The Metro Funding Panel today released a report detailing recommendations for alternative sources of funding to help the Washington Metropolitan Area Transportation Authority (WMATA) solve a looming budget shortfall.

The 132-page report details WMATA’s needs and recommends potential revenue sources. Among the panel’s primary findings are:

• There is, and will continue to be, an expanding shortfall of revenues available to address both capital needs and operational subsidies of the Metrorail and Metrobus systems.

   

• Federal needs require the federal government to significantly participate in addressing these shortfalls, particularly for capital maintenance and system enhancement.

   

• The compact jurisdictions of Maryland, Virginia, and the District of Columbia should mutually create and implement a single regional dedicated revenue source to address these shortfalls.

   

• The most viable dedicated revenue source that can be implemented on a regional basis is a sales tax.

   

• Federal and regional authorities should address alternate methods of funding MetroAccess, or paratransit, needs of the region.

“We felt the best solution for revenue was a sales tax,” said Panel Chair Rudolph G. Penner. “The reason for this condition was that a sales tax has a very broad base so the rate can be very low. It is also likely that visitors will pay for some of that tax, which we think is appropriate since they share the benefits.”

Mortimer L. Downey, the panel’s staff director, noted that the proposed sales tax could be as low as 0.25%.

Three area business associations -- the Greater Washington Board of Trade (BOT), the Federal City Council and the Downtown Business Improvement District (BID) – will advocate for the panel’s recommendations through the newly-formed Business Transportation Action Coalition (BTRAC).

“The Board of Trade, through BTRAC, will initiate background analysis on the impact of the recommended tax on each jurisdiction to provide elected officials and stakeholders with additional information on which to base their decisions,” said BOT President Robert A. Peck. “We will also follow-up on these recommendations in an effort to engage all sectors of our community. Together, we can raise awareness and successfully advocate for Metro’s funding needs.”

The 13-member panel was appointed by the Metropolitan Washington Council of Governments (COG), along with BOT and the FCC, to research funding options for the region’s public transit system. Panelists were selected based on their expertise in economics, political science, public finance and regional transit.

Metro officials say failure to come up with new funding solutions will result in a significant deterioration of the region’s train and bus services. Funds are needed to repair, maintain and replace aging equipment. New railcars and buses are also needed to eliminate overcrowding triggered by a growing population.

“The cost of funding Metro if a sales tax or other measure is not implemented is far greater than anything mentioned in this report,” said John W. Hill, Chief Executive Officer of the FCC. “This is a fight of survival for the system. It can’t advance with its current level of funding and definitely needs some outside help.”

Among the nation’s transit systems, WMATA is the largest one without a dedicated source of revenue. Officials expect a $40 million shortfall in next year’s budget, and the system faces a critical shortfall of $1.5 billion over the next six years for basic system improvements to the 30-year-old system. Metro’s funding needs are outlined in the “Time to Act” brochure released by the Transportation Planning Board at COG in February. A separate report issued by the Brookings Institute in June titled “Washington Metro: Deficits by Design” found that the system’s unprecedented lack of dedicated funding sources necessitates an over-reliance on funding from state and local governments.

Click here to view the final report.