NoVa Legislators Balk at Bailing out Metro

by James A. Bacon

Eleven Virginia legislators from Northern Virginia say they would block any “new dedicated funding stream or tax increases” to fund Metro repairs expected to cost $60 million.

“We cannot in good conscience ask Virginia taxpayers to bail out years of mismanagement, negligence and wasteful spending,” stated a letter signed by House Majority Caucus Chairman Timothy Hugo, House Majority Whip Jackson Miller, Del. David Albo and Del. James LeMunyon.

Washington Metropolitan Area Transit Authority Chairman Jack Evans called the letter “ludicrous.” Channel 4 Washington quotes him as saying, “The fact of the matter is, Metro has a $300 million operating shortfall, an $18 billion capital shortfall and a $2.5 billion unfunded pension liability. And we have to address it some way.”

Wrote the legislators:

Virginia has more than met its funding commitments to WMATA. In 2007, Virginia committed $50 million per year for 10 years to fund capital improvements for Metro. In 2013, the General Assembly passed legislation to increase funding for transportation, providing $300 million for the construction of the Silver Line and generating about $80 million per  year for the Commonwealth’s Mass Transit Fund. The General Assembly also provides an annual operating subsidy to WMATA of about $100 million, Virginia has delivered over and over again.

The solution to funding Metro’s safety needs and on-going operations lies internally. WMATA’s financial problems are, in our view, largely self-inflected. Metro must get labor and operations costs under control. WMATA’s labor cost increases in recent years have exceeded ridership increases and …. benefits for WMATA employees are significantly than the norm among big city transit agencies. WMATA also has a $2.5 billion unfunded pension liability.

Bacon’s bottom line: The legislators’ numbers don’t include subsidies from Arlington, Alexandria, Fairfax County and Falls Church, or revenues from the Tysons special tax district and toll increases on the Dulles Toll Road to help pay for completion of the Silver Line to Dulles International Airport.

At the end of the day, Virginia has no choice but to help bail out WMATA. A collapse of the flailing giant would cripple Northern Virginia’s economy. But Virginian legislators need to drive the hardest bargain they possibly can to bring accountability to the organization or it will become a veritable fiscal black hole. It looks like senior Republican lawmakers in the General Assembly are willing to bargain hard. I have every confidence that downstate legislators will back them up.

(Hat tip: Tim Wise)

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18 responses to “NoVa Legislators Balk at Bailing out Metro

  1. The only problem with the analysis is the part about “Virginia has no choice but to help bail out WMATA.” Once you’ve said that, there is no such thing as hard bargaining. You just said you have no choice.

    The essence of any negotiation is the presence of or development of alternatives. If you have no alternative, you have no power.

    • You’re absolutely right. If Virginia wants to extract concessions, it needs to be able to say credibly, “We’ll walk.” To do that, it needs alternatives. The quickest, easiest, most credible alternative? Uber-ized car pooling and van pooling.

      … Which reminds me, I forgot to publish my post, written over the weekend, on that very topic! Check it out.

    • Here are links to the entire letter. With all the names of the signatories:

      :large

  2. but you can’t negotiate intelligently if you have no idea what the numbers ought to be. Just saying you won’t pay unless they take less is not real smart.

    I’d like to see real numbers compared to other transit systems including the labor costs and if those numbers bear out that METRO is overpriced then I’m all for taking a hard line.

    but I’ll also say – if you starve something – penny-wise-pound foolish – you’re going to end up with higher costs You can’t do things like Metro on the cheap without screwing things up downstream.

    finally – Metro needs to have a sustainable source of funding – arguing against that is just ignorant and begging for even bigger problems .

    Oh – and I do not think Virginia should be paying for METRO – I think those costs belong to NoVa/DC/Md and that goes back to the sustainable funding -… if you don’t address the sustainable funding issue – you basically allow the management of METRO to be irresponsible and just let things go to hell in a handbasket then say “I told you so” when it blows up.

    surely we can have a more intelligent approach than what we’re doing now.

    and for the h-y-p-o-c-r-i-t-e-s – if you really think METRO is a failed enterprise – say so – and that goes for the GOP lawmakers.. get off your duffs and tell the truth as you see it and stand for what you believe and stop being hypocrites.

    • >>surely we can have a more intelligent approach than what we’re doing now.

