D.C.’s sales tax would increase nearly a penny per dollar to fund Metro under a proposal unveiled in the D.C. Council on Tuesday. But the 0.75 percent tax increase would not take effect unless Maryland and Virginia enacted identical sale tax increases to support the struggling transit system, an unlikely prospect in the current political environment.
The Council unanimously introduced the Washington Metropolitan Area Transit Authority Dedicated Funding Act, aimed at funding the agency’s capital needs and boosting revenue. Council members settled on the 0.75 percent figure — rather than 1 percent — because a uniform, regionwide tax at that rate would raise the $500 million a year that General Manager Paul. J. Wiedefeld has requested, Metro Board Chairman Jack Evans said.
In April, a technical panel of the Metropolitan Washington Council of Governments recommended a regionwide 1 percent sales tax to provide $650 million in new dedicated funding for Metro. Evans supports a higher level of funding, but said the Council’s decision was made in the spirit of compromise.
But the new funding must come in the form of a sales tax, Evans said.
“Anything else is subject to the whims of future politicians changing their mind, and so that’s why this is important,” said Evans (D), who also is a D.C. Council member. “We’re leading the way and showing the other two jurisdictions — their legislatures that will convene in January — what they should do.”
Wiedefeld has said Metro needs $15.5 billion over 10 years — including $500 million in annual, dedicated funding — to ensure the system’s safety and reliability.
But the mechanism preferred by the District, the sales tax, faces steep opposition in the GOP-controlled Virginia General Assembly. It also is unlikely to assuage Virginia’s concerns that because of its Washington suburbs’ large population and high volume of retail, its share to Metro would be more than the District and Maryland’s combined.
Maryland Gov. Larry Hogan (R), who initially said Metro wouldn’t receive any additional money from his state, has since proposed a plan offering Metro $500 million in funding over four years — provided the District, Maryland, Virginia and the federal government each agree to provide the same amount. Hogan’s proposal has been criticized in the District and Virginia for falling short of the dedicated funding Metro needs.
But just as other jurisdictions view the Council’s proposal as unfeasible, the District rejects the Hogan plan, Evans said.
“Larry hogan’s proposal is a non-starter in the District — period,” he said. “There’s zero chance that’s gonna happen.”
Hogan’s office responded Tuesday night with a strong statement indicating it will not back the District’s sales tax plan.
“Governor Hogan’s plan is the only viable offer on the table,” Hogan spokeswoman Amelia Chasse said. “If D.C. has to raise taxes on the poorest of its citizens to come up with their share of the additional $2 billion that is their call. However, Maryland will not be joining them in doing so.”
Despite being introduced by the Council as a whole, the proposal and the Metro board chairman’s subsequent comments appeared to widen the rift between Evans and Hogan, who have feuded in recent months over policy differences and Evans’ outspoken rhetoric.
“Ultimately, the best news for Metro is that Jack Evans only has 60 days left in his term,” Chasse’s statement concluded.
Given the stark political differences between the jurisdictions, the Council proposal isn’t expected to significantly advance the regional debate over how to fund the system. The bill is contingent on passage “by the Maryland General Assembly and the Virginia General Assembly in which each jurisdiction dedicates an equivalent increase of .75% of their sales tax” for Metro.
The D.C. measure doesn’t tie the new funding to performance metrics or labor or governance reforms, which some officials — and notably Virginia gubernatorial candidate Ed Gillespie (R) — have said are essential to ensure accountability before any new money is provided. Gillespie’s Democratic opponent, Lt. Gov. Ralph Northam has not advocated a new tax, but said he supports dedicated funding — provided Metro improves its governance, safety and reliability.
Evans argued that the labor and governance reforms pushed by officials and office-seekers in Maryland and Virginia are out of Metro’s hands. The agency is subject to collective bargaining in labor agreements — and binding arbitration when talks fail — and governance is a matter for the jurisdictions to address, he said.
Past leadership may have been prone to irresponsible spending, Evans said, but “in the last two years since [Wiedefeld’s] gotten there and I’ve gotten there we’ve completely changed that culture.” Evans said.
At its last board meeting, the agency celebrated two positive financial developments: its release from “restricted drawdown” penalties by the Federal Transit Administration, which barred it from directly spending $400 million in formula grants; and the receipt of a “clean” audit from an outside accounting firm for the most recent fiscal year, officials said.
“This doesn’t mean we’re at perfection,” Metro board member Jim Corcoran said at the meeting, “but we’re well on our way to improvement.”
The D.C. Council sales tax bill was referred to its Committee on Finance and Revenue.