Graham: Tapping Metro capital budget would avoid service cuts, fares increases
Jim Graham, D.C. Council member and current chairman of the Metro board of directors, thinks I haven't given proper consideration to an alternative that would spare us either a fare surcharge or service cuts: Borrow from the capital budget, the one that pays for most long-term maintenance and equipment, to close the gap in the operating budget, which pays most day-to-day expenses of running the transit system.
Here's the letter that Graham sent to me on Monday. [Talking with Post staff writer Ashley Halsey III on Tuesday morning, Graham said of today's fatal accident: "We have great sympathy for the loss, and will do everything we can to help the families." Graham is among the many Metro leaders who say they would welcome federal oversight of transit safety.]
Dear Dr. Gridlock:
In your Thursday column, "Metro riders will pay the dime but can't afford worse service," you define the choice now facing Metro as between paying an extra dime in fares or worse services.
That ignores what may be the best option for solving this year's budget gap: using $16 million in readily available capital funds to relieve pressure from our operating budget. This option -- proposed by Metro's General Manager [John B. Catoe Jr.] -- is a normal practice used by transit agencies all across the country. (Indeed, the state of Maryland has also balanced its budget this way.)
If solving this year's problem with this $16 million would cause a problem for Metro's capital budget, then it would be a bad idea. But that does not seem to be the case. Metro has consistently spent far less than what was budgeted for capital expenses.
I know that Metro must spend capital money more efficiently. It has improved recently, and we are committed to a better record in the future, which includes a more efficient procurement process.
But here is the recent reality:
-- Over the past three years, Metro capital spending fell short of the budgeted amount by 13 percent to 30 percent annually, with a capital budget of about $650 million each year.
-- Metro's chief financial officer estimates that the agency will have $60 to $70 million unspent at the end of this fiscal year.
-- This fiscal year the challenge is even greater, because staff is working to spend an additional $200 million in federal stimulus dollars.
-- Going forward Metro, will face still greater challenges in spending our capital dollars because the capital budget now has an added $300 million per year in new dedicated funding.
Thus the $16 million needed to solve this year's budget shortfall - with NO fare increase and NO service cuts -- is small relative to these annual unspent capital funds.
Transit agencies around the country are facing a terrible choice between service cuts and fare hikes. Some systems don't even have a choice -- they have to do both. We are in the fortunate situation to have another choice. This good news lets us avoid both service cuts and fare increases this fiscal year.
And then we can focus all of our energies on the much larger budget challenges we face in FY11.
Metro Board chairman
D.C. Council member, Ward 1
Transferring money from the capital budget to close the gap in the operating budget is an element in each of the four options that Metro asked the public to review before the board makes a decision. See my report on the options from Sunday's Commuter page.
The Metro staff report to the public on the option of taking the full $16 million from the capital budget does not present this as the free money option.
"Consequences: Using capital budget dollars to plug the current operating budget shortfall would create a $16 million shortfall in next year's capital budget and delay a rail yard rehabilitation project by one year," says the document offered for public comment.
The board will hear from the public starting at 5:30 p.m. Wednesday at Metro headquarters, 600 Fifth St. NW in the District. When it meets to consider the issue, the board can combine these options in any way it thinks best. I think the least likely result is major service cuts.
I'll have more views from the public here today and Wednesday.
January 26, 2010; 9:30 AM ET
Categories: Metro , Transportation Politics | Tags: Dr. Gridlock, Metro budget
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