      And what is that approach? What you criticize in the following part of your post seems to be very close to what you’re doing yourself:

      >>and for the h-y-p-o-c-r-i-t-e-s – if you really think METRO is a failed enterprise – say so – and that goes for the GOP lawmakers.. get off your duffs and tell the truth as you see it and stand for what you believe and stop being hypocrites.

      I think Mr. Albo, much as I part company with him on many things, has got it mostly right. A very cynical acquaintance of mine posits it this way: “First, determine whose problem it is. If it’s not my problem, then screw it. If it is my problem, what can I do to make it somebody else’ s problem”

      >>if you don’t address the sustainable funding issue – you basically allow the management of METRO to be irresponsible >>

      I’m not exactly seeing the connection between these two concepts. Management can be (what am I thinking? they will be) irresponsible whether or not there is “sustainable funding”, whatever that is. The only connection I can see?: the desired blow-up happens faster and with less ultimate pain when there is no funding. Then the thing goes into receivership/bankruptcy, you get to restructure, a hopefully more competent authority runs it without the union problems, and you get on down the road. You have to get rid of the union because they have monopoly power in this situation for reasons that have been discussed ad nauseum on this blog. See also, Current Situation with the CGT in Paris, which has also been discussed on this blog

      I’ll refrain from responding to the diatribe against Republicans, which serves no useful purpose.

    • WMATA is in the top ten agencies in the United States for incompetence. Remember that Democrat Tim Kaine refused to allow WMATA to construct the Silver Line. Kaine required MWAA to build both Phase 1 and Phase 2 of the Silver Line. And neither McDonnell nor McAuliffe have changed that decision whatsoever. Never before had WMATA not been in charge of Metrorail construction. Kaine’s decision speaks volumes.

      WMATA is not responsive to the public and has few effective cost controls and that’s when it has to seek money from federal, state and local jurisdictions annually.

      If a dedicated tax is ever given to WMATA for Metrorail, it should be a real estate tax levied on properties that are within 1/2 mile of a rail station. These are the prime beneficiaries of rail. Property values are higher; increase faster; and generate higher rents. The added value should be captured, rather than stick the general public, most of which receive little or no benefit from rail.

  3. let’s see the numbers first – how can you advocate anything if you don’t know the facts?

    in terms of hypocrites and GOP-

    If the GOP believes the service is needed then get the facts and make the case for reform -based on those facts.

    If the GOP thinks the concept itself is a failure – then stop the foolish talk about how it doesn’t deserve more money and openly advocate for shutting it down – stand on that and make that your position.

    don’t play this ignorant game of banging it up then saying we have no choice but to keep it… that solves nothing… it’s just adolescent.

    re: the “connection” – when you short fund – you leave management with an impossible job – they cannot make it work.

    if that’s what you actually intend – what does that solve?

    you literally want to starve it into failure and then turn around and say we have no choice but to continue to operate it?

    good lord – that’s about as dumb as you can get…

    again – I want to see the facts that people are basing their views on – is Metro a badly run system with adequate finances compared to other systes or or not or is METRO just another typical transit system that Conservatives believe are conceptual failures in all variants?

    The problem with the GOP/Conservatives – they can’t deal with the realities so they have no answers other than to castigate, condemn , starve the beast then say “I told you so” whether it’s health care, education, or transportation – and subway systems.

    this is why virtually no urban areas in the world except for 3rd world are run by Conservatives. All major first world countries in the world have vibrant subway systems funded sustainability yet in this country we play these stupid faux conservative games that seek to de-fund them because they are “bad”.

    • Larry, you ask for numbers. Are you challenging the numbers presented in the letter signed by the VA Congressmen, or are you ignoring them? The numbers say, specifically, how METRO costs are higher, in terms of a percentage, than four other comparable transit systems. So what you are looking for in terms of numbers that was not presented?
      Also, Sunday’s Washington Post Metro section had an article on METRO costs, and how they are higher than other transit systems, with specific dollar amounts. Unfortunately, since the Post went behind their paywall, it is hard for me to get the url for the actual article. One eye opening number(to me at least): Some to many of the Metro bus drivers (thanks to OT pay) make over $100K a year. That is a very high salary for any bus driver, OT or no OT.

  4. I’m not ignoring them – I’ve not see them and I’ve not seen them presented here.

    I want to see actual comparisons not jst anecdotal data that someone got from somewhere and claims is higher than other systems.

