How Metro plans to spend $6.6 billion over the next year

Metro is putting the final touches on its plan to spend $6.6 billion over the next year. Its Board of Directors is set to vote Thursday on the agency’s 2018-19 budget, which would take effect July 1.

If approved, the budget would be the largest in the agency’s history, and it reflects a pivotal moment in LA’s evolution into a more transit friendly metropolis. While the region continues to cling to the personal automobile, Metro’s draft spending plan earmarks nearly $2 billion for the construction of new rail lines and other transportation options across Los Angeles County.

Just as important are the future projects Metro will study over the next fiscal year, including the Vermont Transit Corridor and the Crenshaw Line’s northern extension to the Hollywood and Highland Red Line station. Metro isn’t ready to start construction on those two projects right now, but agency staffers are busy planning and mapping out how to do so in the coming years.

$6.6 billion is, of course, a lot of money. Where does the money come from? Where does it go? Below is a break-down of the budget.

Where does Metro’s money come from?

About half of Metro’s budget ($3.4 billion) comes from four sales tax increases Los Angeles County voters have approved over the past 38 years. Thanks to propositions A and C, passed in 1980 and 1990, respectively, as well as Measures R (2008) and M (2016), two cents of every dollar spent in Los Angeles County goes to Metro.

In the next fiscal year, Metro expects to get $844 million from each of those measures.

Another roughly $604 million is sourced from various state programs, including $32 million from the embattled SB1 gas tax bill, approved by the state legislature in 2017. SB1, also known as the Road Accountability and Repair Act, increased various fees and taxes earmarked for road repair and transportation investment, including a 12 cent increase on the state’s per-gallon gasoline excise tax.

Operating revenue from passenger fares on Metro’s bus and rail system produces about $303 million each year. Other sources of revenue, like system advertising and tolls from Metro ExpressLanes, generate about an additional $138 million.

Another $997 million is sourced from grants won in previous years by Metro for construction and maintenance. Another $1.1 billion comes from bond acts, the federal government, and left-over sales-tax revenue from last year.

How does the next budget compare to previous years?

If approved, the 2018-19 budget would be the agency’s largest. It’s a $281 million boost from the previous year, and a roughly $1 billion gain since 2015-16. Much of that increase is due to voter-approved Measure M sales tax revenue.

How will the money be spent?

$6.6 billion is a lot of money, and most of it is reinvested directly into transportation service in Los Angeles County.

Construction

Metro will spend the largest chunk of its money—about $1.99 billion—on a multitude of construction projects. Of that amount, about $1.74 billion will be spent on rail and transit expansion, and about $250 million will be spent on highway projects.

The single largest construction project on Metro’s agenda over the next fiscal year is the Westside Subway extension, which will extend the subway’s Purple Line from its current terminus at Wilshire/Western in Koreatown, all the way to the VA West Los Angeles Medical Center in Brentwood by the mid 2020s. Over the next year, Metro will dedicate just over $980 million to this project alone.

Other large projects Metro will continue work on next fiscal year include finishing the Crenshaw/LAX light rail line, which will connect the Expo Line to the Green Line, passing through Leimert Park, Crenshaw, and Inglewood on its way toward LAX. Work will also continue on the Regional Connector, which will thread together Metro’s Blue, Expo and Gold light rail lines with a pair of 1.9 mile tunnels under Downtown LA.

Operations

The next biggest chunk of change, to the tune of $1.8 billion, will go to operating and maintaining Metro’s existing transportation network. Of that total, about $1.14 billion will be allocated on salaries and benefits for Metro operators and maintenance workers.

An additional $493 million is earmarked for what Metro calls “state-of-good-repair” improvements. These are more involved overhaul projects than routine maintenance, like Metro’s “New Blue” project, which will shut down the Blue Line for eight months in 2019 for major repairs and upgrades.

Local subsidies

A significant portion of Metro’s budget—about $1.3 billion—will be devoted to subsidizing other municipal and regional transportation agencies. Local agencies, like Santa Monica’s Big Blue Bus, the San Gabriel Valley’s Foothill Transit, and the Los Angeles Department of Transportation all receive some money from Metro.

Metro also subsidizes local Access transit services, which serve wheelchair users and other mobility-challenged residents.

Another $179 million is allocated for Metrolink and other regional rail services.

Planning

Separate from its construction arm is Metro’s planning wing, which responsible for studying future projects like the Crenshaw North Extension, the North San Fernando Valley Bus Rapid Transit project, and the Vermont transit corridor.

Aside from conducting the technical and environmental analysis required for major construction projects, Metro staffers are responsible for applying for grants, managing existing Metro property, and for managing the entire agency. On general planning and programing, Metro plans to spend about $167 million over the next year.

Debt

Metro plans to spend about $417 million to pay off outstanding agency debt.

Anything else?

One open question for Metro is related to the potential repeal of the SB1 state gas tax. Metro has already earmarked about $32 million from gas tax revenue for a few projects around the county. If voters repeal the gas tax, that money disappears.

At a Wednesday committee meeting, Metro staffers said the agency would have to “get creative” if SB1 were repealed.