D.C.’s ‘Big Money Loser’ Metro Faces Uphill Battle for More Aid

Washington, D.C.’s metro system is looking for a fresh round of federal aid, as Covid-19 relief funding dwindles and long-term work-from-home policies depress ridership.

Metrorail ridership is less than 30% of pre-pandemic levels, and bus ridership is about 40% of what it once was, Paul Wiedefeld, CEO and general manager of the Washington Metropolitan Area Transit Authority, said at a hearing Wednesday.

The federal government partly funds the capital and maintenance expenses of the metro system, which served as a key transportation mode for federal employees before the pandemic. The system also got an infusion of operating cash during the pandemic.

Metro anticipates an operating budget deficit of $500 million by the summer of 2024, and would “strongly welcome” more federal operating funds as that date approaches, Paul Smedberg, chair of WMATA’s board of directors, said in testimony before the House Oversight and Reform Subcommittee on Government Operations.

The suggestion raised questions about the system’s financial sustainability, and whether it makes sense for the federal government to subsidize transit its employees no longer use every day.

“I don’t believe the pre-pandemic financial model for Metro is sustainable,” Wiedefeld said, adding that “transit is not a profit-making business.”

Transit Dangles Perks to Lure Riders in New Hybrid-Work Reality

Photo: Al Drago/Bloomberg

A commuter boards a subway train in Washington, D.C., on April 13, 2020.

Metro’s ridership decline reflects a larger trend, with ridership nationwide plummeting by 79% in 2020, and continuing to fluctuate.

Congress helped to boost transit in three Covid-19 relief funding packages. WMATA received more than $2.4 billion in emergency funding, which helped the system close an operating deficit for three consecutive fiscal years, Rep. Gerry Connolly (D-Va.), chair of the subcommittee, said at the hearing.

Del. Eleanor Holmes Norton (D-D.C.) said she has always supported the special federal funding that WMATA receives for capital costs and remains “committed to securing operational funding for Metro as well.”

Telework Goes ‘Up, Up, Up’

Some lawmakers, including subcommittee ranking member Jody Hice (R-Ga.), warned that the Biden administration’s telework policies could lead to a “permanent” decrease in ridership.

“If the federal workforce is no longer reliant on the Metro, why should we consider the Metro a national asset rather than just a local subway or transit system?” Hice said. “Once Covid relief funding runs out, how is Metro going to survive?”

Wiedefeld said Metro serves workers at the Pentagon and others who are essential, and that Metro can adjust as transit demand evolves.

Before the pandemic, WMATA’s operating funds came only from local governments and revenue generated from the system, not from the federal government. “That will be a challenge for the local governments again to address because the federal money will disappear at the end our fiscal year 24,” Wiedefeld said.

David Ditch, a policy analyst at the Heritage Foundation, said Metro’s finances were unsustainable before the pandemic and are worse now. Its current operating structure wouldn’t be sustainable without further bailouts, he said.

Rep. David Trone (D-Md.) said Metro’s drop in ridership is unlikely to fully reverse as telework goes “up, up, up,” while the insurrection at the U.S. Capitol on Jan. 6 “scared away” tourists and government workers.

“It’s really mission impossible turning this around from a financial standpoint, and we may have to accept that it is going to be a consistent money loser and a big money loser for decades and decades,” Trone said.

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bloombergindustry.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com