Transit Continues to Prove Unstainable
COST Comments: The two articles below about Washington, DC describe one of many examples as to the unsustainable fiancial nature of most transit systems: The greater the transit use, the greater the taxpayer subsidies. And, there is a limit. Transit agencies do not consider the very high initial capital costs and capital replacement. Basically, the more riders of transit, the greater the financial loses and the deeper the financial problem, resulting in higher fares, reduced service and/or higher taxes. In most cities, some 99% of the travelers and taxpayers subsidize some 1% of the total passenger miles traveled on transit. Therefore, the transit objective to get people, who have a choice, out of cars is very detrimental to all taxpayers and the unstainable transit financial structure reduces service and increases costs for those who depend on transit and have no alternative.
Note: DC at 4.3% is just behind NY (10.7%) and SF (4.8%) for urban area transit share of transportation passenger miles. NY alone has 43 % of the transit passenger miles in the US. Add Chicago, LA, Boston and Philadelphia to the previous three cities and you have more than 84% of the transit passenger miles in the US. This doesn’t leave much for the rest of us.
Metro Facing Layoffs, Cutbacks
Ridership Up Amid A Record Deficit
By Lena H. Sun
Washington Post Staff Writer
Friday, January 9, 2009; Page B01
Metro faces a 13 percent shortfall in its $1.3 billion operating budget for next year, and officials have suggested cutting almost 900 positions and enacting the largest-ever cuts in train, bus and paratransit service, even as transit ridership in the region and across the country is soaring.
Agency officials said the budget difficulties reflect the grim economic reality facing local and state governments, which provide a substantial portion of Metro’s funds. Transit agencies across the country also are facing service cuts.
“The budget year ahead is as bleak as the national economy,” Metro General Manager John B. Catoe Jr. told board members.
The gap of $176 million is the largest in the agency’s 33-year history. Unless board members and agency officials are able to make significant additional expense cuts or discover new revenue to plug the hole, riders could be facing $73 million in service reductions starting in July, officials said. They did not specify what might be cut.
Higher fares are not on the table under the proposal that Catoe presented yesterday to the board. Board members, however, could authorize fare increases, although that appears unlikely, given that Metro raised fares and fees last January and promised not to consider raising them again until July 2010.
“To close this $176 million gap, we propose to cut our projected expenses by $103 million,” Catoe said. “Then, as a last resort we are proposing $73 million in service cuts.”
Catoe said the agency has identified 891 positions, about 8 percent of the workforce, that would account for much of the $103 million in administrative and operational expense cuts. About half of the 891 positions are vacant. Of the positions being considered for elimination, 313 are administrative and 578 are service-related, which includes bus and train operators and mechanics.
Several longtime board members said they could not recall any time when the transit agency had been confronted by such sizable looming layoffs and service reductions.
“In my time on the board, there has never been anything of the magnitude of this type of service cut,” said D.C. council member Jim Graham (D-Ward 1), who has represented the city on the board for 10 years.
Catoe said Metro plans to work with local governments in coming weeks to come up with recommendations for service reductions, which will be presented to the board. The transit agency has cut jobs and expenses over the years to fill budget gaps, but has not cut service in 13 years.
Service cuts that would have relatively less impact would be on less heavily used bus routes, which tend to be in the District, the jurisdiction that has the most Metrobus service. Service cuts are likely to resurrect the city vs. suburbs dynamic that dominated fare increase hearings in December 2007. City board members will push to equalize the pain of any service cuts among the jurisdictions. Suburban members probably will point to efficiencies that can be maximized by eliminating the lowest-performing bus routes.
“This pain has to be proportionally distributed,” Graham said.
Budget officials said expenses have increased by $159 million from last year because of stock market losses in the pension fund, a huge jump in paratransit ridership (Metro’s costliest service) and rising energy and labor contract costs. Meanwhile, despite growing ridership, revenues dropped by $17 million because of unfilled parking lots, declining investment interest and less revenue from other sources such as property rental incomes.
Catoe said the transit agency wants to deliver a balanced spending plan that remains focused on safety and customer service without asking local governments or riders to pay more.
Last fall, Catoe cut pay raises and vacancies, froze hiring and trimmed internal contract, travel and other administrative costs.
“We appreciate the dedication and service of all our employees, and we will do everything we can to ease the transition of those employees who will leave Metro,” Catoe said.
Union officials said they oppose service cuts and layoffs. Jackie Jeter, president of Amalgamated Transit Union Local 689, which represents 10,000 current and retired Metro workers, said management has not identified positions that might be cut.
“The jurisdictions that fund Metro have some tough decisions to make,” she said. “Metro cannot run a world-class transit agency without investing in services, sustainability and capital enhancements.” The Metro employees who will be charged with transporting crowds to the historic inauguration of President-elect Barack Obama are “the same workers who need the region’s support,” she said.
