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Approval of Public Hearing Staff Report and Amendment to FY2021 Budget

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Approval of Public Hearing Staff Report and Amendment to FY2021 Budget Finance and Capital Committee Action Item III-A November 19, 2020 Approval of Public Hearing Staff Report and Amendment to FY2021 Budget 4 of 316 Washington Metropolitan Area Transit Authority Board Action/Information Summary MEAD Number: Resolution: Action Information 202224 Yes No TITLE: FY2021 Budget Amendment PRESENTATION SUMMARY: Staff will review public outreach results related to the proposed service changes, request Board acceptance of the Public Outreach and Input report, seek approval of the Title VI Equity Analysis, as well as the FY2021 Operating Budget amendment, and repeal the previously approved FY2021 fare and service adjustments. PURPOSE: To seek Board acceptance and approval of the Public Outreach and Input report, Title VI Equity Analysis, and amendment to the FY2021 Operating Budget, and to repeal the previously approved FY2021 fare and service adjustments that have not been implemented due to Covid-19. DESCRIPTION: Identification of Parties with an interest in Metro’s budget: The following list includes Metro's top non-personnel multi-year contractors through FY2021 and to date ($500 million) as well as the Metropolitan Washington Airports Authority (MWAA). Some vendors have contracts spanning through FY2022 as well. l Kiewit Infrastructure Company l Kawasaki Rail Car Inc. l PNC Bank National Association l SunTrust Bank l C3M Power Systems, LLC l Transdev Services, Inc. l Gannett Fleming-Parsons Joint Venture II l Mott MacDonald I&E, LLC l New Flyer of America, Inc. l Bank of America NA l Wells Fargo Commercial Services l Clerk, U.S. Court l Motorola Solutions Inc. l M.C. Dean, Inc. l Mythics, Inc. l Potomac Yard Constructors l First Transit, Inc. l Diamond Transportation Service, Inc. l Dell Marketing LP l HNTB Corporation l Metropolitan Washington Airports Authority (MWAA) A full list of Procurement Awards is available at: https:// www.wmata.com/business/procurement/solicitations/index.cfm#main-content Metro has labor agreements with the following collective bargaining units: 5 of 316 l Fraternal Order of Police/Metro Transit Police Labor Committee, Inc. (FOP) l Office and Professional Employees International Union Local No.2, AFL- CIO (Local 2) l Local 639, International Brotherhood of Teamsters Law Enforcement Division (Local 639) l Local Union 689 of the Amalgamated Transit Union, AFL-CIO (Local 689) l Local 922, International Brotherhood of Teamsters (Local 922) Key Highlights: l As a result of Covid-19 impact on local governments, school districts, businesses, and individual riders, the ridership outlook for the remainder of FY2021 is lower than was assumed in the May approved FY2021 operating budget l At current funding utilization rate, CARES Act funds will not support the full fiscal year l The expected budget gap, absent additional federal assistance or a significant improvement in ridership, is projected at $176.5 million by the end of FY2021 l To offset these budget pressures, staff proposes $30.5 million of management actions l Board actions of $146 million are required to balance the budget, including approval to cut service changes effective February 13, 2021 and to defer capital projects to achieve the level of savings to ensure a FY2021 balanced budget Background and History: On April 2, 2020, the Board approved the FY2021 Budget, which included a $2.08 billion operating budget and subsidy requirements of $1.25 billion. Following the Covid-19 pandemic, the Board revised the FY2021 operating budget on May 28, 2020 to $2.052 billion and subsidy requirements to $1.12 billion. The amended budget utilized $546M of CARES Act funding, deferred implementation of the previously approved service and fare adjustments for six months, took additional management actions to reduce expenses, and provided a one-time credit that reduced jurisdictional subsidy contributions by $135 million. These actions enabled the Authority to balance its budget amidst a greatly reduced ridership outlook and constrained funding environment. CARES Act funding was previously estimated to be depleted around the end of the calendar year but due to aggressive cost management, Metro has been able to extend the funding for two additional months. Continuing Covid-19 impacts has further diminished the Authority’s financial outlook. To address this anticipated shortfall, the GM/CEO is proposing $30.5 million of management actions to reduce FY2021 expense, in addition to the $88 million included in the amended FY2021 budget. The actions include greater contracting efficiencies, eliminating meal relief for station managers, as well as non- represented employee performance pay deferment and discretionary reductions. In