The Washington PostDemocracy Dies in Darkness

Metro’s prospects rise as omicron fades, but looming financial shortfall will shape service

The transit agency is likely to face two obvious but unappealing paths forward: Find financial help or cut service.

The Silver Spring Metro station. (Sarah L. Voisin/The Washington Post)
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Mired in problems immediate and long-term, Metro registered a rare sliver of good news these past two weeks: The number of passengers boarding trains rose to its highest levels since mid-December.

It was a small but welcome development for a transit agency facing a federal safety probe that has left most of its rail cars out of service. Seeing few positive developments on the horizon earlier this month, Metro acknowledged future service is unlikely to mirror its pre-pandemic offerings.

As Washington is increasingly eyeing in-person work while the omicron variant fades, the portion of those workers who turn to Metro will help shape the agency ahead of a massive budget shortfall. The looming hole will leave Metro with two obvious but unappealing paths forward: Find financial help or cut service.

Elected leaders and business officials say Metro remains a draw for private development as projects near stations move forward and more people live in and visit downtown. As a shift toward telework upended the commute, they say turbulence will give way to stability after Metro pivots from a focus on commuters.

Before reaching solid footing, the transit agency is likely to face years of difficulty as its customer base of federal workers increasingly works from home, forcing Metro to find new passengers or resort to sobering cuts next year if ridership doesn’t hit pre-pandemic levels, which transit officials say is unlikely.

Proposed service cuts earlier in the pandemic — including station closures, shorter hours and elimination of weekend service — didn’t come to fruition.

Metro’s next leader will face ridership challenges and a looming ‘financial cliff’

Congress saved Metro from making those draconian service cuts over the past two years with three rounds of federal stimulus money, an infusion of $2.4 billion that made up for revenue losses. Metro, with an annual operating budget of about $2 billion, is projecting to have $151 million remaining in federal aid to use in the fiscal year that begins July 1, 2023, leaving the agency to make up the rest.

Paid ridership, meanwhile, is not projected to account for a more than $500 million funding gap that year. According to Metro projections, transit officials predict ridership to rebound to 53 percent by this summer, 65 percent by next summer and 75 percent by summer 2024.

Metrorail’s weekday ridership these past two weeks has routinely surpassed 160,000 daily passengers — up from the doldrums of the omicron surge but still one-quarter of pre-pandemic levels.

“Come July 1, 2023, that’s when the fiscal cliff kicks in and all bets are off,” said former Metro board member Michael Goldman, now chair of the Washington Suburban Transit Commission.

Metro also faces looming trouble over its capital budget, which funds construction and renovation projects, as well as new trains and buses.

To pay for those items, the transit agency uses federal funding, grants and subsidies from jurisdictions, as well as issuing bonds. Metro won’t be able to issue more bonds if its entire stream of subsidies goes toward paying existing bonds. That would leave Metro unable to pay for maintenance and other projects without increased subsidies, a tough sell for jurisdictions whose budgets were also hurt during the pandemic.

Metro officials have not formally discussed any strategy in recent months. But the Metro board previously reviewed a plan to cut the agency’s operating budget to make up for missing fare revenue, providing a glimpse of what might lie ahead without substantial increases in ridership.

In December 2020, while Congress was moving toward passage of its first coronavirus stimulus package, board members had to make contingency plans. They advanced a budget proposal that would have cut $494.5 million, with such drastic service changes that Goldman referred to it as the “doomsday” plan.

From the archives: Metro board moves ‘doomsday’ budget forward to accept public comments

Chief among the proposed cuts: Eliminating weekend Metrorail service. The cost-cutting blueprint also proposed shuttering 19 of 91 stations, shortening weekday service by two hours, cutting Metrobus routes by half and creating longer waits for trains. It called on the transit agency to eliminate about 2,400 positions from Metro’s more than 12,000-person workforce through attrition and early retirements, as well as layoffs, if necessary.

Weeks later, the plan became moot when Congress bailed out Metro with the Cares Act.

