Metro officials say they will need significant increases in funding and changes in state legislation to avoid dramatically cutting down service in the 2025 fiscal year.

At a Thursday board meeting, agency leaders detailed three possible scenarios by which Metro could avert a “transit death spiral,” where the agency would have to cut services back by two-thirds as soon as July 2024.

Metro officials have said such service cuts cannot happen and will be “devastating” for the region. Trains would stop running at 9:30 p.m. and arrive every 20 to 30 minutes as opposed to every six to 12. The system would have a daily capacity of only about 300,000 for trains and 200,000 for buses. Officials have painted a dire picture of the consequences, outlining a scenario in which roads would become severely congested, pollution would worsen, and the local economy would suffer.

To avoid that outcome, Metro says it needs additional funding from D.C., Maryland, and Virginia. But Maryland and Virginia would need to pass legislation that would enable them to give those additional funds. In 2018, when the three jurisdictions agreed to provide $500 million in annual funding for Metro, Maryland and Virginia capped their subsidy increases to 3% each year (D.C. does not have this cap). Metro officials are hoping that both legislatures will remove that cap for the 2025 fiscal year.

Metro General Manager Randy Clarke said Thursday that legislation removing the cap “has to happen” or the region would have to brace for the death spiral.

“Without that change, there’s no getting around it. It’s binary. We’re into significant service cuts next July,” he said.

While officials have expressed optimism that states will provide support, Metro’s budget schedule doesn’t neatly line up with Maryland and Virginia’s legislative sessions, which start in January and wrap up in the spring (Clarke usually proposes a detailed budget for the upcoming fiscal year in December, and the board approves a budget in either March or April).

Due to the uncertainty of whether Metro can secure additional funds on time, officials say they will need to plan for possible layoffs and a hiring freeze in January. Layoffs would happen six months after.

ATU Local 689, the union representing Metro, told DCist/WAMU that “we are closely monitoring the situation and reiterate our commitment to working with every party around the region to ensure that we close the deficit and avoid a catastrophe for our mass transit system.”

“We are firm in our stance that slashing worker benefits is not the way to fill that budget gap,” the union said in a statement.

Officials presented three different scenarios to solve the funding problem Thursday, differing primarily in the amount of funding each plan would use from Metro’s capital program budget (which goes toward repairs and modernization) to mitigate the deficit. One plan calls for withdrawing $345 million from the capital budget, while in the two other scenarios, Metro would withdraw $60 million – consistent with most previous years – or $190 million, the amount allocated for the 2024 fiscal year. Board members are expected to vote in the coming months in favor of one of the three scenarios.

The more funding Metro uses from the capital budget, the less funding it would need from D.C, Maryland, and Virginia to help alleviate the funding gap. However, the more Metro relies on funds from its capital budget, the less money it would have available for repairs and modernization projects that budget is meant for, such as the Heavy Repair and Overhaul Facility, the 8000-series “fleet of the future,” zero-emission buses, and the Blue/Silver/Orange Corridor. Metro says those projects will make the system safer, more reliable, and more environmentally sustainable.

Stewart Schwartz, executive director of the transit advocacy non-profit Coalition for Smarter Growth, says it’s “concerning” that the agency may have to rely more on capital budget funds to reduce the deficit.

“We don’t think that’s ideal,” he said. “We think Metro funding should be the top regional transportation priority for local jurisdictions.” Schwartz says Metro has been relatively successful in minimizing extraneous use of such funds over the years.

Now, he says jurisdictions may need “some sort of mechanism for regional agreement” that will allow them to act ahead of the legislative schedules.

Schwartz says Metro needs a dedicated source of funding like state highway systems instead of continually struggling to break even each year. The current funding gap has been years in the making. While the COVID-19 pandemic did cause a decline in ridership that never fully recovered, the transit system has never had a steady, ongoing source of funding. Critics warned in Metro’s early years that the lack of steady funding would have long term repercussions (one report warned that it “potentially poses one of the gravest fiscal and political crises ever confronted by Washington.”)In recent years, Metro has been relying on temporary pandemic relief funds, fare revenue, and state and local subsidies to continue operating.

The upcoming federal government shutdown will not affect services in the short term. But Clarke said that it will result in loss of revenue: fewer people will be using the Metro to commute, and that means a loss of fares.

“Every million dollars that we lose on fare, starting on Monday, will be a million that we’re gonna have to make up some other way,” Clarke said. “Timing probably couldn’t be worse.”
Separately, Metro leaders are projecting an additional $95 million in one-time savings this budget year – higher than what was projected in the approved 2024 fiscal year budget. Those savings are possible due to “improved contract service management, office consolidation efficiencies, and personnel expense management.” Metro is also expecting an additional $50 million in recurring savings for the 2025 fiscal year through “administrative efficiencies,” cutting back on consulting costs, “digital transformation,” and more effective long-term repairs.