Intersect v8n3, June 21, 2004 Metro Funds Fall Short, Customers Pay More Costs By Peter Buryk The Washington Metropolitan Area Transit Authority, or Metro, is suffering from a lack of dedicated funding that is standard among other transit agencies of its size, according to a new study by Brookings Institution scholar Robert Puentes. In his study, Puentes concludes that Metro's inability to collect revenue in the form of taxes leads to increased budget deficits and decreased service for its customers. Other large transit systems in New York, Chicago, and Los Angeles receive 20 percent or more of their annual revenues from such sources as gas and sales taxes. Metro is different from these systems in that it relies on local subsidies from the three jurisdictions that it serves, Maryland, Virginia, and the District of Columbia, for a large part of its revenues. In 2002, Metro received 14.6 percent of its operations funds and 20.6 percent of its capital funds from local subsidies. Other large transit systems average less than 5 percent and 8 percent respectively. Operating funds are used to run the system and consist primarily of employee salaries and benefits. Capital funds pay for infrastructure costs such as maintenance, system expansions, and the purchase of buses and trains. Each jurisdiction's subsidy contribution is determined by complex formulas for rail, bus, and other services. Such factors as population density, number of transit stations, and ridership are considered in local subsidy calculations. Reliance on local subsidies and the absence of a dedicated funding source leaves Metro vulnerable to the budgetary pressures and transportation priorities of local jurisdictions. Continued increases in ridership and aging equipment and facilities have also driven up costs. For fiscal year 2005, Metro faces a $25 million budget shortfall. Metro's board approved a round of fair increases for rail, buses, and parking that not only closed the gap, but as in last year's price hikes, will raise more money than the projected shortfall. This year, the fare and fee increases, effective June 27, will generate an additional $29 million. Minimum rail fares will increase by 15 cents to $1.35 and bus fares will increase by five cents from $1.20 to $1.25 per ride. Weekly bus passes, however, will remain at $11. The budget committee added this provision recognizing the financial burden of fare increases for bus riders, who are typically less affluent than rail riders. The cost of parking at Metro stations will increase by 75 cents, and monthly parking fees will increase by $10 to $45. Metro's transportation service for the disabled, MetroAccess, will also increase its fare 10 cents to $2.50. Weekday service will begin one half hour earlier at 5 am, and late night Metro service will continue, but riders will be charged peak hour fares for non-peak service between 2 and 3 am on Friday and Saturday nights. WRN joined Metro board members Jim Graham (DC) and Chris Zimmerman (Arlington) in opposing fare increases, especially on bus riders. WRN argued that transit is an essential public service that benefits everyone, and that increased costs should be paid by the public as a whole, rather than transit riders. The smaller increase on bus fares of five cents versus a rail fare increase of 15 cents is viewed as an important precedent. Over the past two years, daily parking fees have risen by $1.50. This is close to the $2 WRN originally proposed in order to avoid fares increases last year. In both years, however, fares and fees have increased above what was needed to cover the budget gap. In this year's action, the Metro board again shifted increased costs onto its customers. See "Washington's Metro: Deficits by Design," by Robert Puentes, June 2004 at: http://www.brook.edu/urban/publications/20040603_puentes.htm