METRO SERIES: Revenue drop, pension liabilities harming system

Metro LogoWASHINGTON, D.C. - With ridership continuing to decline, revenues from fares also decreasing despite rate increases and at least a half a dozen pending lawsuits with claims of $1 million or more, Washington Metropolitan Area Transit Authority (WMATA) trains continue to chug along thanks to an influx of government money.

“A primary cause of Metro’s current budget challenge is the decline in rail ridership. Total rail ridership peaked in 2009 and has stagnated or declined each year since then,” Paul Wiedefeld, WMATA general manager, wrote in his executive summary of this year’s fiscal budget, which began July 1.

The $3.1 billion fiscal year (FY) 2018 proposed budget includes $1.8 billion for operations and has more expenses than income in the 186 page-budget. Money for operations includes $841 million from fares, parking and advertising, and another $976 million from government funding from Maryland, D.C. and Virginia.

Metro’s total operating budget is very dependent upon the government, noted a spokesman from the National Society of Accountants, who reviewed recent budgets for The Sentinel.

“This thing is bleeding, but it is propped up by government funds,” the spokesman said. “There has been a substantial drop in the use of the Metro.”

In the proposed budget, Metrorail ridership is projected at 177 million trips, a drop of 26 million (13 percent) compared to last year’s budget, according to the budget’s executive summary. In FY 2016, passenger revenue decreased by 5.3 percent – which amounted to $45 million fewer dollars.

Passenger revenue for this year is expected to be $540 million, a decrease of $81 million as compared to FY 2017.

WMATA is working to increase funding, possibly in the form of regular dedicated dollars. Meanwhile, the net local government subsidies for the rail line are increasing by $112 million (projected at $374 million total in FY18).

The budget calls for 500 fewer jobs, of which 300 will come from operators, mechanics and supervisors at a time when rail and train problems have turned riders away.

Wiedefeld labeled the budget a “reality check,” noting in his budget summary that WMATA must deal with day-to-day operations as well as the need to continue repairing the infrastructure. Repairs are needed due to problems that often result in fires, single-tracking, delays and unhappy riders.

In its budget, Metro is optimistic that as repairs continue and train rides become safer and more reliable, some of the disgruntled riders who have found other ways to get around will return.

However, it also notes riders will not return in hordes because federal employment is “stagnant,” and an increasing number of baby boomers are leaving their jobs. Therefore, income from fares is not projected to increase a great deal.

WMATA assets exceed liabilities, as it has purchased new rail cars during the past few years, including 50 new 7000 series cars and additional rolling stock for the Silver Line, which opened in 2014. Also included in net capital assets is the Paul Sarbanes Transit Center in Silver Spring.

When comparing FY 2015 and 2016 budgets, the spokesperson for National Society of Accountants pointed to a 5 percent decline in ridership, producing fewer fare dollars. From 2015 to 2016, WMATA brought in 45 cents in passenger revenue for every dollar it spent.

“The revenues are not cutting it,” he said.

The spokesman also noted to another trouble spot in the budget: employee pension funds. In 2016, total pension liability was listed at $526 million, creating a 30 percent underfunded pension fund.

The spokesman believes that was “better than most municipalities, quite frankly, but it’s still bad.”

In the litigation section of the FY 2016 budget, listed are exposures that WMATA may end up being responsible for down the road, depending upon the results of the various lawsuits.

Listed in that section are third-party bodily injury and property damage liability claims, workers compensation claims and other claims that could set the authority back by millions of dollars.

There are six people with claims greater than one million dollars, the spokesman noted.

While insurance would cover much of these claims, the number of lawsuits show that lack of maintenance causes more than just a decrease in ridership, the spokesman pointed out.

Overall, he said, “There’s just no cash, not enough cash coming in to pay the bills.”

Last modified onWednesday, 20 September 2017 16:41
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