The big picture: WMATA faces a $176M budget gap, due mostly to increased personnel costs ($99M) and the elimination of a one-time budget trick* employed last year to reduce a fare increase ($36M). WMATA will present a plan to eliminate $103M of that gap, leaving management and the Board with the tough decision of how much service to cut, or whether to consider increasing fares for the second year in a row. WMATA's member jurisdictions could be asked to provide a "cost of living" increase of 2% in the budgeted subsidy, which would reduce the shortfall by another $10M.
Cost increases: The largest increases in costs ($44 million) come from wage increases for unionized employees, which WMATA budgeting treats as sacrosanct. But in these hard times, unions all over the country are being asked to do their part to help keep costs down. For example, in Montgomery County the firefighters' union agreed to cuts in order to help the county balance its budget, nationally the Teamsters agreed to wage cuts of 10% in order to help keep their employers afloat. All Headline News reports that Boston has asked its city worker's union for a wage freeze in order to help balance the budget. Bridgeport, Connecticut workers have agreed to a two-year wage freeze as well as a five day unpaid vacation (furlough). Would it be fair to ask the unions to compromise and agree to a cut in wages or at least a cut in wage growth rates (perhaps a one-year wage freeze)? The cuts might save some jobs compared to having to lay off workers or cut service (which would lay off more workers).
Big Cuts: The biggest cuts are to the metro work force, which will decrease by 292 funded positions out of over 10,000. These cuts will keep WMATA's personnel costs from increasing by almost $100M this year. Out of the eliminated positions, most (70%) will be from rail and bus divisions (about twice as many lost in rail as in bus), and most of the rest will come from administrative divisions (28%).
It's hard to tell from this presentation whether most of the eliminated jobs are from slots that just haven't been filled, or whether most of them are workers who will be laid off. According to a recent article in the Washington Post, when Metro was considering cutting 900 jobs the split was approximately half and half. Now that the number of eliminated positions appears to have shrunk, perhaps all of the proposed staffing cuts will be from unfilled positions. It's unclear from the previous discussion whether the 900 eliminated jobs include those that result from service cuts.
Smaller Cuts: Other smaller cuts are to increase the number of workers per supervisor, to reorganize the staff with fewer levels of supervision, to reduce overtime, and to take advantage of today's low fuel prices. WMATA also proposes to "employ technology-driven approach[es] to traffic/ridership measurement", which, according to Metro, should result in more accurate data collection. As someone who is interested in data and analysis, I hope that WMATA will be forthcoming in sharing this data with the public.In addition, non-personnel expenses (such as materials purchases) will be deferred when possible. This should concern riders because it just pushes the problem down the road rather than actually cuts back on costs. In that case, the required fare increases or service cuts are not eliminated, but are merely deferred until next year. Also, if the reduction in supervision means that poor customer service or unsafe practices are not improved or prevented, it could reduce the quality of WMATA's operations.
Changes from the prior report: Comparing this proposal to the one previously presented to the Finance, Administration and Oversight Committee in early January, there's an "Other" expense of $22M from the previous presentation that's missing from this one, and with that unexplained disappearing item, WMATA appears to have met their goal of eliminating $103M from the baseline. The rest of the shortfall will have to be made up in service cuts, which according to the previous proposal, will cut expenses by $87M and revenues by $14M. The presentation to be discussed tomorrow does not provide any specific proposals for service cuts. Alternatively, the Board could decide to raise fares or the subsidy provided by local governments. WMATA is not allowed to run a surplus or a deficit. To close the books, any surplus (deficit) at the end of the year is returned to (or charged from) WMATA's member jurisdictions via the funding formula. Typically, WMATA runs a surplus compared to the budget and returns some of the subsidy.
The Bottom Line: Metro's operating costs increased by $159M, and revenues, even with increased ridership, went down by $17M. WMATA is proposing $103M in cuts to operating expenses, leaving a $73M gap that must be filled, most likely with cuts in rail or bus service. Future board presentations are expected to discuss changes to the FY 2010 operating revenues and potential service cuts.
*WMATA's fare increase last year started in January 2008, but the money collected from January to July was actually applied to the next year's operating revenues (running from July 2008 to July 2009). Since WMATA can only use that trick once, there's a shortfall of around $36 million).