As area leaders consider the FY 2025 budget proposed by the Washington Metropolitan Area Transit Authority (WMATA), a workgroup created by the Metropolitan Washington Council of Governments (COG) has released a new interim report assessing different options to address the transit system’s financial issues and ensure Metro is in a strong position to serve the region.

In its report, the COG Chief Administrative Officers Workgroup on WMATA Cost Structure, comprised of local city and county managers, the District of Columbia Chief Financial Officer, and state and regional transportation officials, outlines eight near-term recommendations, including actions that would increase the subsidy payment by WMATA funding partners, transfer some capital funding to cover operating expenses, increase fares, and implement targeted service reductions.

The report was transmitted today to area elected officials on COG’s Metro Funding Strategy Group and WMATA funding agencies, marking the first time a group of government officials from the District of Columbia, Maryland, and Virginia has jointly weighed in on the merits of specific cost and revenue factors.

“Our focus has been to help area leaders develop a better shared understanding of Metro’s financial issues and forge consensus around a set of solutions,” said COG Executive Director Clark Mercer. “Our workgroup brings together expert administrators, who know budgets and the financial pressures our governments are facing, and who also recognize the immense economic, environmental, and quality of life benefits that Metro provides us.”

The workgroup expressed support for re-baselining WMATA funding partners’ subsidy payments, which were impacted during the COVID-19 pandemic. If policymakers take legislative action, the change will lead to increased subsidy payments from WMATA funding partners to Metro. The workgroup also supported keeping the operating cost increase cap in place, which can help ensure more predictable and manageable budget increases. In addition, the workgroup applauded WMATA management for its work over the past several months to identify and reduce administrative costs.

“The reality for Metro’s funding partners is that we can’t absorb a $750 million increase on our bill,” said Alexandria City Manager Jim Parajon, who chairs the workgroup. “What that means is we all need to be part of the solution from Metro making service adjustments to reflect current demand, to area governments paying more through re-baselined subsidies, increased stable state funding, and greater return to office participation by the federal workforce.”

The workgroup recommended increasing fares to help narrow the funding gap and ensure riders are also contributing to the shortfall, while also encouraging the system to continue taking steps to decrease fare evasion. Officials also said that any fare increase must be accompanied by – with support of the region – new strategies to increase participation in Metro Lift, WMATA’s low-income fare product, noting that while more than 5,000 people have signed up, as many as 400,000 area residents may be eligible.

The workgroup cautioned against drastic cuts in service. Instead, it advised that Metro should work with area jurisdictions and funding partners to examine and implement targeted service reductions to minimize the impact on transit-dependent populations and better balance ridership demand, which has improved since the height of COVID-19 but is still significantly lower than pre-pandemic levels.

The workgroup, which has been regularly coordinating with WMATA staff, was formed in August to independently review and verify the magnitude of the system’s budget deficit for area government officials and identify factors to reduce short-term operating costs.

The CAO Workgroup on WMATA Cost Structure near-term recommendations:

• Re-baseline WMATA’s Subsidy;
• Keep the Operating Cost Increase Cap in Place;
• Reduce Administrative Costs;
• Increase Fares, Improve Participation of Metro Lift, and Decrease Evasion;
• Transfer Capital Preventive Maintenance Funds to Operating Costs as an Interim Measure for FY 2025, and Potentially in FY 2026;
• Implement Targeted Service Reductions;
• Continue Advocating for a Greater Return of In-Office Participation by the Federal Government;
• Increase Federal Contributions to WMATA.

While officials urgently focus on the looming FY 2025 budget deficit, the workgroup included an additional long-term recommendation in the report:

• Undertake a more comprehensive, regional examination of WMATA’s operating and funding model as well as its governance to ensure the system’s long-term financial health.

The report highlights that in future years, Metro will be facing a significant shortfall in its capital budget as well, which will be accelerated if WMATA transfers large amounts of funding from its capital budget to cover operating expenses.

COG, as the association of 24 area jurisdictions representing about 6 million residents, is committed to providing regional leadership to meet the challenges WMATA faces. From 2016-2018, COG helped the region lay the groundwork for the Metro dedicated capital funding agreement along with public, private, and civic sector partners and created the Washington Metrorail Safety Commission on behalf of the states. 

MORE: Chief Administrative Officers Workgroup on WMATA Cost Structure - Interim Report