Dedicated DC Metro Funding Makes Sense in Theory, but is Unlikely to be an Improvement in Real World
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Commentary

Dedicated DC Metro Funding Makes Sense in Theory, but is Unlikely to be an Improvement in Real World

One issue that DC WMATA rail boosters are fixated on is procuring a source of dedicated revenue. Currently Metro is funded from annual appropriations. Unlike the total funding argument, rail boosters make a good case for dedicated funding, particularly from a theoretical viewpoint. Unfortunately, from a practical viewpoint switching to dedicated revenue would probably be a wash maybe even a slight negative.

For WMATA, each of the jurisdictions that receive service contributes a certain amount of revenue. For rail this complicated formula is based on population, population density, weekday ridership, residence and the number of rail stations by jurisdiction. Generally, dedicated revenue is a better method to fund transportation than annual appropriations. Dedicated funds typically are required to be spent on one intended purpose, increasing efficiency. Dedicated revenue lacks the annual appropriations funding fight over limited resources with more politically popular subjects such as defense or education. Dedicated funding provides long-term certainty allowing long-term capital project to be planned and constructed more efficiently. As a result dedicated funding is preferred.

But dedicated funding works best if it is a required line item in the general budget. Many states and cities have line items in their budget for fields ranging from homeless services to school resources. A line item would eliminate the concern that general budget funds could be cut from one year to the next. However, dedicating a line item to transit could be a very hard sell, politically. DC, Maryland and Virginia executive and legislative leaders would all have to agree to dedicate this funding off the top of their budgets each year. They provide non-dedicated funding now, but have a say in the process and could reduce funding if they choose. The ability to reduce or increase higher provides political control over WMATA; if the agency underperforms or does not offer sufficient service in a politically-connected district, they can use the stick to change behavior. And if service is increased in the right area, they can use the carrot to reward the agency. That’s a lot of control to ask three groups of politicians to cede.

Dedicated funding does not work as well if it is a set percentage of total revenue or sales tax revenue. Certain types of dedicated funding can be far less predictable than annual appropriations. During the recession, Metro’s ridership continued to climb reaching a high in 2009. This was possible because unlike other systems that relied on sales tax funding or real estate values, which significantly declined during the recession, WMATA was able to keep or increase the frequency of its transit service. Other systems that relied on sales taxes, such as Atlanta’s MARTA had to cut service substantially leading to ridership decreases of 20% or more.

Many transit agencies are rightfully concerned that annual appropriations funding might be cut. But in Washington DC in which WMATA has bipartisan support and 16.4% of commuters take transit to work, significantly reducing funding for transit is never going to happen from a political standpoint. Yes, a dedicated line item in the DC, MD and VA budgets would help, but it’s not going to happen either. And WMATA could harm itself in the down years if it relies solely on sales tax revenue. Similar to the federal funding issue, WMATA’s best course of action is to revamp its management structure and improve its operations before it makes significant changes.

Baruch Feigenbaum is senior managing director of transportation policy at Reason Foundation and lead author of Reason's Annual Highway Report.