A Modest Proposal for Bailing out Metro Rail: Raise the Friggin’ Fares!

Projected growth in Metro ridership. Graphic credit: WMATA. (Click for larger image.)

by James A. Bacon

The Washington Metro system continues to crumble, as hundreds of riders found to their consternation Wednesday when a fire near the Anacostia Metro station stranded several Green Line trains underground for several hours. A rider named Scott posted an incredible first-person story on Unsuck DC Metro, describing getting stuck in a jam-packed train that coasted to a halt in a tunnel underneath the Anacostia River. As temperatures inside the cars rose to some 90 degrees, people took off coats and shirts. After an hour or two of waiting in the dark, some passengers broke windows; others exited the train and walked down the tunnel. Someone threw up. The cars stank of urine as people wet themselves.

Needless to say, after that experience, Scott was rethinking his commitment to Metro and public transportation.

The Washington Metropolitan Area Transportation Authority (WMATA) has long known it has a problem. And the standard response is, “We need more money.” Let us set aside the Washington Times‘ expose of endemic featherbedding and incompetence in the lower and middling ranks of Metro employees and take senior management at its word, that MWATA’s problem is mainly one of insufficient funds.

Let us also acknowledge that Metro is a critical piece of infrastructure that the Washington region, including Northern Virginia, cannot allow to deteriorate. As management points out in its draft Momentum Strategic Plan 2013-2025, without Metro, there would be one million more auto trips per day, traffic congestion would increase by 25 percent, and the region would have to invest tens of billions of dollars on new roads, bridges and parking facilities.

Over the next three decades the region is forecast to experience a 30% increase in population growth, and a 40% increase in rail ridership from 750,000 per day to 1.05 million per day. Metro needs to spend $1 billion a year on capital improvements just to maintain its current, sub-par level of service. To improve service, WMATA will need to invest $1.5 billion a year over the next decade. To deliver the transit system “that the region deserves” — the enterprise needs $2.25 billion a year. Note: That is over and above annual operating subsidies.

Metro has not identified where that money will come from. But it knows where to look: “Metro will work with regional and federal partners to develop a predictable funding source for transit,” states the strategic plan. Later, the document elaborates: “First, Metro must work to ensure it continues to receive the robust capital funding from its local, state and federal partners that it has in recent years. … Second, Metro must work with the region to find new mechanisms that could generate revenue for Metro.”

Watch out, Virginia, Metro is looking at you!

Remarkably, the strategic plan never mentions the idea of… raising fares. Anticipating a 40% growth in ridership, Metro is terrified by the prospect of being inundated with riders. To accommodate all that demand, it needs to spend more money from sources unknown. Economics 101 logic suggests that raising rates would do two things: (1) It would raise more money; (2) it would reduce the number of projected riders, hence reducing the need for capital improvements.

The Metro strategic plan never mentions the concept of “value capture” either. Interestingly, when touting the regional benefits of the rail service, the document notes that the presence of Metro stations increases the value of surrounding land. “The land around Metrorail stations generates $3.1 billion annually in property tax revenues to the jurisdictions. Of these revenues, $244 million of incremental property value is … extra value that would not exist without Metro.”

The idea behind “value capture” is that some of the economic value created by transit and highway improvements should be used to help finance those improvements — as Fairfax and Loudoun Counties are doing to a small degree to help finance the Rail-to-Dulles extension. Rather than dunning taxpayers generally, including those who don’t use Metro or, worse, in downstate Virginia who don’t even garner indirect benefits from Metro, commercial taxpayers who benefit from higher rents should be tapped to help pay to maintain the system that makes those higher rents possible.

But none of that is in the works. Here is what is in the works. Governor Bob McDonnell has proposed a massive tax restructuring plan that would increase spending on roads, bridges and rail projects by $2.4 billion over the next five years. Nearly $1.1 billion would go to rail and public transit. (See details.) Of that amount, $300 million would underwrite the expansion of Metrorail to Dulles airport and $500 million would be applied to other transit needs. It is not clear how much of that sum, if any, would defray WMATA’s capital costs.