    I’m not surprised that some transit folks make 100K – not only here but in NY and other high cost areas. You have someone who is responsible for the lives of hundreds of people – like a boat captain or an airline pilot , right?

    let’s see the numbers… you can get the WaPo article even with the paywall.

    give me the cutline and I’ll go get them and put them here.

    if those are issues – they need to be dealt with – but when you short-fund the system – you’re causing more problems and engendering a death spiral.

    that’s not the way you fix a system. that’s how you make it worse and even more susceptible to disaster. Rational people do not do that.

  5. if this is the article: ” Metros by the numbers: How D.C. stacks up against other capital cities”

    it does not compare the financials… at all other than to claim Metro is costly without any comparative data to support that statement.

    I found one so far on transit system efficiency –

    http://www.vitalsigns.mtc.ca.gov/transit-system-efficiency

    take a look –

  6. Here’s another example:

    TABLE 1 Rail Agency Annual Costs, Revenues, and Deficits Page 7

    http://iurd.berkeley.edu/wp/2010-04.pdf

    Here’s my point –

    when folks complain about the costs of Metro – the unions, the salaries, etc – are they saying that compared to other subway systems these costs are out of line

    or are they saying these costs are too high and unions are wrong – in general ?

    are they complaining about Metro – or the ALL subways systems as being too expensive and having unions?

    are they essentially opposed to the CONCEPT of subways and using that as the argument against Metro – rather than ranking METRO comparatively against other similar systems?

    What’s the point of opposing subways systems in general if they are common around the world?

    at that point – are you now really disclosing your own ideological beliefs rather than actually doing an objective analysis and seeking reform of a system that is actually not as well operated as it’s peers?

    so these guys write letters about the “cost” that they don’t like and won’t support paying – these same guys would write this same letter in other cities with Metros also?

    see – this is the problem these days with these issues. Are people wanting reform of a particular operation or agency or are they really opposing the CONCEPT of that operation or agency?

    To me – this is an issue of honest about one’s motivations in their criticism.

    If you want reform – then go at it.

    if you just want to rant about a concept you disagree with and focus it on one particular thing – what is your real goal?

    why is that important? Because if you basically throw sand in the gears – you’re not really about fixing it – to start with.

    you cannot short fund ANY operation – whether it be subways, police or education or virtually anything without harming the functionality.

    the costs are what the costs are – and if those costs are in line with other similar operations -then that’s what the cost is and it is an issue of whether or not society wants to pay taxes to support that activity or not.

    There are always going to be folks who oppose anything the govt might do except for the basics and others at the other end of the spectrum.

    but if you are opposed in concept – don’t make the argument on specifics if those specifics are pretty much the same across all variants of the same operation.

    Are the subways in Paris union-operated and have similar costs to Metro?

    or not?

    or would you be opposed to BOTH Metro and the Paris Subway because they are union operated and costly?

  7. Larry,

    I would not want to compare just about anything here with what’s going on in Paris these days. Even so, the French may in fact be waking up as opposed to what we’re doing. This will be the first time in my memory (since DeGaulle) that the French government has not caved to the CGT in the first day of a strike. And this from a committed Socialist, President Hollande. Public support of the CGT is only about 35-40%, whereas in past years it’s been well over 60%. CGT has engaged in blockades of oil and gasoline terminals, thwarting trucks and buses, but that has now been mostly broken. CGT still has one card left to play, however. The countrywide soccer matches start on Friday. It will be interesting to see what the government does in the face of the need to transport folks around.

    The unions are always behind the times. They were in the case of our auto companies and there was a lot of damage to everybody. They simply are incapable of recognizing truly changed circumstances, usually whenever the company/government/institution runs out of other people’s money. In my own personal experience, I had a client who for years would do the standard triennial negotiations (conveniently in November), the company would make a final offer, the union would go out on strike (and take a long weekend hunting), 3-4 days later the company would come back with a little more and everyone went back to work. When the economy got tough in the early 80’s, the company told the union that they couldn’t do it that way anymore, that this time there would be a final final offer. The union failed to believe it, and they were on strike for eight weeks before it dawned on them that there was not going to be any more. They engaged in property destruction, intimidation, etc.

    It’s always the same. They fail to recognize changed circumstances, when it is no longer business as usual. We are seeing it before our eyes in Washington and in Paris.

