"Let's Talk" -- What to do when your transit authority needs more money?: Washington region edition

Earlier this week, WMATA, the transit authority operating subway and trunkline bus service in the Washington DC metropolitan area, announced that they are seeking additional "subsidies" from the local jurisdictions--WMATA's revenue comes mostly from local governments and fares, along with some money from the federal government.

See "Metro wants more money; without it, officials say, rail service might be cut back" Washington Post. From the article:

Metro warns that unless Washington-area jurisdictions increase their subsidy to the transit agency by more than 10 percent for the next fiscal year, subway riders could see cutbacks in service. 

Metro officials have drafted a budget for the next fiscal year that includes a contribution of $892 million from the jurisdictions it serves — a 10.3 percent increase over the current subsidy — to help the transit system meet its operating costs.

Fares are already very high for Metrorail, which functions as a hybrid subway and commuter railroad system.  Fares are based on distance, and the maximum distance fare is $5.90.  And unlike many other metropolitan areas like New York City or San Francisco, WMATA doesn't offer a deeply discounted monthly pass.  Fares are reaching their maximum, especially compared to other cities across the country which tend to not charge distance-based fares for subway service.

Indirectly the federal government pays a big proportion of transit fare revenue, because the federal government provides free transit benefits of up to $130/month for employees, and many take advantage of this, WMATA is able to charge "high fares" because of this subsidy.

The reporting says that local governments are leery of increased subsidies because of tight budgets and other demands. Also see "Metro Is Ready to Take Trains Away If It Can't Get More Money" from In the Capital and "Metro receives backlash over new proposal" from WUSA-TV.

That's a cue that now would be a good time to begin a broader discussion of how transit (not just WMATA) could be funded in the Washington area.

Last year, I wrote about a study, Big Move Implementation Economics: Revenue Tool Profiles , done for Metrolinx, the regional transit authority in Greater Toronto, which identified 25 different types of funding sources:

• Auto Insurance Tax
• Car Rental Fee
• Carbon Tax
• Cordon Charge
• Corporate Income Tax
• Development Charges
• Driver’s License Tax
• Employer Payroll Tax
• Fare Increases
• Fuel Tax
• High Occupancy Tolls
• Highway Tolls
• Hotel & Accommodation Levy
• Income Tax
• Land Transfer Tax
• Land Value Capture
• New Vehicle Sales Tax
• Parking Sales Tax
• Parking Space Levy
• Property Tax
• Sales Tax
• Tax Increment Financing (Special Assessment Districts)
• Utility Levy
• Vehicles Kilometres Travelled Fee
• Vehicle Registration Fee

Employer Payroll Tax.  It happens that for years I have been enamored of the concept of  a transportation withholding tax as an element of payroll tax. They do this in Portland and Eugene, Oregon, which is where I first learned of this concept.  Post-recession, New York State passed a similar tax to fund transit in Greater New York City.

But it turns out that since the 1970s, France has imposed a similar tax, called versement transport.  It was first applied only in Greater Paris, and over the years has been extended across France and applied to other jurisdictions, and is a significant source of funding for local transit services.

In cities like Lyon or Paris, this tax generates upwards of 40% of the total revenue stream supporting transit provision (see "Lyon: Urban Planning Designed Around Public Transport," Mass Transit Magazine).

Note that the tax is not a fail-safe source of revenues as it is still subject to the impact of recession (as is sales tax).  The Tri-Met system cut services and ended the free "fareless square" service in Downtown Portland in response to revenue shortfalls as a result of the 2008 real estate crash and recession.

Federal exemption from the tax would make the tax less valuable.  In the US, these taxes have exempted local, state, and federal governments.  This would be problematic in the DC region, because the federal government is a major employer.  Key to the success of such a tax here is incumbent on the federal government agreeing to its assessment.

It also has the issue of being termed a "commuter tax," which DC is not allowed to assess.  However, if all of the jurisdictions in the area were to enact such a tax, maybe it could go through.

But by using the funding stream to fund transportation improvements beyond transit, perhaps such a tax would be more palatable.

Conclusion.  Note that since 2009 I've argued that it is time to rebuild the metropolitan consensus concerning transit, which is all the more true given the recent decision by Arlington County to stop moving forward on implementing streetcar service, and the campaign platform of winning Maryland Gubernatorial candidate Larry Hogan, which called for not funding the Purple Line light rail program in Montgomery and Prince George's Counties.

The 40th anniversary of WMATA in 2016 is another hook on which to hang such a process.  See "WMATA 40th anniversary in 2016 as an opportunity for assessment."

That won't do so much for providing WMATA with more revenue for the next fiscal year, but longer term, it could make for a more stable funding stream.

Postscript.  Many years ago, I got an email from an activist positing that rather than increase fares, transit systems could just get more money from local jurisdictions, mentioning the fact that the transit system in Rochester, New York has done exactly that ("Creativity Helps Rochester's Transit System Turn a Profit," New York Times, 2008).

I replied that's certainly possible, but such relationships are constructed over long periods of time, it can't be done in a rush, and when other organizations are also financially pressed.