurisdiction most supportive of increasing funding for the agency, and both Bowser and the D.C. Council have backed higher taxes to pay for it.

McAuliffe has said he would support dedicated funding for Metro only after the transit agency showed progress on safety, reliability and efficiency. He’s also on his way out of office; he’ll be succeeded in January by the winner of November’s general election.

Both major candidates vying to succeed McAuliffe — Democrat Ralph Northam and Republican Ed Gillespie — warned that they want to see more progress at Metro before considering more money for the transit agency.

In addition, the Republican-controlled legislature in Richmond strongly opposes new taxes and also has been skeptical about increasing funding for Metro.

McAuliffe’s initial response Monday was cautious and sought to link Hogan’s action to work by former U.S. transportation secretary Ray LaHood. McAuliffe recruited LaHood earlier this year to try to forge a consensus on funding and governance.

McAuliffe spokesman Brian Coy said the Virginia governor “is encouraged that the ongoing review conducted by Secretary LaHood has resulted in progress between these three jurisdictions on a shared vision for the future of the Metro system.”

Then there’s the federal government. The Trump administration’s budget proposed to slash federal funding for transit. Metro supporters have been concerned that the agency will lose an annual $150 million federal subsidy that expires after the federal fiscal year ending in 2019.

Steve McMillin, one of two federal Metro board members newly appointed by the Trump administration, said that with the $150 million subsidy already on the line, the expectation of additional dollars beyond that “would not be a realistic planning assumption.”

Asked what his message for the region would be, McMillin replied: “I think the message is we shouldn’t be looking over the hill for a savior — we should plan on saving ourselves.”

Connolly, the Northern Virginia congressman, agreed that the federal piece of the puzzle is going to be “very difficult” and the GOP-controlled Virginia legislature presents an additional challenge.

“If Virginia said ‘yes’ and D.C. said ‘yes,’ it would give us a lot more leverage in turning to the federal government and saying, ‘You — the biggest user of this transit system — you need to follow suit,’ ” Connolly said.

Hogan’s letter reaffirmed his position that the federal government needs to do more.

“Forty-two percent of Metro riders are federal employees, and yet the federal government’s investment does not reflect this fact,” Hogan said.

Hogan began his letter by emphasizing his backing for Metro — his support of which had been called into question at the Aug. 28 summit.

“Despite its long-standing financial mismanagement and safety and reliability issues, Metro nonetheless continues to play an incredibly important and vital role in the region,” Hogan said.

He went on to say that 21 percent of Metro’s ridership comes from Maryland, 23 percent comes from Virginia and 55 percent from the District.

“By any logical measure, Maryland has been paying not only our fair share, but actually more than our fair share,” Hogan said.

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Metro Board member Michael Goldman, whom Hogan recently reappointed to the board, said he did not have any personal insight into the governor’s decision-making, but he believed the proposal was prompted by reaction to Hogan’s previous position.

“I suspect there was some frustration that more didn’t come out of that [summit] meeting, and the press coverage and leaks coming out of it seemed to make Maryland the bad guy in all this,” Goldman said.

Martine Powers contributed to this report.