Some employees have been told that layoffs will begin shortly after Inauguration Day, when the transit agency has asked employees for an all-hands-on-deck effort to carry the largest expected ridership in history.
This is the agency’s second proposed round of layoffs in three years. In 2007, Metro cut 254 positions, or almost 20 percent of its administrative staff. The proposed layoffs, if implemented, would reduce the number of total positions to about 10,100, which would be the same level as 2006.
Metro’s capital budget of $478 million has also been cut by a third compared with the last fiscal year.
Proposed service cuts will be discussed over the next several months at board Finance Committee meetings and by local government officials and the Riders Advisory Council. Public hearings on potential cuts are expected to be held in March, and the Metro board is expected to approve a final budget in June. Fiscal 2010 begins July 1.
© 2009 The Washington Post Company
Sunday, January 25, 2009
The good news for riders is that Metro is not considering a fare increase for the coming year. But the transit authority says it doesn’t expect to raise enough money to maintain service at current levels, despite cost-control efforts. So it is asking the region’s leaders to help decide where cuts should be made. Here’s a look at the problems that lie ahead:
Metro’s Spending
It costs about $1.3 billion to operate Metro for a year. Although inflation is not a significant problem nationwide, the transit authority says some of its expenses are rising.
Elsewhere: Many other transit systems, including those in Atlanta, Chicago, Boston and New York, say they face large increases in their operating costs similar to what Metro is experiencing.
Key factors: Contractual labor costs are rising by $44 million. Energy costs, including the electricity to run trains and fuel for the buses, are increasing by $13 million. The cost of the MetroAccess service for disabled people is rising by $17 million. The more rides it provides, the more money it loses. Meanwhile, the transit authority has been hit hard by the recession. Pension investment losses are likely to total $44 million.
Limiting losses: Management imposed cost controls last fall, including a hiring freeze and overtime limits to reduce expenses for the current fiscal year, which ends June 30.
Metro’s Revenue
Like most of the country’s transit systems, Metro doesn’t earn enough from fares to cover the cost of operating its trains, buses and vans.
Fares: The cost of riding trains and of parking at Metro stations increased a year ago, and there are no plans for new fare and fee hikes.
Subsidy: To balance the budget for fiscal 2010, which starts July 1, the plan assumes $103 million in administrative cuts and $87 million in service cuts.
Ridership: Ridership is increasing and should generate more money this year. This year, Metrorail ridership is up 3 percent, Metrobus ridership is up 3 percent and MetroAccess ridership is up 20 percent. Most of the revenue gain is in rail ridership.
Other sources: The portion of Metro’s income from sources other than rides is not increasing. Parking revenue is less than expected, and no increase is projected for the next fiscal year. Metro guesses that not as many people have been driving to stations since the parking fees went up. Meanwhile, the weak economy is limiting revenue from fiber optic lines in the system, from interest income and from property rentals.
Bottom Line
To balance $1.3 billion in expenses, Metro projects about $762 million in revenue and a government subsidy of $535 million. Metro General Manager John B. Catoe Jr. is anticipating no change in the subsidy that local governments provide to the transit system.
Getting there: Metro says reaching the goal on expenses will require $103 million in administrative cuts and $87 million in service cuts. Service cuts at that level would be the largest in Metro’s history.
Guidelines: The transit authority says the standards it is applying are: no reductions in safety and security; a 10 percent cut across all departments; and minimal impact on service.
What to cut: The transit authority staff has not publicly proposed specific service reductions, although it seems probable that bus routes with too few passengers would be among the top targets. Catoe also is asking for a review of how well MetroAccess meets the standards of the Americans With Disabilities Act. It might be that the transit authority is exceeding standards.
What’s Ahead
When Catoe offered his plan this month, he urged the board to reach out to governments that fund Metro for suggestions on which services to cut. Although board members wanted governmental and public involvement, some said they first wanted to make sure Metro had done all it could to cut expenses.
Avoiding cuts: Catoe says he doesn’t expect an increase in the annual government subsidy, but he says that to avoid cuts, the subsidy would have to increase to $608 million.
Inauguration subsidy: Metro’s budget did not anticipate the cost of inauguration service. One subsidy the transit authority is looking for is a federal payment to recover the expense of that special service.
Timetable: The board, local governments and Metro’s Riders Advisory Council will discuss cost-cutting ideas over the next several months. Public hearings would be held in March, and the Metro board probably would approve a final budget in June.
Your opinion: Tell us what you think. Which services should Metro look at for potential cuts, and what should be off-limits? Send your thoughts to commuter@washpost.com.
© 2009 The Washington Post Company