Downstate Virginians need to pay attention. Typically, they focus only on the projects in their own back yards, paying no heed to what debacles may be occurring elsewhere in the state. WMATA, unwilling to tackle the endemic inefficiency of its unionized workforce and reluctant to raise fares in the face of projected increases in ridership, would much rather extract money through the political process. Downstaters need to make sure they don’t get fleeced.

18 Responses to A Modest Proposal for Bailing out Metro Rail: Raise the Friggin’ Fares!

  1. I agree though if not mistaken METRO already boosts fares at rush hour.

    looking for a sustainable funding source? here it is:

    http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=SB1313&submit=GO

    Description
    Local income tax. Adds the City of Portsmouth to the list of localities authorized to impose a local income tax to generate revenue to be used for transportation purposes. The bill also removes the requirement that the local income tax be approved by a referendum and repeals the five-year sunset on the local income tax.

    This bill mentions Virginia Beach, Portsmouth, Norfolk, Prince William, Manassas, Manassas Park, Alexandria, Falls Church, Arlington, Loudoun.

    http://www.richmondsunlight.com/bill/2013/sb1313/

  2. The remarkable this is that much of this problem is largely self induced by Nimby opposition or inefficient governance that has thwarted development around Metro-sites leaving many locales grossly under served.

    The terrible lesson is: Never invest in a metro without the zoning in place to carry the cost. Otherwise, small groups of citizens can cost their fellow citizens hundred of millions, if not billions, of dollars in losses without cause.

  3. I agree though if not mistaken METRO already boosts fares at rush hour.

    looking for a sustainable funding source? here it is:

    http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=SB1313&submit=GO

  4. Description
    Local income tax. Adds the City of Portsmouth to the list of localities authorized to impose a local income tax to generate revenue to be used for transportation purposes. The bill also removes the requirement that the local income tax be approved by a referendum and repeals the five-year sunset on the local income tax.

    This bill mentions Virginia Beach, Portsmouth, Norfolk, Prince William, Manassas, Manassas Park, Alexandria, Falls Church, Arlington, Loudoun.

    http://www.richmondsunlight.com/bill/2013/sb1313/

    • Such a tax drains revenues without solving problem, only turns it into an ever growing one.

      Conversely, the proper development around metro sites does the reverse. It expands revenues exponentially, greatly enriching the community and region.

      Apparently we’ve become so affluent and lazy, our leaders built subways without taking the steps necessary to make them self-sufficient. Then they just turn around and dump yet another problem on taxpayers.

      • “Over the next three decades the region is forecast to experience a 30% increase in population growth, and a 40% increase in rail ridership from 750,000 per day to 1.05 million per day.”

        The real question is how much of that population increase is going to be located close to existing paid for metro stops? I have not looked deeply into this issue regionally, but a bus maintenance yard, electric power transfer station, and used car lot occupy an entire block over a DC metro stop that market wise, if developed, could fill that grossly under used access point in a nano second. Same thing just up the road, in DC, and other stops as well.

        I do not understand the politics but should not regions outside DC insist the DC do the right thing – the Smart Growth thing – develop their metro sites for the good of all their citizens, rich and poor alike. DON’T Tax! Grow Smart!

      • ” Conversely, the proper development around metro sites does the reverse. It expands revenues exponentially, greatly enriching the community and region.”

        so you don’t want taxes to fund METRO, right?

        so how does METRO get funded from “proper development”?

        are you not talking about higher taxes in the areas developed around METRO?

        or perhaps some other approach?

        I just don’t see how METRO can run only on farebox. Is there any METRO any the world that does?

        better yet, are there any non-govt, private sector subways in the world?

        See the problem I have is that virtually everyone you talk to says METRO is absolutely essential – that disaster would occur without it but then when you get to the money part of it – it’s a “problem” because the govt runs it.

        but aren’t they all run by govt – around the world?

