Another year, another Metro funding crisis averted — barely. The D.C. region managed to plug a $750 million funding hole for the Washington Metropolitan Area Transit Authority so bus and rail service would keep running this fiscal year, which began in July. Getting to this point was painful. Fares are going up, even though Maryland, Virginia and the District in February committed an extra $480 million to plug the gap. Another crisis looms if the key players don’t give more money by July to make up for the end of pandemic relief aid.
By the Editorial Board
Metro began its rail service in 1976, and though the system is showing its age, users still regard it as clean and accessible. This year, 77 percent of riders said they consider the system “excellent” or “good,” the highest in a decade but still lower than in 2005. Weekday Metrorail ridership has been averaging nearly 373,000 per day so far this year, nearly triple the rate of 2021, the worst pandemic year. Still, that’s only about 60 percent of 2019 levels. More concerning still, fares cover just 17 percent of Metro’s operating expenses, down from 36 percent in 2019.
With ridership on a new, lower trajectory, the system’s finances are unsustainable. Metro needs to rightsize and restructure accordingly while avoiding a death spiral, in which service cuts deter riders and fewer riders trigger more cuts. If Metro achieves systemic restructuring, it could get access to a stable funding source for its daily operations in return. At present, however, Metro uniquely lacks one: Most big cities dedicate a tax — often a sales tax — to finance public transit. WMATA, by contrast, has to ask Virginia, Maryland and D.C. for operating funds every year.
The Metropolitan Washington Council of Governments and WMATA recently convened a task force, DMVMoves, to come up with a solution. The goal is to have a plan for how transit will need to shift and expand in the D.C. area in the decades to come and a concrete proposal to fund it. A draft is expected by year’s end and a final plan by spring. Crucially, the planning goes beyond Metro to take into account the region’s 12 local bus systems, three commuter bus systems, two commuter rail systems and one streetcar service.
Yet the task force’s initial meeting, on June 10, did not address the issue of a stable funding source. That debate needs to happen soon. An early estimate suggests WMATA needs roughly $1 billion more in additional revenue per year. That’s on top of the $2.8 billion state and local governments already provide. If the DMVMoves process doesn’t yield results, a more dramatic intervention, analogous to the supervised bailout of General Motors in 2009, or even of the District itself in the mid-1990s, could become unavoidable.
The task force will almost certainly consider a sales tax. One study found 39 out of 46 major metro areas fund public transit with sales taxes — ranging from 0.4 percent to 2 percent. In 2017, a Metropolitan Washington Council of Governments study said a 1 percent levy could generate $650 million per year. Other options include a property tax increase, congestion pricing for auto traffic, a gas tax hike or fees to develop property near Metro stations.
Sales taxes have their drawbacks. They are regressive; their revenue yield tends to ebb and flow with the business cycle. In some places such as Los Angeles, rates have crept up over time, suggesting that a dedicated revenue stream like this fails to incentivize transit agencies to spend wisely. But there are also advantages. Visitors from out of town would pay sales taxes. Though voters recoil from tax increases, they generally find sales taxes more palatable than others. If a sales tax were approved, D.C., Maryland and Virginia would all have to agree to any new increases, which would almost certainly prevent Metro from treating it as a cash cow.
We aren’t ready to endorse a sales tax unless and until we see the details. But the D.C. area needs a strong transit system — rail and bus — and it’s past time to end the constant funding crises that prevent long-term planning. Money isn’t the system’s only issue, of course. At the June 10 meeting, task force members rightly bemoaned a lack of coordination on scheduling and payment systems among the region’s varied transit authorities. These would seem to be the low-hanging fruit of structural reform and should happen even before a new funding source materializes.
That isn’t essential to stabilizing Metro, though. Determining how it can best serve the region’s needs, based on a stable and appropriate budget, is.