  8. Crazy – you realize that airline pilots and UPS drivers are union right? Police are union – right?

    Union does not mean just dollars… either… it can mean working conditions and fairness in pay and equal treatment.

    but you’re missing the point – subways are in most major cities on earth – even though the right calls them “failed”.

    how can that be?

    • I guess I am totally failing to miss the point. Oh, by the way, in another life I was a traditional (vs. EEOC) labor lawyer, meaning I have dealt with unions for a long time. And it is precisely the working conditions part of the contract that causes all the problems. Over the years, management gave in to the demands for this working condition and that one. When it was no longer feasible to do that because of the worldwide nature of the labor force, the unions balked and the trouble began.

      But, and here’s a lesson for you Larry: have you noticed that labor unions are only successful where the market conditions are impacted? That is the case. So, for example, before 1978 when the ICC was eliminated, the Teamsters controlled the highways. Nothing moved unless Jimmy Hoffa said so. Why was that? Well, there were only so many interstate trucking companies and they had a multi-employer contract with the Teamsters (bad move, but that’s a topic for another conversation ). Why was that? Well, because the ICC, that wonderfully useful government agency, only issued so many licenses to be an interstate carrier. So what happened in 2008 with the elimination of the ICC and the end of regulation of interstate truckers? Well, any Tom, Dick or Harry who could get a $40K loan from the bank could buy a rig and be in the interstate trucking business. The Teamsters no longer had a near monopoly on interstate trucking and could no longer dictate terms.

      You can argue whether that was good for those truckers. At the very least, more ordinary folks had a shot at making good money who did not have that shot before. But more importantly for purposes of this discussion, the union was no longer successful because it was not operating in an industry where management could easily pass along the costs of the union to the customer. And so the Teamsters faded away as a real factor in the trucking industry, UPS to the contrary notwithstanding.

      But have the Teamsters faded away entirely? No, only insofar as the trucking industry is concerned. What have they done? They looked for another industry that is a monopoly, near monopoly, or simply has high barriers to entry. Where did they find that? Yep, you guessed it. The government, which I would venture to say is now the Teamsters biggest “client”, though I haven’t checked of late.

      And to think that many in the management labor law business once called government clients “the public sector trap”, because it was thought that you couldn’t send them big bills like you could with major corporations. Now it’s almost the only game in town. All because it’s a monopoly.

  9. Crazy – have you talked about miners and others who worked in slave-like conditions before unions?

    You talk about the ICC and licenses – have you considered – occupational licenses that do the same without unions but with lobbyists in the GA?

    is your solution to get rid of licensing all together so it can’t be perverted?

    see – that’s the clue for you. You can “reform” by destruction. It’s throwing the baby out with the bathwater.

    if you don’t like union abuses – deal with the abuses – not the right of the union to exist.

    and the bigger problem with you guys – is you’d kill subways because of unions – even though they exist around the world and often are unionized – your “solution” is to shut down the subways …. because you do not think you can stop the unions – right?

    workers have the right to negotiate for good working conditions, fair rules and wages. It’s a basic human right and really embodied in the Constitution in the idea that people can organize and seek redress.

    Unions can actually be their own enemy and put their own workers out of a job – yes – but that’s not an acceptable reason to outlaw them.

    and entire industries don’t go belly up or go overseas because of unions.

    unions have to adapt to global commerce – it’s a continuum not an ending.

    the right these days has no answers. they want simple answers that in reality are simple-minded and their big weapon is to shut down and destroy without alternatives… if they donj’t like it – kill it…

    thats not an intelligent approach at all.. People should have the right to unionize – even if it puts them out of a job – it’s still their right.

    Metro is not in trouble because of unions. It’s in trouble because it has no fixed source of capital facilities funding – that other subway systems do have.

    On the operational side – Metro’s per passenger cost is right there with most other cities in the US except NY which is lower – and also unionized.

    the worst subway systems in the US are in Texas…twice the cost of METRO per passenger – and I do not know if they are union or not but Texas is a right-to-work state.

    you standard “it’s the union’s fault” answer though is not the primary problem – it’s the way that METRO is funded.

    • Larry,
      I have almost no clue what you said in your post. You make up what you think I said rather than what I said. I’m sorry, I’ve been criticized before for making an ad hominem argument directed at you, and I want to try to avoid doing that now… it’s real hard, because your post reveals that you don’t understand much about unions and the environment they operate in.

