New estimates show Loudoun’s payments to Metro could be as much as $27.9 million higher, double what was expected in the first year—with some asterisks.
Metro’s proposed fiscal year 2018 budget raised a lot of eyebrows around the DC region by doubling or tripling some costs to the jurisdictions that pay into the transit system, and now Loudoun is grappling with its own obligation doubling in cost and a shortfall of millions of dollars.
Those numbers come with caveats. For example, they include a bus service payment, which Loudoun will not make to WMATA because it will continue to provide its own bus service instead of using Metro buses. County finance committee Chairman Matthew F. Letourneau (R-Dulles) estimated those payments account for about half of the projected operating costs and a quarter of capital costs.
As part of the Washington Metropolitan Area Transit Authority compact, Loudoun, like every other participating locality, must contribute operating and capital costs based on its ridership and stations. The county’s fiscal planning is based on projected costs from before Metro General Manager Paul Wiedefeld unveiled what he called the Reality Check Budget Plan.
That budget shows capital costs rising dramatically to address up to Metro’s longstanding maintenance and safety concerns. Some localities, like Alexandria and Fairfax County, are seeing their proposed capital costs triple over the current year.
Now, Loudoun County staff members are trying to figure out what these higher costs will mean for the county government when it starts paying into Metro in 2019 and 2020, in anticipation of the Silver Line extension to Ashburn.
The Metropolitan Washington Council of Governments Technical Panel, which includes representatives from Metro jurisdictions, WMATA’s financial staff, and DC’s chief financial officer, now says the county could pay as much as $27.9 million more in its first year.
The county’s current Metro funding plan, which includes local gas sales tax revenues, a 30 percent match for capital funding from the Northern Virginia Transportation Authority, Metro tax district revenues, and bond financing, falls short by $28.3 million in 2020. In fiscal year 2026, the county is coming up short $69.9 million with its current plans, all before taking out bus costs, allowing for budget negotiations, or accounting for possible new revenue streams for Metro or changes in how it’s funded.
“For Loudoun, I think the next step is to still better understand even the existing projections,” Letourneau said. He anticipates the finance committee, which will be briefed in more detail during a meeting tonight, will direct the staff to come up with more refined projections: “We know what we’re putting out today is not accurate, if for no other reason than they’re elevated probably by 25 or 30 percent just because of the bus issues alone.”
County staff members attempted to break out bus service costs from the estimates before tonight’s meeting, but could not finish that work in time.
Letourneau, who represents Loudoun on the Metropolitan Washington Council of Governments and the Northern Virginia Transportation Commission, said the spike in cost is manageable for Loudoun, but gives new urgency to a regional discussion on paying for Metro.
“For us, you think about what’s in our Capital Improvement Program, $12 million or $15 million or $30 million even is not going to cause us huge issues,” Letourneau said. “We handle those types of expenses in our CIP, not that we want to, but we do all the time. We’re the jurisdiction that’s building $35 million elementary schools every year.”
He said Loudoun can accommodate the extra costs in its $2.4 billion budget. But other localities cannot, meaning there must be a serious conversation about how Metro is supported.
“There’s been a lot of talk about all that kind of stuff in the past, but it hasn’t really been serious,” Letourneau said. “This is turning into a more serious discussion, because now there are actual budget projections that are more realistic for the first time that are staring people in the face.”
One of the major problems Metro faces is that it has no dedicated, reliable source of funding and must renegotiate its budget with the entire WMATA compact membership—made up of 11 jurisdictions—each year. Without a totally reliable source of funding, Metro cannot take on debt to finance its capital costs, the usual way to pay for major infrastructure projects; it must pay up front.
Developing a dedicated revenue stream, such as from the state and federal governments, could help push costs down for Metro. Currently, Virginia and the federal government pay only capital costs to Metro and do not contribute to operational expenses. The proposed 2018 Metro budget does not include an increase in Virginia’s $50 million contribution.
In the example of the City of Alexandria, which could see its capital contribution nearly triple from $11 million to $37 million in 2018, the COG technical panel estimated paying for Metro capital projects with debt financing instead of up front. That could reduce the city’s cost by $111 million over the next ten years.
In April, the technical panel will come to the Council of Governments with options for paying for the higher cost of Metro. In the meantime, Loudoun, too, will again adjust its budget plans.