Metro's 2011 budget starts out about $100M in the red from a preliminary analysis, but the General Manager has to submit a balanced budget to the Board by December. Here's some things he could consider:
Revenues: A fare increase is unavoidable this year. Metro should increase all fares by some base amount, about 5%. For Smartrip bus fares, this is about a nickel, maybe a dime. For cash bus fares, $1.50 is a reasonable increase that makes the cash payment easy to manage in exact change. According to data obtained from Metro, less than 15% of Metrobus riders pay cash. For Metrorail, off-peak fares should increase a dime at the low end to $1.45, and a fifteen cents at the high end to $2.50. Peak Metrorail fares should increase fifteen cents at the low end to $1.80, and the maximum fare should increase fifty cents to $5.00. Parking fees should increase a minimum of 5% (about 25 cents), and the Board should study whether parking garages that are completely full should have higher parking fees to manage demand. Even the bike locker fee should be increased by $5 (to $75 per year), with higher increases targeted to stations that have a waiting list.
The fare increases should have a broad base component, ensuring that all riders contribute to keeping Metro's budget balanced, and a targeted component to (1) overcrowded Metro services (like parking, peak rail and bike lockers), and (2) segments that are relatively price insensitive (like peak-hour commuters). This kind of fare increase should raise around $65M, about half of the amount raised by a much more targeted fare increase in 2008. Since Metro already assumed a $34M fare increase, that's $31M more than previously stated.
Subsidy: Last year, in one of the worst economies since WWII, Metro's funding partners were able to contribute an additional 3%, or $16M. This year, with the economy starting a recovery, we should expect the same or more. It is not fair or equitable to expect Metro's customers, who do not select the members of the Board or participate meaningfully in Metro's governance, to bear the primary burden of keeping the transit system solvent through fare increases or service cuts.
If the Board is unable or unwilling to hold down cost growth in areas like employee compensation (up $53M a year) or paratransit (up $20M), then the Board should be able or willing to go to its local governments and ask for the money those increases require. In discussions, Board members often treat this cost growth as unavoidable, but the experience with BART shows that it is possible to constrain the growth of labor costs, and the staff has repeatedly discussed ways to reduce Metroaccess costs. With the riders expected (as suggested above) to contribute about 10% more than last year, it is only fair that the subsidy should be increasing at about the same rate. Metro's funding partners should be expected to contribute no less than the increase in paratransit service, or $20M, but really it should be closer to $30M, or about 6% of the subsidy last year (subsidy levels typically increase every year, while fares increase only some years, that's why it's not 10%).
Cost reduction: According to this presentation, reducing Metroaccess to the mandated 3/4 mile ADA corridor would save $2.8M per year or more. Another idea would be to ask jurisdcitions to stop dropping their own federally subsidized paratransit programs, and directing their constituents to use Metroaccess, as the District did last year. Metro could also implement a mandated 2-3% cost reduction effort in all departments except public safety, which would save about $3M per year. The board could decide to implement the "escalator to stairs" concept, with a delay between when the escalators are no longer maintained and the capital expense to convert them to stairs, saving them up to $1M per year. They could implement the cost reduction strategy of closing underutilized station entrances on Metrorail, as proposed last year for a savings of about $1M per year. They could continue to propose cutting Metrobus lines that underperform, or jurisdictions could offer to take them over, as Fairfax and Arlington Counties did last year. Finally, they could propose cutting Metrorail service frequency outside of rush hour, going to 15 minute headways on weekdays and Saturdays during the daytime, which could save another $7.5M per year. Some of these service cuts are painful, but the budget gap is huge.
The total of everything above is about $75M per year, so the GM and the Board are going to have to find even more cost reductions, more subsidy increases or more fare increases than what I've mentioned above. It's going to be a tough budget year.