>I wrote to WMATA asking what happens if there is an operating surplus (more revenues that expected, not more revenues than costs), for example from the fares collected from the record ridership they’ve been having.
From the presentation before the Finance Budget and Oversight Committee (6/12), it appears that when WMATA collects more than expected from passenger revenue or is able to save on expenses more than expected, the surplus is returned to the jurisdictions in the form of reduced subsidies.
According to the presentation materials for the recent fare increase, about $100M has been returned to the jurisdictions, while according to the latest reports WMATA is almost $500M in the red for long-term maintenance.
Is WMATA not allowed to retain those surpluses in a rainy day fund, or to use those funds to partially offset the long-term capital needs of the system?
Yesterday, I received the response from Richard Harcum, Managing Director of the Office of Management and Budget:
It is the policy of the Board of Directors that at the end of each fiscal year any operating budget surplus that is not specifically set aside for reserve funding or other uses shall be deducted from the local jurisdiction’s first-quarter billings of the next fiscal year. Conversely, if a fiscal year ends with a deficit in excess of the budgeted amount, the jurisdiction shall have that amount added to its billings two years later.
This billing process keeps WMATA whole financially by adding to, or deducting from, the annual operating subsidy needed to fund transit service in the region.
Capital funding is provided through grants from the federal and local governments in support of the multi-year “Metro Matters” budget.
So, the answer is “no”. Increased revenues cannot be retained for future expenses, WMATA doesn’t build up a general “rainy day” fund, and operating revenues aren’t used to make long-term capital purchases.
The jurisdictions are responsible, through the funding formula, for any deficits, and receive the benefits of any surplus.