A $500 million subsidy will not fix Metro

Originally published in the Washington Post

Carol Park Apr 5, 2018

The cherry blossom season is here. Tourists are pouring into the District. Visitors should prepare for Metro delays and disappointments — such as today’s in Virginia — if they choose to use the troubled system.


In March, Virginia and the District publicly pledged to give Metro additional funding of $154 million and $178 million a year, respectively, to boost its operations and maintenance. Maryland has now anteed $167 million a year in additional funding. The four-decade-old system is certainly far behind in routine maintenance, never mind wholesale replacement and reconstruction of major components, but a half-billion tax dollars a year will not solve the core of Metro’s long-standing problems. In fact, the three governments would be hastening Metro’s failure by continuing a system that is fundamentally flawed and is increasingly being rejected by the population it is intended to serve.


The Metro system was declared “the worst in the world” by the Washington Examiner in 2017. Correspondingly, Metro ridership dropped 19 percent from 2011 to 2016, a span during which most big-city systems gained riders. Long delays, safety failures and poor accountability by the system’s operator, the Washington Metropolitan Area Transit Authority, are regularly cited as areas of concerns.


After the 2009 crash near the Fort Totten station that killed nine people and injured 80, the National Transportation Safety Board found the accident was a product of failures by the train operator, maintenance workers and senior management. Years later, little has changed, as the system had to fire 21 staffers for falsifying safety records between late 2016 and January 2017.


WMATA is not solely to blame for these problems; the federal government, the District, Maryland and Virginia share in the fault. Those governments have consistently backed Metro and WMATA, shielding it from competition and providing hundreds of millions of dollars in subsidies with minimal conditions. There have never been serious incentives for Metro to improve safety, increase ridership or significantly boost revenue from its beneficiaries: the riders, many of whom use it to travel from wealthy suburbs to well-paying downtown jobs.


According to WMATA’s Fiscal Year 2018 cost projection, it faces a budget gap of $290 million. The chief executive has proposed employee reductions, fare increases and service cuts to bridge the gap, leading to job losses and lower ridership predictions.


Instead of continuing with business as usual, it is time to consider a dramatic alternative: privatize the system through a competitive bidding process, so that the operator will face market incentives to operate the system well.


This is not some wild, untried idea. Countries around the world have been privatizing their transportation infrastructure to improve management and efficiency. In Hong Kong and Tokyo, private companies run clean, efficient subway systems that use distance-based pricing, with high fare recovery ratios. If they can master privatized subways, why can’t we?


Even in the United States, the Massachusetts Bay Transportation Authority (MBTA) has moved toward privatizing parts of its system. After 15 years of MBTA expense increases, last year the privatization effort resulted in the system’s first expense decrease.


In some ways, Metro is also already headed in this direction. Over the years, the system has dramatically increased its reliance on private contractors to perform core functions. Spending on private contractors has nearly doubled in the past two years, from $24.8 million in fiscal 2015 to $47.4 million in fiscal 2017.


WMATA projects $1.82 billion in expenses in 2018. Let’s suppose that a Metro privatization followed MBTA’s lead. If MBTA’s 0.3 percent cost reduction last year was applied annually to Metro’s expenses, this would yield a yearly savings of $54.6 million. In less than six years, WMATA’s budget gap of $290 would be history. In less than 10 years, Metro would have $500 million in annual savings, equal to the subsidies that the District, Maryland and Virginia are preparing to fork over. And remember: These numbers solely consider cost reduction. Imagine if improved efficiency led to more ridership and fare revenue.


Carol Park is senior policy analyst at the Maryland Public Policy Institute.