By Wyatt Gordon

Note: A version of this article was originally published by Greater Greater Washington, a nonprofit dedicated to advancing racial, economic, and environmental justice in land use, transportation, and housing throughout the Greater Washington region. This is part three of a series on the Washington Metropolitan Area Transit Authority (WMATA)’s fiscal cliff, which refers to the drastic shortage of funding to cover the costs of the region’s transit system from mid-2024 onwards. You can find part one here and part two here.

After Virginia’s General Assembly included $149.5 million for Metro in its recently released biennium budget, the three jurisdictions WMATA serves appear ready to close the agency’s $750 million budget gap that could have cut 67% of transit service in the nation’s capital. Although Gov. Glenn Youngkin potentially reduced Metro funding down to $130 million with an amendment, the Capital Region appears ready to turn its attention towards how to fix WMATA’s long-standing structural issues, which cause a regional crisis every few years.

Progress process

Thanks to new 24/7 bus service, improved wayfinding, and the restoration of much of Metro’s old frequencies, regional leaders are generally satisfied with WMATA’s post-pandemic performance. Riders seem to agree. The Capital Region now leads the nation in transit ridership recovery among systems with heavy rail; however, just a little over half as many people board Metro’s trains on an average weekday compared with 2019.

Although inflated costs, the end of federal relief funds, and the evolution of where and how people work are also buffeting other large metropoles, DC finds itself in a particularly precarious position, with roughly a third of its real estate owned by the federal government. As long as Maryland, DC, and Virginia come through on their promises, WMATA should be held whole for the next couple of years. The true problem will arise in year three when the region aims to stop shifting maintenance dollars toward operations.

Over the last year, two stakeholder groups convened by the Metropolitan Washington Council of Governments have been carefully consulting on how to avoid a crisis. One group consists of the region’s chief administrative and financial officers, the Northern Virginia Transportation Commission, and other bean counters working to verify WMATA’s numbers and advise electeds on where more money for the agency could come from. The other comprises executive and legislative hard-hitters from all three jurisdictions meeting every few weeks to ensure the budget gap gets closed.

Clark Mercer, the director of MWCOG, anticipates some sort of regional conversation on how much transit the Washington region needs, how best to govern WMATA, and how to pay for it growing out of that executive and legislative roundtable.

“We’ve got to have a bigger conversation and have it be a more public process,” he said, highlighting the importance of business coalitions, the federal government, and civil society groups as well. “Coming up with ideas of how to pay for things before we define exactly what we want isn’t the right order of operations. To get our electeds, our stakeholders, our counties, and our cities on board, we have to agree on the what first, how much it costs, and options to pay for it—then electeds can decide whether that is palatable or not.”

Decongestion dollars

While that order of operations may be correct for officials, advocates and policy people tend to lead on proposing new solutions and socializing them among the public before electeds ever weigh in. After receiving MTA board approval late last month to implement tolling into New York City’s central business district this June, it would be hard for the Capital Region not to consider a similar policy (and potential windfall for transit) here as well.

“Effectively pricing access to roads is a win-win because it lowers traffic and raises money,” said Alex Baca, GGWash’s DC policy director.

Every time I’m stuck in a traffic jam I am baffled that congestion pricing isn’t seen as a more common sense idea.

Wouldn’t it just obviously be better for your city to have fewer traffic jams + a lower sales tax?

— Matthew Yglesias (@mattyglesias) April 11, 2024

Although arguments abound over whether the policy should be called road pricing, congestion pricing, or decongestion pricing, the acknowledgement of the effectiveness of tolls to raise revenue in the U.S. dates back to 1792. The commonwealth already leverages tolls in Northern Virginia to help pay for its portion of Metro. Several cities internationally have responded to challenges similar to those in the Washington region with congestion or road pricing schemes of their own, which have been established for decades.

As in NYC, some worry road pricing could pinch low-income communities. Dan Reed, GGWash’s regional policy director, disagrees and believes the status quo is worse: “People argue that we can’t have tolls because of higher costs to poor people and equity, but all of the burdens of driving fall disproportionately on poor people whether that is pollution, time lost to driving, or the cost of owning and operating a car.”

A DC study on road pricing was conducted from 2019 to 2020, and was legally required to be released by July 2020, but DDOT has refused to share its findings with the public. (Disclosure: the DC Sustainable Transportation coalition (DCST), the entity contracted to conduct the study on behalf of DDOT, was previously managed by Greater Greater Washington). A George Washington University study on the policy released earlier this year found that fees for driving and parking would decrease air pollution and improve public health in the region.

Although advocates and academics agree that road pricing could prove a huge win for the region and WMATA’s coffers, Congress could run their recent playbook of intervening with local policymaking. But it may not be as complicated as it looks: GGWash has previously busted the myth that the District’s Home Rule charter prevents it from charging out-of-state drivers.

Land largesse

One of the strongest fiscal engines of the Capital Region in recent decades has been housing growth. Whether in Navy Yard, Silver Spring, or along the Silver Line, development means big dollars. Could the region help solve WMATA’s long-term fiscal problems by better leveraging its limited land?