Board members could also ask the federal government and D.C., Virginia and Maryland to increase their subsidies. This year, D.C. is contributing $399 million to pay for Metro’s operations, while Maryland is giving $423 million and Virginia is providing $288 million.

Goldman said a sales tax could be a solution, but Metro would first have to convince all three jurisdictions to agree on it.

Kate Mattice, executive director of the Northern Virginia Transportation Commission, said such persuasion would be “a big lift.”

“I think it’s still a little premature to really look at that crystal ball, which is challenging for all of us,” she said. “We are all watching a period of uncertainty in the way people are moving in our region and really across the country.”

Developers along the nearly 11-mile Silver Line extension that is expected to open this year — further complicating Metro’s financial picture — say the shift to telework isn’t hurting demand for new office space along the corridor. The extension includes six new stations and will bring the rail system to fast-growing Loudoun County.

“With Metro finally expected to open this year, we’ve seen a pickup in leasing activity,” said Michael Rocks, a developer of the 1.67 million-square-foot mixed-use Innovation Center South project near Metro’s new Innovation station.

Even if telework expands, Rocks said, businesses and residents want to be near the Metro system. Companies along the Silver Line also find the connection to Dulles International Airport attractive, he said.

Development in the region has always boomed near Metro lines, Metro General Manager Paul J. Wiedefeld said during an interview — a trend he said he expects will continue. It’s not just commuting services that attract people to Metro, he said, but convenience and an alternative to the region’s choking traffic congestion.

“To have the option to live in an area where you have high-quality transit service, whether you go into the office every day or not is almost irrelevant, to some degree,” he said. “It’s really about all the things you want to do with your life. And if you have that option there, that’s a value.”

Wiedefeld, who will retire from the agency later this year, said Metro can continue to attract people moving into transit-situated apartments and condominiums, college students and reverse commuters who live in D.C. but work elsewhere.

“I believe there is additional ridership. It just may not look like the ridership that we served pre-pandemic,” he said. “We will serve some of that, but I think it’s changing.”

Wiedefeld said technology can help Metro shave costs. The agency might also consider a partnership with ride-hailing companies, which Metro tested in 2019, subsidizing late-night Lyft and Uber rides to people working later than Metro’s service hours.

Metro plan would subsidize Uber and Lyft fares to fill late-night service gap

Automation of shuttles or Metrorail could also help reduce costs, since more than 70 percent of Metro’s operating budget goes toward labor. The Metrorail system ran on an autopilot system for decades until a 2009 collision at Fort Totten killed an operator and eight passengers. Even though it wasn’t at fault, Metro’s Automatic Train Operations system has been disabled ever since.

Wiedefeld said Metrobus expansion is another place the transit system might find riders. Throughout the pandemic, more people have ridden the bus than the much larger Metrorail system, especially lower-income riders.

As commuter numbers lag, discussions are taking place to lure more people to downtown Washington, where office vacancy rates stand at an elevated 16.5 percent, said Gerry Widdicombe, director of economic development for the DowntownDC business improvement district. Retail vacancy rates are at 21 percent, a percentage point off the record set in December 2020.

Meanwhile, downtown housing vacancy rates are near record lows, said Galin Brooks, director of planning and placemaking with DowntownDC. She said as the omicron variant has faded, more people are coming downtown for reasons outside of work. Metrorail is busiest within the downtown district on weekends, while the number of people downtown is about 60 percent of pre-pandemic levels.

Entertainment-focused businesses and venues are nearly back to normal, Widdicombe said, while restaurants are about 70 percent full. He said he would like to see a shift downtown to providing more housing, with residential areas making up 6 percent of downtown compared with office space at 76 percent.

While the next few years could be difficult for transit in the Washington area, Wiedefeld said he expects Metro to come out on the other side serving a prominent role.

“There will be different ways we move around with [Metro]," he said. “But at the end of the day, this is such a strong region that we will get back there. I’m very positive about that.”