Fare increase crucial to maintaining Metro operations in FY09
Metro has always sought to manage resources efficiently and to avoid fare increases. The money in Metro?s operating budget comes from local governments and from revenues from advertising and fares.
You may not know this, but Metro has come in more than $100 million under budget since 1998 and returned that money to local governments.
Also, Metro fare increases have been kept below the general inflation rate since 1995 and have not come close to keeping up with the growing costs to run the system (for example, inflation in fuel, electricity and health insurance).
This year, in an effort to cut back on excess costs and operate as efficiently as possible without sacrificing service, Metro made significant organizational cuts and implemented new cost saving measures. However, operating costs continue to skyrocket, and we estimate our organizational cutbacks and current funding structure do not provide enough funds to cover the growth in future operating budgets.
Without a fare increase, or a dramatic increase in subsidies from local government, Metro would be forced to make significant service reductions.
This web page provides detailed information about Metro's budget and why changes are needed.
How
is Metro funded?
What
are the economic pressures on the Metro operating budget?
How
much money is needed to balance the FY09 budget, and why that amount?
What
has Metro done to prevent a fare increase?
If
there is a fare increase, will we be paying more for the same level of
service?
Isn?t
there a bill in Congress that will provide $1.5 billion to Metro?
What
is happening with other transit agencies in the country?
Does
Metro have a long-term plan for fare increases?
What
is the current fare increase proposed by the Metro Board?
How
do the increased fares compare to driving?
When
would these fare increases go into effect?
How
can I provide input?
Additional
information
How is Metro funded?
Metro actually has two budgets, the capital budget and the operating budget.
First, there is the capital budget. The money in the capital budget comes from federal, state and local government, as well as from bonds we use to finance improvements. This money is used for things like large-scale facility maintenance, rail maintenance and for new rail cars and buses.
Second, there is the operating budget. Money in this budget comes from state and local government, as well as from revenue we earn with advertising and from fares. The operating budget, therefore, is most important as we discuss fare policy. This money is used for daily operations and pays for electricity, fuel and payroll.
What are the economic pressures on the Metro operating budget?
It?s very important to understand that virtually no transit agency in the country, or in the world, makes a profit or even breaks even. Each year, Metro customers pay only about 55% of the actual cost of their transportation. The remainder comes from state and local government and advertising.
Metro and the state and local governments have kept fare increases below the inflation rate for more than a decade, and even with fare increases, customers still will not pay the full cost of their transportation.
Metro base fares have increased 14% for bus and 23% for rail since 1995, while the inflation rate has risen 37%. During this time, costs to operate the system have actually grown far faster than the rate of fare increases, but this growth wasn?t passed on to customers.
Fuel ?
360%
Electricity
? 30%
Health insurance
? at least 86%
This is compounded by slow ridership growth and added costs for security, safety and service expansion.
How much money is needed to balance the FY09 budget, and why that amount?
Metro will need $109 million to balance the FY09 budget.
From FY04 to FY07, Metro?s revenue from all sources (fares, advertising, etc.) grew about 27% or around 9% per year. During that time, Metro?s expenses grew at roughly the same rate, about 26%, or about 8.6% per year.
In FY08, Metro cut $34 million from its budget and reduced the growth of expenses from 10.5% to 8%. Then, close to half of this growth was paid for through applying the one-time proceeds from a legal settlement to the budget. That and the fact that Metro projected a 4% growth in revenue for FY08 allowed us to avoid a fare increase this summer.
Unfortunately, the 4% growth in expenses paid for by the settlement will not go away and carries into the FY09 budget. In effect, operating expenses in FY09 will rise about 11% and revenue is only projected to grow 1%. That leaves a shortfall of about $121 million to maintain the same level of service.
If Metro provides a minimal level of additional service in FY09, expenses would grow another $20 million. Additional service would include the costs of operating the 6000-series rail cars, extending Yellow Line service to Fort Totten during off-peak hours and ending Red Line turnbacks at Grosvenor-Strathmore during off-peak periods.
If the contributions of the jurisdictions increase about 6.5%, then Metro will need about $109 million to balance the budget. Without an increase in the subsidy or the fares charged, the current service offerings would have to be reduced, which goes against Metro?s commitment to service and would be detrimental throughout the region.
What has Metro done to prevent a fare increase?
Metro and the jurisdictions have gone to great lengths to keep fare increases below the level of inflation for more than a decade. Metro is, in fact, a lean organization. Overall, in the years since 1998, Metro has come in more than $100 million under budget and has returned that money to the local governments.
