Metro presents a slimmer budget reflecting the loss of commuters to telecommuting

Subway officials braced for what some have called a “fiscal cliff,” when the reality of slow ridership would catch up with the agency’s finances, possibly forcing it to consider cutting service or expanding service. raise prices.

That day may not come as soon as originally planned, according to a snapshot Metro released of financial information from the transit system on Monday. The transit agency will need to fill a budget gap of about $185 million over the next fiscal year to continue operating at current service levels and — at some point over the next few months — pay for the increase. frequencies for Metrorail trains when its full fleet becomes available.

Transit officials say riders are unlikely to see significant service cuts or station closures in the fiscal year that begins in July, though that ultimately depends on Metro’s board. . The transit agency’s outlook provided a first look at how Metro plans to navigate a pandemic-era future upended by the loss of telecommuting commuters as future federal aid begins to roll in. dry up.

The funding gap is less than the $500 million annual operating budget shortfall that officials predicted more than a year ago, a gap has narrowed with the help of federal leftover money from coronavirus relief, funds from the Infrastructure Act, federal grants, reduced spending and fare revenue that exceeded conservative Metro projections.

The fiscal reprieve will likely be temporary. Metro projects budget deficits of $527 million in fiscal year 2025, which could reach $731 million in four years without a significant increase in revenue or funding.

“I think we’ll have enough tools – or hopefully we’ll have enough tools with the [Metro] board to be able to avoid things like fare increases or service cuts,” Metro chief executive Randy Clarke said in an interview last month. “If we can do that, I think next year we just have to get to a point where we have to do something. And it’s not just us. It’s big agencies all over the country.”

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With the help of nearly $2.4 billion in federal coronavirus relief over three years, Metro has maintained an annual operating budget of over $2 billion despite historic pay rider losses that began in start of the pandemic. While the Metrobus system is almost back to pre-pandemic passenger levels, the number of trips made by Metrorail passengers has yet to reach half the number seen before the pandemic.

On Wednesday, driven by commuters returning to the office more regularly, Metro recorded more than 290,000 rides — a pandemic-era high — although that’s 44% of its average weekday daily ridership compared to September 2019.

The decline in fare revenue between 2020 and this fiscal year, which ends June 30, has been cushioned between $500 million and $700 million a year through three rounds of federal assistance during the pandemic. The Maryland, District, and Metro-served jurisdictions in Northern Virginia subsidize most of Metro’s operating expenses while also contributing to Metro’s separate annual capital budget, to which the federal government also contributes. It also totals over $2 billion.

Offices have reopened. Convincing commuters to fill them is not so simple.

Over the past two years, federal stimulus payments have saved Metro from making serious service cuts. Before the first stimulus package was approved in December 2020, council members began offering employee buyouts and proposed laying off several thousand workers, closing some stations and eliminating weekend rail service. .

Instead, federal money has allowed Metro to experiment and refocus its service and strategies by focusing on office commuters — many of whom work for federal agencies — by redirecting rush-hour resources by week to hours that better serve part-time and night workers. . At the same time, teleworkers are using public transport to make more non-work related trips throughout the day.

As part of this change, the Metro Board proposed weekend, $2 one-way Metrorail fares, hoping the change would persuade more families to travel. This summer, Metro extended the flat rate to trips on weekdays after 9:30 p.m.

Metro has effectively erased the $2 bus-to-rail transfer fee by reducing transfers to Metrobus, and transit officials have started offering cheaper seven-day regional bus passes and monthly passes. unlimited.

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Subway officials hope fare cuts, rebates and service changes — including subsequent rail service that went into effect this year — will attract fare-paying passengers, but growth has been slow as federal money has started to decrease. The transit agency will carry forward about $627 million of remaining stimulus funds from the next fiscal year, which begins in July.

In March, Metro received an additional $120 million in pandemic relief through a U.S. Department of Transportation grant for pandemic-affected agencies. Revenue from fares, parking and other sources, meanwhile, exceeded forecasts. The agency expects to bring in at least $380 million this fiscal year, rising to $465 million next fiscal year.

Money from the Infrastructure Act should also help Metro pay for preventative maintenance, which can cost the agency more than $650 million a year, transit officials said.

Metro will also incur additional expenses, about $120 million a year, to operate the six-station, 11.5-mile Silver Line extension that transit officials have tentatively pledged to open this year.

Ultimately, that leaves Metro with a $184.7 million gap to close next year.

Officials say this is achievable through attrition of employees, elimination of positions, sale or lease of unused subway land for development, service changes and possible changes of tariffs. Passengers were unhappy that Metro charged peak fares during peak hours despite not having the same level of service. The agency has been offering reduced service with long waits for nearly a year after its regulatory agency suspended more than half of Metro’s railcars over a wheel safety issue.

Clarke said he plans to consider fare restructuring to remove or reduce peak hour fares.

“I think we need to have an honest conversation about tariffs,” he said. “We have probably the most complicated fee schedule in the history of time.”

Other ideas that could be discussed include phasing out distance-based pricing, reducing bus fares to $1 to help low-income residents and encourage more passengers, and reducing parking fees. to encourage more rail passengers.

Subway records show how public transport use has dropped in the third year of the pandemic. The proportion of passengers using Metrorail during peak periods has fallen 8% since 2019, while peak hour fare revenues have fallen 5% – signs that office commuters have become a smaller part of the Metro customers. At the same time, the proportion of revenue from Metrorail trips over 10 miles fell 5%, highlighting an increase in the number of suburban residents working from home.

Service changes that metro officials say they could consider to better adapt to new travel patterns include increasing service on the central and southern segments of the system to serve fast-growing parts of the region, such as the Navy Yard district, around sports stadiums and airports. Metro executives could also consider reducing service at some stations, opening the transit system earlier on weekends and closing it later on Fridays and Saturdays.

Clarke is expected to release its proposed budget in November. Council members will then review the spending plan and hold public hearings early next year to get residents’ responses. A final vote is scheduled for March.

However, Metro compensates for the annual funding difference, transit officials will likely take more than a year into account. Ridership projections show slow passenger growth, reaching 75% of pre-pandemic levels between 2024 and 2025. Clarke said it would be up to Metro’s board and regional leaders to help decide what type of service he wants from Metro and how to pay for it. .

One thing the region needs to recognize, Clarke said, is that fare revenues and ridership may never return to pre-pandemic levels.

“The question of how best to fund Metro is an important question that requires thought leadership and broad community input,” Clarke wrote in a Washington Post opinion piece published Friday. “It starts with ‘What do we want Metro to be?’ ”

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