addition, Board actions of $146 million are required to ultimately balance the budget in FY2021. Board deferral of capital projects will yield $30 million savings; with an additional $116 million in cost savings from service reductions, proposed effective February 13, 2021, to achieve the required savings. The Board previously authorized a compact public hearing on the proposed service changes which was held virtually on October 13, 2020. Discussion: Outreach Results Metro received 3,000 responses, of which nearly 30 percent were from Title VI populations (respondents were 28% minority and 9% low income). Despite the ongoing pandemic, in-person outreach was conducted for one day at twelve locations, targeting stations with high average weekday, low-income, minority, limited English proficient ridership, and rail-to-bus transfers. Outreach teams spoke with 5,100 customers, with one in five interactions in languages other than English. Public comments were collected between September 26 – October 19 through surveys, written/uploaded comments, and at the virtual public hearing on Tuesday, October 13. 6 of 316 The survey emphasized that these proposals were being considered due to budgetary pressures, and respondents were asked if proposals were “unacceptable,” “acceptable” or, alternately, “acceptable if temporary.” Survey results showed that the proposals are acceptable to large majorities of respondents. All proposed Metrorail changes are acceptable to most respondents. A reduction of Metrorail service hours was acceptable to 56 percent of respondents. l Frequency, turnbacks, and weekend service changes are acceptable to 8 out of 10 respondents l Maintaining current Metrobus service levels is acceptable to 7 out of 10 respondents Yes Yes No Acceptable Unacceptable (acceptable if (acceptable) (unacceptable) temporary) Metrorail 12-minute weekday 80% 18% 31% 49% 18% headways Sunday Service on 84% 14% 42% 42% 14% Saturdays Red Line Turnbacks 82% 14% 63% 18% 14% Yellow Line 76% 19% 58% 17% 19% Turnbacks Reduce Operating 56% 41% 30% 26% 41% Hours Metrobus Retain August 72% 24% 32% 41% 24% Service Plan FY2021 Funding Gap and Operating Budget Amendment Based on FY2021 Q1 actuals, the revised funding gap is expected to total $176.5M. Furthermore, based on feedback from the public participation process, staff has identified $30.5 million in management actions, $30 million in capital projects that can be delayed without negatively impacting safety and state of good repair, and $116 million in service reductions to balance the FY2021 budget. Recommended Service Levels and Adjustments Thanks to aggressive cost management, the recommended service reductions are less than originally proposed in September and will be effective on February 13, 2021. Metrorail l Standardize weekday and off-peak rail service frequencies on each line l Retain 11 pm system closure seven days per week l Open Silver Line Phase 2: July 1, 2021 Metrobus l Retain the August 2020 service plan l Bus Service Improvements on 20 lines to address needed additional capacity No longer recommended are proposals to implement turnbacks on the Red and Yellow Lines, as well 7 of 316 as the earlier 9 pm closing of the Metrorail system Monday-Thursday. On Metrobus, the August 2020 service plan provides approximately 75 percent of pre-pandemic service, along with targeted enhancements to address passenger crowding and provide supplemental capacity where needed. In addition, front-door boarding and fare collection on bus will re-start in January 2021 as approved by the Board in September. The recommended service levels do not include changes requested by the jurisdictions to nine Metrobus lines requested by Maryland and Virginia which are currently not funded in the proposed amended budget. Title VI Equity Analysis The service changes do not result in a disparate impact (DI) for minority populations or disproportionate burden (DB) for low-income populations. FY2021 Fare Adjustments Repeal On April 2, 2020, when the Board adopted the FY2021 operating budget, it approved fare changes to be effective by July 1, 2020 that included the following: Metrorail l Peak base and peak max fare increase to $2.35 and $6.50 respectively l Simplification of mileage tiers l Weekend flat fare of $2.00 Metrobus l Lower Price for the 7-Day Regional Bus Pass to $12 Metrobus + Metrorail l Transfer Discount of $1.00 On May 28, 2020, the Board amended the FY2021 operating budget in light of the Covid-19 impacts and as part of the revisions required to balance the budget, the Board approved a six-month deferral of the fare changes. Ridership and revenues continue to be significantly below pre-Covid levels. Through Q1 FY2021, passenger revenue was 89 percent less than the prior year and 20 percent below budget. The proposed fare adjustments would further reduce fare revenues by approximately $1.9
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