More recently, Metro made cuts and program changes that avoided a fare increase in the summer of 2007 and yielded $34 million in savings. Metro is continuing to look for efficiencies and has identified measures that could yield $34 million in annual savings.
- The cut of 254 positions, or 20% of administrative staff, that Metro made in FY2008 will continue to save $25 million each year in the future.
- Metro instituted a safety program that should cut workers? compensation claims in half by 2012. The program has been very successful in Los Angeles, where they reduced spending from $57.5 million in FY04 to $41.4 million in FY06 and an estimated $41.1 million in FY07. That?s a 28.5% reduction. If we achieve the same level of success, we could save $4.8 million a year.
- Metro could save up to $3.3 million a year by completing paratransit eligibility assessments in-house and $1 million a year by switching responsibility for elevator shuttle service from Metrobus to MetroAccess.
- Through changes to copying and paper procurement policies and the cancellation of some contracts, the Corporate Strategy and Communications department is on the path to save up to $500,000 a year.
- Metro is aggressively recruiting to fill operations vacancies and reduce overtime.
If there is a fare increase, will we be paying more for the same level of service?
Metro is committed to improving service. Here are a few of the improvements we have planned:
- Metro projects that in the Spring of 2008 the rehabilitation of 364 2000/3000-series rail cars will be complete. This will make more Metrorail cars available to serve customers. Currently, about 10 percent of these cars are out of service at any time for rehabilitation.
- In September 2007 Metro eliminated four-car trains from rush hour service, and we will continue to receive, test and deploy our fleet of 184 6000-series cars. When all of these cars are accepted, and with concurrence of the Board, we will be able to field 916 cars each day rather than the current 782 cars. When this is accomplished, one-third of rush hour trains will have eight cars and two-thirds will have six cars.
- Contingent upon Board approval, we hope to run every other Blue Line train from Franconia-Springfield to Greenbelt via the Yellow Line bridge across the Potomac. This pattern will provide direct service from southern Fairfax County to the eastern portion of downtown.
- In FY2008, Metro will purchase 100 replacement buses and 25 new buses to improve service. In FY2009, Metro will replace an additional 100 buses in its current fleet. This will improve overall reliability of our bus service.
- Metrobus is working to restructure its bus service to provide customers with improvements. This will include limited-stop service like MetroExtra route 79 between Silver Spring Metrorail station and downtown/Archives along Georgia Avenue/7th Street NW, and the work we are doing with the public to improve the 30-lines.
- MetroAccess is buying 65 new vehicles to improve service and will implement door-to-door service for its customers in Spring 2008.
Isn?t there a bill in Congress that will provide $1.5 billion to Metro?
Congress has not yet approved the National Capital Transportation Amendments Act of 2007, which could provide Metro with $1.5 billion in federal funds over 10 years. If approved, the money must go into the capital budget, which pays for things like maintaining tracks, repairing tunnels and buying new buses and railcars. The shortfall for FY 2009 is in the operating budget, which pays for fuel, electricity and employee salaries. Money can't be moved between the two budgets, as a matter of law. Think of the capital budget as a type of real estate escrow account, where money is held for a specific reason like paying taxes on property. Money for the capital budget is given to us for a specific reason, in this case maintenance and improvement of our facilities and equipment. It cannot be used to cover shortfalls in the operating budget.
What is happening with other transit agencies in the country?
Because Metro?s funding is unique, it is very difficult to directly compare our fares with those of other transit agencies. For example, almost every other transit agency has a significant dedicated funding stream for their operating budget from state and local sources. Metro?s dedicated funding stream is minimal in comparison. It is important to note, that even with their dedicated funding, a number of major transit agencies are raising fares.
Los Angeles County Metropolitan Transportation Authority
- In 2005, 53% of their budget was dedicated funding from state and local sources, and they received 74% of their funding from state, local and federal sources.
- Cash fares will increase 20% in 2009.
- Day pass increased 66% in 2007 and 100% by 2009.
- Monthly pass increased 19% in 2007 and 44% by 2009.
Chicago Transit Authority
- In 2005, 27% of their budget was dedicated funding from local sources, and they received 55% of their funding from state, local and federal sources.
- In 2006, base cash fares increased 14% for both rail and bus.
- Due to insufficient government funding, they are raising fares again from 14-50%, depending on service and payment method, and they are cutting 39 bus routes.
