Metro is one of 10 public transportation providers seeking $25 billion in aid from Congress to cover financial losses related to the novel coronavirus pandemic.
Given that most businesses are now closed and many Angelenos are temporarily out of work, Merton CEO Phil Washington says the agency is expecting to “take a massive hit” in lost sales tax proceeds over the next few months, amounting to as much as $700 million.
Without an injection of new funding from the state or federal government, the agency’s plans for future operation and expansion could be impacted.
With ridership plummeting and sales tax revenue on the decline, transit agencies nationwide are struggling to continue operating trains and buses.
Speaking to reporters last week, Washington said that ridership—and, thus, fare revenue Metro collects from passengers—has plunged between 50 and 60 percent since local officials ordered schools and businesses closed to stem the spread of the virus.
That’s not the agency’s most pressing financial concern.
Through four different voter-approved sales tax measures, Metro collects a total of 2 cents every dollar spent in Los Angeles County. That funding keeps buses and trains running and pays for transportation projects countywide.
In a letter to Sen. Diane Feinstein, sent last week, Washington wrote that Metro could lose “at least $700 million” in sales tax revenue over the next year.
Metro spokesperson Dave Sotero says this estimate is based on the prospect that business closures and other measures ordered by local officials continue for four months, though some of the anticipated revenue loss would also come over the course of the following fiscal year, as the local economy recovers.
Money taken in through sales tax measures accounts for nearly half of the $7.2 billion Metro budgeted for this fiscal year.
Sotero says this shouldn’t affect the status of projects now under construction, like the Downtown LA Regional Connector and the Crenshaw/LAX Line—both expected to open in the next two years.
Washington said Friday that construction was “not being impacted” by the virus, but acknowledged that the agency was actively seeking financial assistance from the state and federal government.
“This funding shortfall would have an acute impact on our ability to maintain our operations and would also be detrimental to our agency’s overall financial standing,” he wrote in the letter to Feinstein.
Juan Matute, deputy director of the UCLA Institute of Transportation Studies, says losing that amount of money would likely force agency leadership to either cut service dramatically or delay work on future projects that agency leaders hoped to open in time for the Olympics, like a rail line through the Sepulveda Pass and a train connecting Downtown to the Gateway Cities.
“Maybe instead of 28 by ’28 it could become 28 by ’38 or something,” he says, referencing a proposal to complete 28 transportation projects before the Olympics come to Los Angeles in 2028.
Matute says he expects that relief for transit agencies will be part of a federal aid package now working its way through Congress. Senate leaders announced an agreement on the bill early this morning.
Regardless of how much Metro receives in financial support from the federal government, Matute says agency planners should be prepared for riders to return to the system in a big way.
“If there’s a severe recession, people who are out of work but still need to get around will become reliant on Metro,” he says. “They have to be ready to carry a lot more riders.”