Washington, D.C. (April 26, 2017) – As area leaders focus on ways to ensure a safe, reliable Metro system, a financial analysis by the Metropolitan Washington Council of Governments (COG) finds that the system’s predominant funding problem is a significant capital shortfall of $6.1 billion over the next 10 years.
The analysis, led by a technical panel of local city and county managers and the District of Columbia’s Chief Financial Officer, highlights the $6.1 billion gap out of an overall capital investment of $15.6 billion over the next decade dedicated to the system’s infrastructure, such as the tracks, stations, railcars, buses, escalators, and elevators. The analysis also identifies critical capital needs of at least several billion over the same period, such as a new Rosslyn connection, water remediation on the Red Line, and power system upgrades, that are not included in the $15.6 billion investment.
Regarding funding for the maintenance of Metro’s infrastructure, the analysis finds a $1.3 billion shortfall over the next 10 years.
During the release of the analysis at today’s COG Board of Directors meeting, panel members described their work as a detailed blueprint to assist elected officials by using financial and accounting metrics to illustrate the system’s value to the region and its revenue needs over the short and long-term.
“Our goal is to help the region’s elected officials reach a consensus on the best way forward for our region’s most valuable asset,” said COG Executive Director Chuck Bean. “A safe and reliable Metro is fundamental to our region’s long-term success.”
The panel concluded that the best way to achieve long-term capital funding is through the establishment of a new, dedicated funding source that would support bonding and spread the cost of capital projects over the projects’ lifespans. Metro is the only major big-city rail system in the U.S. without dedicated funding.
The panel said that a dedicated funding source that raises $650 million annually would cover the capital and maintenance funding gaps. The panel studied revenue options to provide a dedicated funding source, such as sales, property, and gas taxes. Several COG Board members thanked the panel for their work and said a solution other than a one-size-fits-all approach may be required for the region.
Over the next several weeks, COG will bring together a task force of elected officials to review the analysis, coordinate with public and private partners, and prepare recommendations for regional actions. The technical panel has been asked to explore additional options to meet Metro’s needs that will inform the task force.
The analysis finds that it is not possible to close the capital funding gap through farebox revenue and cost-saving measures alone. In addition, federal funding, including a federal-regional agreement providing $300 million a year, provides about 30 percent of Metro’s funding. If federal investment drops, the funding gap will grow.
The analysis stresses that a failure to invest in Metro will cause continued delays for passengers, worsen traffic congestion, and jeopardize the region’s economy including the planned and proposed development around Metro stations (more than $50 billion) and a potential drop in tax revenues of $1 billion to $2 billion per year.
The analysis’ financial model includes detailed assumptions about Metro’s operating and capital funding for the next decade from local, state, and federal governments, assumptions about farebox recovery and other revenues, and similarly detailed assumptions about operating costs and capital project needs.
In addition to the financial analysis, COG has partnered with the Greater Washington Board of Trade to hold two large forums in 2016 bringing together government, business, and civic leaders to discuss how the region can better support Metro.
Regarding safety, COG has assisted the District of Columbia, Maryland, and Virginia in creating an independent Metrorail Safety Commission that will assume safety oversight of Metro from the Federal Transit Administration. Through its Fire Chiefs Committee, COG has also been working with Metro to develop new safety protocols and improvements to emergency communications.
MORE: View the Technical Panel Final Report on Metro
MORE: View the event page for meeting materials and an audio recording.