Massachusetts Bay Transportation Authority
- In 2005, 55% of their budget was dedicated funding state sources, and they received 67% of their funding from state, local and federal sources.
- From 2000 to 2007, base bus fares increased 66-100% and base subway fares increased 70-100%.
Southeastern Pennsylvania Transit Authority
- In 2005, 22% of their budget was dedicated funding from state and local sources, and they received 61% of their funding from state, local and federal sources.
- This year, an 11% across-the-board fare increase, and close to $150 million from dedicated funding allowed them to avoid an additional 24% fare increase along with a 20% cut in service and the elimination of 1,000 jobs. They have, however, been forced to raise the price of tokens and transfers by 15 cents.
New York City Transit
- In 2005, 30% of their budget was dedicated funding from state and local sources, and they received 42% of their funding from state and local sources.
- Currently, there is much discussion in New York about how to meet the $1.7 billion shortfall projected by the city of New York?s Independent Budget Office, including increased subsidies and fares.
Does Metro have a long-term plan for fare increases?
In addition to a fare increase in FY09, Metro is proposing a long-term fare policy that would link fare increases to a Transportation Index that reflects the costs of delivering service. The index would probably grow at about twice the inflation rate because the costs of providing transit grow at a faster rate. For example, fuel costs have increased more than 300% since 1995 while the inflation rate has gone up 37%. A long-term fare policy would create a predictable and understandable approach to fare increases and help Metro better prepare for future budget years.
What is the current fare increase proposed by the Metro Board?
After the public hearing process is complete and the Board reviews the final report on public input, the Board may opt to lower any of the proposed increases. The major changes are summarized below:
- The Metrobus base fare for riders using cash would increase 8% from $1.25 to $1.35. Metrobus fare for Express bus service would increase 3% from $3 to $3.10. The fare for customers using SmarTrip cards would stay at $1.25 for regular bus service and $3 for Express bus service. The price of bus passes and D.C. Student tokens would not change. Regular Metrobus tokens would be eliminated, and after a year, transfers would be available only with the use of a SmarTrip card. An increase in the bus transfer period from two hours to three hours is also proposed.
- The Metrorail boarding charge during rush hour would increase 22%, from $1.35 to $1.65.
- The Metrorail maximum rush hour rail fare would increase 20%, going from $3.90 to $4.70, which will affect only 10% of our peak ridership.
- Daily parking at Metro stations could increase by $1.15 per day. The price of reserved parking at Metro facilities could increase from $45 to $55, and the number of reserved spaces could increase by up to 3,500.
- The MetroAccess base fare will remain at $2.50.
To view the complete fare increase proposal, go to http://www.wmata.com/about/community/fare_increase_public_hearing_docket.pdf.
How do the increased fares compare to driving?
It is difficult to come up with an ?apples to apples? comparison between the costs of driving and Metro fares. There are many factors to consider. First, there is the cost of wear, maintenance and insurance for a car, and the value of the time you spend caught in traffic congestion (about $2.3 billion dollars annually for our region). Also, whether you receive some form of pre-tax or tax free transit and parking benefit through Metro?s SmartBenefits program could save you anywhere from $550 to $2,400 a year on your parking and commuting costs. Finally, taking Metro can reduce costs to the environment that come from driving a private vehicle.
Cost comparison
Under the new fare proposal, the average trip on
Metrorail, about seven miles, would cost around $2.70. If you calculate the cost
of driving using the Internal Revenue Service deduction for business mileage,
48.5 cents/mile, traveling that same distance would cost $3.40 or 20% more.
Using the IRS deduction, the maximum rail fare of $4.70 is still cheaper than the cost of driving your car 10 miles one-way.
The costs of parking are also important in comparing the cost of driving or taking Metro.
- Parking at WMATA lots in Montgomery County would cost $5.15 per day. A survey by Colliers International found that parking rates in D.C.?s business districts runs almost two to three-and-a-half times that much.
- Parking at WMATA lots in Prince George?s County would be $4.90 per day. A survey by Colliers International found that parking rates in D.C.?s business districts runs two-and-a-half to three-and-a-quarter times that much.
- Parking at WMATA lots in Virginia would be $4.65 per day. A survey by Colliers International found that parking rates in D.C.?s business districts runs more than two-and-a-half to three-and-a-half times that much.
- Parking at WMATA lots in D.C. would be up to $4.65 per day. A survey by Colliers International found that parking rates in D.C.?s business districts runs more than two-and-a-half to three-and-a-half times that much.
