Metro officials will begin discussions to develop a balanced budget for FY2016 in an environment where anti-transit tax policy has made it more affordable for some commuters to drive to work rather than ride transit. This early discussion will provide guidance to the General Manager/CEO in presenting his budget proposal next month which will lead to budget adoption in early 2015.
Despite an upward trend in bus ridership and higher rail ridership on a year-over-year basis with the addition of the Silver Line, changes in federal tax law that provide greater financial incentives to park than to ride public transportation are one reason that Metro says rail ridership will be level next year. On Jan. 1, 2014, the federal transit subsidy was reduced from $240 to $130, impacting both private sector workers and federal workers who use SmartBenefits and pre-tax commuter savings programs through their employers. This subsidy level will continue through 2015 unless Congress acts during the lame duck session. Other ridership drivers include regional employment data that forecast a continuation of the recent decline in federal government-related employment.
Members of the region's Congressional delegation have been strong supporters of the higher transit benefit.
“We will have to do whatever can be done to control expense and then work closely with the jurisdictions to determine how to provide the same level of service without asking our customers to pay more,” said finance committee Chairman Mortimer Downey. “We recognize that affordability is fundamentally important to our commuters.”
In recent years, Metro’s Board has considered fare increases every other year in order to keep buses and trains affordable, and to ensure that everyone who benefits from transit as part of the regional transportation network shares in the cost for service. Fare changes took effect July 1, 2014, and Metro is not contemplating another fare increase next year (FY2016).
Metro officials said that while rail revenue has been impacted by the tax policy that subsidizes parking at 88 percent more than bus or train travel, the policy affects both federal and private sector employees.
"The decrease in the transit tax benefit has penalized a broad cross-section of Metro riders — both private sector workers and federal employees alike," said Metro’s Chief Financial Officer Dennis Anosike. "There's no doubt that some commuters traveling longer distances are now finding it more affordable to drive than ride, and that needs to change."
Anosike’s outlook for next year’s budget establishes guiding principles for the board to consider. The goals include funding the business plan that advances Metro’s Momentum strategic plan, ensuring continued safety and reliability investments, and continuing to identify and implement management efficiencies.
Funding the business plan requires investment in safety programs, such as the fatigue management system that limits consecutive hours and days of work for safety-critical jobs. Other expense drivers in Metro’s projection include modest inflation which impacts the costs of materials and utilities, as well as cost of living adjustments included in Metro’s collective bargaining agreements.
The business plan continues the authority's focus on building a safety culture, increasing customer satisfaction, improving service delivery, connecting the region, overhauling Metro's financial management policies and systems, and strengthening Metro's workforce. The plan includes continuous improvement in financial controls and compliance for WMATA. For example, a new internal control and compliance office will have responsibility for the authority’s adherence to financial management controls, processes and procedures. Potential management efficiencies will also be analyzed and discussed over the next several months.
The board finance committee’s discussion this week is expected to focus not only on Metro’s operating budget for next year, but also its capital requirements, which are being discussed among the jurisdictions in parallel with the FY16 operating and capital budget process. These capital funds will support the continued safety and state of good repair of the Metro system as well as planned capacity investments in eight-car trains, core stations, and the Metrobus network.
