More than half of $72m budget gap stems from last year’s problems Metro’s board is considering cutting back bus and train service instead of asking local governments to pony up $72 million to cover the entire budget gap next year.
| Borrowing for the future from the future |
| Metro’s board of directors has postponed making major service cuts for at least two years by cobbling together money from other sources. |
| • In 2009, the board tapped $13 million from the agency’s rainy day fund to help avoid service cuts for the fiscal 2010 budget. |
| • But in 2010, ridership dropped below projections and snowstorms hurt the bottom line. The agency ended the budget year $16.6 million in the hole, but pushed the shortfall forward to the 2012 budget now under consideration. |
| • In approving the fiscal 2011 budget last June, the board decided to borrow $30 million from its capital budget to plug a hole in the operating budget – under the condition the agency paid it back. “Surprise, surprise, none of those things happened,” Mortimer Downey said, noting that ridership and revenue haven’t boomed. “I don’t think we’ll be $30 million ahead of budget at the end of the year.” |
Nearly $47 million of the $72 million gap in the proposed $1.46 billion operating budget comes from the pain the directors postponed from last year, while the rest comes from lower-than-expected revenues.
Now those decisions are jeopardizing service for riders.
The service cuts the board is considering are similar to those the agency considered last year, according to Chief Financial Officer Carol Dillon Kissal: rerouting buses with low ridership, closing station entrances and increasing the times between trains.
However, Metro officials would not provide The Washington Examiner with the list of proposed cuts, saying the one they viewed was a draft.
Kissal said cutting late-night service on weekends likely wouldn’t be considered to close the budget gap. Instead, that may be revisited over the summer as a way to make more time for maintenance work.
Still, she said it was late in the budget cycle to consider cutting service, so any cuts likely would be enacted in September, not the start of the budget year in July.
“It would be herculean, difficult to put in place and not impact our riders,” she said.
Metro ran a deficit of $16.6 million last year after ridership dropped and the transit system weathered massive snowstorms. The board handed riders the bill with a 10-cent emergency surcharge on each trip for about four months. But even that didn’t bring in enough, so the board borrowed time to pay off the rest.
Then the board borrowed $30 million from the agency’s capital
budget to fill a gap for the current operating budget, promising to pay it back.
Now the bills are coming due.
General Manager Richard Sarles has proposed a budget calling for the communities served by Metro to kick in $72 million more in subsidies, bringing their total to $693 million. But the economic downturn is still taking a toll on local governments, which are battling their own budget woes.
The agency is considering some one-time fixes such as negotiating lump-sum leases on property for up to $50 million that borrow against future annual revenue of about $4 million if the leases are paid out yearly.
Some board members say the past money shifts could cost even more — both financially and politically — as they go to Congress begging for their funding package not to be cut.
“It’s jeopardizing the $300 million,” D.C. board member Tom Downs said. “We undercut the critical needs of our own funding.”
House Republicans have threatened to cut $150 million for Metro, which could unravel a deal for D.C., Maryland and Virginia to pay $150 million more.
Federal board member Mortimer Downey said Metro has been fighting the proposed congressional cuts, bemoaning how it would hurt the agency’s rebuilding program. But he said Congress could say the board didn’t think that money was so critical when it borrowed $30 million from those funds in June.