Environmental Impact
In terms of the environment, Metrobuses and
trains take 580,000 cars off the road each weekday and eliminate more than
10,000 tons of pollutants from the air each year.
Also, a recent study by the by the American Public Transportation Association (APTA) found that an individual switching to public transit can reduce his or her annual carbon emissions by more than 4,800 pounds a year.
According to the study ?Public Transportation?s Contribution to U.S. Greenhouse Gas Reduction,? if one member of a household completely switches from driving to using public transportation, he or she can reduce their household carbon footprint by up to 30 percent.
When would these fare increases go into effect?
Before the Board approves any variation of the proposed fare increase, the proposal must go through a rigorous public hearing process. This process will probably take about two months and will involve holding two public hearings in the District of Columbia, two in Maryland, and two in Virginia.
After the public hearings are held, Metro staff will write a report on the results and present it to the Board. Only then will the Board vote on whether to approve or reject a fare increase. Currently, the earliest that a fare increase could take effect is January 6, 2008.
How can I provide input?
Metro has scheduled and advertised six public hearings on the proposed fare increases. These meetings are scheduled to begin at 7 p.m. and they will be preceded by an open house at 6:30 p.m.
Tuesday, November 13, 2007
Bechtel Conference Center
1801 Alexander
Bell Drive
Reston, VA 20191
(Hearing number 525)
Wednesday, November 14, 2007
Metro Headquarters
Jackson Graham
Building
600 Fifth St. NW
Washington, DC 20001
(Hearing number 526)
Wednesday, November 14, 2007
Montgomery County Council Building
100
Maryland Avenue
Rockville, MD 20850
(Hearing number 527)
Thursday, November 15, 2007
St. Luke's Center
4923 East Capitol Street,
SE
Washington, DC 20019
(Hearing number 528)
Thursday, November 15, 2007
Arlington County Board Office
Courthouse
Metro Building
2100 Clarendon Blvd., Room 307
Arlington, VA
22201
(Hearing number 529)
Thursday, November 15, 2007
Prince George?s Sports and Learning Complex
Town Hall Room
8001 Sheriff Road
Landover, MD 20785
(Hearing number
530)
Those who want to testify are asked to provide their name, address, telephone number and organization affiliation, if any, at least five days prior to the hearing to Office of the Secretary, Washington Metropolitan Area Transit Authority, 600 Fifth Street, NW, Washington, DC 20001. Requests to speak also may be faxed to 202-962-1133 or e-mailed to public-hearing-testimony@wmata.com. Please submit only one speaker's name per letter and include the hearing number for the hearing at which you wish to speak. Lists of individual speakers will not be accepted. Others present at the hearing may be heard after those who have registered have spoken. Public officials will be heard first and will be allowed five minutes each to make their presentations. All other speakers will be allowed three minutes each.
Written statements and exhibits may be submitted until close of business on Monday, November 26, 2007 to Office of the Secretary, Washington Metropolitan Area Transit Authority, 600 Fifth Street, N.W., Washington, DC 20001 or via e-mail to public-hearing-testimony@wmata.com.
All public hearing locations are wheelchair accessible. Anyone who requires
special assistance such as a sign language interpreter or additional
accommodation to participate in the public hearing, or who requires these
materials in an alternate format, should contact Ms. Danise
Peņa at
202-962-2511 or TTY 202-638-3780 by Wednesday, November 7, in order for WMATA to
make the necessary arrangements.
Metro also has a Riders' Advisory Council (RAC). The 21-member council includes six individuals from Maryland, Virginia and the District of Columbia, two at-large members and the Chair of Metro's Elderly and Disabled Transportation Advisory Committee.
RAC meetings are open to the public and take place the first Wednesday of each month from 6:30 to 8:30 p.m. in the lobby level Meeting Room at Metro's Headquarters located at 600 Fifth Street, NW, Washington, D.C. Please call 202-962-1388 for more information.
Additional information
Washington's Metro: Deficits by Design ? This Brookings Institute Report examines the unusual financial structure of the Washington Metropolitan Area Transit Authority (WMATA) and finds that the agency's serious budgetary challenges owe in large part to its problematic revenue base.
January 2005 Blue Ribbon Panel Report ? This panel was sponsored by the Metropolitan Washington Council of Governments, the Federal City Council and the Greater Washington Board of Trade, and provides recommendations for Metro funding.