The future could be fixed by a 19th-century idea: a land value tax (LVT). By taxing the value of land itself at a higher rate than what is built upon it, LVTs add a financial incentive for property owners to develop their parcels to their highest potential. Detroit is the most prominent example of an American city moving to an LVT, but Virginia’s capital, Richmond, already has the authorization needed to implement such a policy.

“The implementation of an LVT would increase the value of the land itself and decrease the value of the improvement so we could over time adjust the value of land in the District to better match why much land is perceived as valuable, a.k.a. its proximity to transit and the amenities that result from that,” said Baca.

Even if an LVT isn’t in the cards, the region could still generate more revenue simply by allowing for more infill in its most attractive areas to both grow Metro ridership as well as the tax base. A quick look around the region reveals that the vast majority of construction cranes are in close proximity to a Metro stop. But, from parking requirements to zoning codes, the region’s localities often make it unnecessarily difficult to build new housing, according to Matthew Yglesias, a DC-based journalist.

Yglesias draws a direct line between increasing housing supply downtown and funding for public transit. “Allowing housing to be built gives you revenue, and that is what you need to keep public services functioning.”

Federal fix

Although Metro ridership is trending upward among the region’s 400,000 federal employees, each additional day per week that the federal workforce takes the train contributes $20 million more to WMATA’s coffers. With many federal workers only going into the office two to three days per week, the agency is still hurting from their absence even though a fully in-person federal workforce wouldn’t fix the long-term fiscal crunch either.

One way for the federal government to pay its fair share is for Congress to allocate operating dollars to WMATA, if not all big city transit systems.

“Rural and small town transit agencies can use federal dollars for operations, but Congress has always had the attitude that cities are big and wealthy and can pay for transit operations themselves, ignoring the fact that many cities have no authority to raise money for transit.” said Beth Osborne, director of Transportation for America.

After MWCOG hosted a Capitol Hill reception last fall featuring four regional senators where federal operating dollars for Metro was a hot topic, legislators’ opinions may actually be starting to shift.

“There is no Congress that functions without folks taking Metro,” said Mercer. Reflecting that reality, Virginia Senator Mark Warner even recommended WMATA funding in the president’s most recent budget, citing homeland security reasons.

The issue could come to the fore in a new transportation authorization bill that needs to be taken up in the next two and a half years. Osborne hopes that permanent transit operating assistance would be focused on improving service, finding ways to recruit and maintain more operators, and adding more service or upgrading the quality of existing service.

Even a technical fix bill to give transit agencies the flexibility to use formula dollars for operating expenses could help, but Osborne isn’t holding her breath on a solution anytime soon.

“The federal government has always supported public transit reluctantly and tried to limit its responsibility in transportation,” she said. “Congress has always helped build things but then let states and locals run them, creating an incentive to build things you don’t have the ability to maintain.”

Regional revenue

Anyone who has tried to ride New York’s subway into New Jersey or whose jaw dropped at finding out that the San Francisco Bay area has 27 separate transit agencies can attest to the fact that in America, transit governance rarely crosses jurisdictional boundaries. That is why the funding mechanism Metro needs lacks any existing real world model, according to Yonah Freemark, a research associate at the Urban Institute.

“What is needed is some regional tax structure that would not only fund the operations of WMATA but also the expansions that the agency is looking at like the new “Bloop” and bus improvement projects across the region,” he said. “It is a bit difficult due to the tri-state nature of WMATA, but it is feasible to see a standardized tax levied across all three jurisdictions.”

With Maryland investigating how to stabilize its transportation revenue via a state commission and DC and Virginia open to finding new funding sources for Metro, now is the time for the three entities WMATA serves to come together on a sustainable funding model for transit in the nation’s capital.

In an Urban Institute report released late last year looking at transit agencies’ fiscal cliffs across the country, Freemark and his fellow researchers suggest funding that is both stable over time regardless of potential economic crises and revenue sources that are diverse. They also found that “the funding sources that are more stable are the ones that are the most controversial, unfortunately: income tax, property tax, and vehicle registration revenue.”

Thanks to voter approval of revenue referendums in 1996, 2008, and 2016, Seattle’s Sound Transit is overseeing perhaps the most ambitious public transit expansion in the nation, funded by a combination of sales taxes, property taxes, and a motor vehicle excise tax. Some electeds in Northern Virginia are instead toying around with the idea of using transient occupancy taxes and a levy on rental cars to try and push the burden off of regional residents and instead onto tourists and business travelers — an idea Freemark finds dubious.

“This idea that you should charge people that are visiting the region as your primary source of revenue isn’t grounded in reality,” he said. “The primary people benefiting from the Metro are those who live here.”

No matter which suite of solutions the region’s officials, advocates, and residents settle on to permanently fix WMATA’s funding crisis over the next couple of years, transportation funding, in general, is in crisis and overdue for reenvisioning.

“With fewer people driving gas-powered cars and gas taxes not raising as much money, we’re going to have to figure out new ways to fund transportation,” said Reed. “The sources we have been using so far are no longer sufficient. We have to think of bigger holistic solutions that can undo some of the mistakes of the past.”