        • No, wrong, your are clueless. Read my earlier posts. Start with Fiscal Fix. How many times need one explain what should by now be obvious.

          • really? how about recounting it in the context of how METRO would be paid for?

            remember, we’re talking about things that have some chance of actually happening not some libertarian theory.

            I seriously do not recall and perhaps this is a good time to go over it again – in case others have not heard it either.

  5. Folks down Fredericksburg way would LOVE to have METRO!

    of course they don’t want to pay for it.

    Right now, VRE, the commuter rail costs about $20 per trip while the rider pays under $5 – with subsidizes from the Fed Govt as well as subsidizes from those who purchase gasoline with an additional 2.1% tax on it.

    I doubt seriously if VRE could survive soley on farebox alone.

    Right now – all the NoVa localities have that 2.1% surtax on gasoline and instead of going to METRO, it goes to VRE.

    how do you like them apples?

  6. oops.. I erred… in the VRE fares.. been a few years and it’s apparently $10 a trip fare …

    ” … “According to the Heritage Foundation in 2005,When a passenger from Fredericksburg pays his or her $7.29 ticket (10-pass) to climb aboard the train, taxpayers kick in another $10.50 to finance that ride. And because morning riders come back in the evening, each Fredericksburg passenger imposes a daily cost of $21 on the community, the state, and the nation.”2″

    http://virginiaplaces.org/nova/vre.html

    I would guess the actual trip now costs over $25.

    of course you will not find this information from the VRE website without quite a bit of digging.

  7. As management points out in its draft Momentum Strategic Plan 2013-2025, without Metro, there would be one million more auto trips per day, traffic congestion would increase by 25 percent, and the region would have to invest tens of billions of dollars on new roads, bridges and parking facilities.

    ============================================

    Complete nonense. That kind of congestion would be unsupportable, so it would not happen. What would happen is that businesses and agencies would go elsewhere. So the question that needs to be answered is whether the alternative development plan would cost more or less than Metro.

    Or maybe even whether the alternative development plan would cost less than the alternative development AND Metro combined, since that seems to be what is happening. We are getting the alternative development in spite of Metro.

    In other words, the billions spent on building and supporting Metro have bought us pretty much less than nothing.

  8. I think when I was riding VRE some hears ago my ticket was $6 and the subsidy was $18. I felt guilty every time I rode.

    I have quoted several times from a book I have by Winston and Shirley, that states that if mass transit had to pay its own way, all but around 2% of it would cease operation.

  9. commercial taxpayers who benefit from higher rents should be tapped to help pay to maintain the system that makes those higher rents possible.

    ============================================

    When i said htis years ago EMR said I was nuts. But here is the thing, Those commercial interests do not want to pay for it anymore than people wnat to pay to ride the express lanes. If you want to have an alternate form of development, with more jobs ins more places, just try taxing commercial interests for the cost of the supposedly superior transportation Metro provides — and see how fast they leave.

  10. something that might be interesting – comparing cities with subways with cities that don’t in terms of congestion or other metrics.

    sounds like fertile ground for a policy wonk working with a data guru.

  11. Well, Washington has one of the newest and best Metro Systems around, and it is now the proud owner of the distinction of having the worst traffic congestion in the nation. New York and Boston have much older systems, so one would think the demographics would have shifted by now, but no, both those cities have severe congestion.

    How many samples would you like? The short answer is that mass transit does nothing to reduce auto congestion, but only adds a new layer and a new mode of congestion to the mix. It gives some additional people the ability to go some additional places that would be difficult to get to absent the mass transit, but it does nothing to alleviate traffic congestion,

  12. I note that the FBI is talking about moving it’s HQ and initially it ruled out Prince William (as well as all counties south of there) because it did not have METRO.

    We went through this same discussion with BRAC it seems.

    so which is it? When Federal Agencies and private companies both make decisions about where to locate (and not) based on METRO… what does that really mean?

    Good old Spotsylvania would LOVE to have the FBI HQ but there is no way that current FBI employees would commute to Spotsy and few would move there either from what I understand…

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