Metro leaders are still planning for service cuts and fare hikes as early as this summer due to its budget shortfall, but they’ll likely be much less severe thanks to $480 million of additional funding promised by D.C., Maryland, and Virginia.

That funding is crucial to Metro avoiding a “transit death spiral” agency officials have been sounding the alarm about for months. Without additional subsidies, Metro has said it will be forced to dramatically cut service, increase fares, and lay off nearly 2,300 Metro employees.

Last Thursday, D.C. came in with the lion’s share in additional funding, promising up to $200 million on top of its $462 million subsidy. Maryland and Virginia have proposed $150 million and $130 million respectively.

The commitments from the three jurisdictions enabled Metro leaders to outline a new budget forecast for the 2025 fiscal year. Speaking with reporters Monday, Metro General Manager and CEO Randy Clarke said the agency is in a much better place than before.

“Nothing is done,” Clarke said, referencing the promised funding from D.C., Maryland, and Virginia. But he said conversations with local lawmakers have been “positive.” The additional funding commitments aren’t guaranteed for the three jurisdictions until lawmakers approve budgets, which won’t happen until the spring.

Metro’s originally projected budget deficit for the 2025 fiscal year was a staggering $750 million. In addition to the nearly $500 million in additional funding committed by the region’s three jurisdictions, Metro is expecting to close the remaining $250 million with both new revenue and cost savings.

In December, Metro officials projected fares would have to go up by a hefty 20% on both Metrorail and buses starting in July. The new projected fare increase wouldn’t be as steep, but would be at least 12.5%, which would mean fares as high as $6.75 on weekdays during the day. Fares would be as high as $2.50 for weekends and evenings (currently priced at $2, meaning a 25% increase).

Those fare increases would generate about $24 million in additional revenue. Officials are also estimating an additional $12 million from “revenue recovery,” which includes growing ridership and new faregates being installed across the system, which are significantly reducing fare evasion, according to Metro data.

In addition, Metro officials are proposing “targeted service” cuts, as opposed to the draconian cuts they proposed in December. Those cuts included the elimination of about half of all Metrobus routes, the closure of 10 train stations, trains that stop running at 10 p.m., and slower arrival times.

With targeted service reduction, trains will continue to arrive at a similar frequency during peak commuting times, but in a narrower window of time. Currently, Clarke says trains arrive about every five minutes mornings and evenings on weekdays, within a peak service period totalling four hours. In the next fiscal year, that four-hour peak service period would be shortened to about two hours.

Officials are also considering reduced service for days when there’s expected to be less ridership, such as on holidays.

The targeted service cuts are expected to generate about $20 million in savings.

In addition to the previously mentioned targeted service cuts and fare hikes, Metro outlined an ongoing freeze on wage increases for workers in ATU Local 689 and Local 922 as well as non-unionized workers (generating $38 million), as well as $145 million in one-time savings and administrative efficiencies that it identified last year. Metro is also projecting an additional $11 million in savings from inflation reduction.

But overcoming this year’s shortfall was only a short-term task, according to Clarke. Going forward, he says he and local leaders need to ensure a sustainable funding plan for Metro, which has been without dedicated funding since its founding and has instead relied on a combination of local subsidies, federal relief, and fare revenue.