      1. Where did I say get rid of the unions? Unions are not the problem. If you had read my post closely, you would have found this: “Over the years, management gave in to the demands for this working condition and that one.” It’s management that’s the problem. There’s no incentive for public sector management to resist unreasonable demands. It’s a monopoly. A. They can pass on the costs to the public with almost no punishment to them personally. B. Their only consequence is possible removal from office, but they assure that removal if there is a long strike or some huge inconvenience to the public. Google Michael Bilandic, Chicago. Even in the private sector, there is little incentive for management to resist union demands if management operates in an impacted environment. See American auto industry. When it shifts from free market to impacted market to monopoly market, the unions are not resisted, and you get bad results. That’s why I gave the example of what happened to the trucking industry in my last post. You don’t refute any of that. You go off on some other jag about miners and what’s f-f-f-aaa-i-i-rr. I’m sorry that life is not fair, Larry, I really am.

      “The essence of any negotiation is the presence or development of alternatives.” Getting to Yes, Fisher and Ury, 1981

      2. I have indeed talked about the needless occupational licenses that thwart the average guy. See Institute for Justice (IJ) and their work.
      And yes, I would get rid of most of it. Most of it is not about skill in the particular area being regulated. Most of it is about protecting existing businesses from competition. It needs to be gone, and IJ is working very hard to do so. I’m surprised you don’t know about them.

      3. Where did I say I’d kill the subways because of the unions?

      4. In the private sector, folks do have the right to organize and bargain for their working conditions. No question. Section 7 of the NLRA, as amended. 1935. But under the NLRA, there is no right to collectively bargain in the public sector at the state level. That right is conferred by individual state legislatures. D.C. would be a special case, since they fall under Congress. I’m not sure whether Congress has delegated to DC City Hall the authority to allow public sector bargaining. In any case, there is such bargaining in DC.

      5. Where did I say outlaw the unions? Even if I wanted to, it would be a non-starter. Where unions need to be CURTAILED (you could look it up, that’s different) is in the public sector. Even George Meany said it, as did Walter Reuther. They recognized that a union in an almost pure monopoly situation would lead to very bad results, and it has. Why? Because management is encouraged to give in to the unions by the structure of the situation. When the politicians give in to the unions, they do so with other people’s money, not theirs. There is no incentive to protect the public fisc, only their own necks when things go wrong and there’s a strike. Simply put, there’s no real accountability. You can still have unions, but there can be no right to strike in the public sector. A lot of states gave the right to strike, and they are regretting it. See Illinois, France.

      6. You are correct. Metro is not in trouble because of the unions per se. But neither is it in trouble because of source of funding. It’s in trouble because management has given in to the unions and mismanaged while doing so.

      7. Entire industries do in fact go overseas when the costs of domestic labor get too high. Otherwise, you have to answer why have the auto plants drifted to Mexico in one form or another. It wasn’t because the head of HR at GM got stiffed by the union rep when they had dinner together at RenCen in Detroit.

      8. Where did I say it was the “union’s fault” I’ll say it again a different way. Unions are a result, not a cause. They “result” from poor management. Any halfway decently run business can avoid a union with the proper personnel management practices. I used to do it all the time. Unions “result” from impacted industries. They “result” from management being willing to give away the store. They “result” from lack of balls on the part of management. If the union can get away with whatever excess they propose, they will. It’s part of human nature. It’s called absence of foresight.

      9. Finally, consult Joseph Schumpeter re: “destruction”, as you call it. We heard the same lament when the steel mills closed down because steel could be made cheaper elsewhere. The industry could not survive as it existed. Those folks remade themselves because their near-monopoly which allowed them to exact near-monopoly wages no longer existed. You can do what China has done, keep building apartments and offices to be occupied by nobody in order to keep the industry going, but eventually you have to pay the piper. It’s like that old Fram oil filter TV commercial with the two dirt bag mechanics telling you to replace your oil filter, saying with an evil grin, “You can pay me now, or you can pay me later.”

  10. Crazy – my apologies but despite all your verbiage – I have no clue what you are advocating FOR. especially with regard to unions, subways and METRO!

    lay it out man…. so far you’re just bloviating… with no effect.

    here – tell me what to do about this while you are at it:

    The NFL Players Association

    https://www.nflpa.com/about

    aren’t these guys EVEN WORSE than all the bad you’ve mentioned?

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