How Does Metro’s Subsidy Allocation Work?
Like every transit agency in the U.S., Metro receives contributions from the jurisdictions it serves to help supplement revenues from fares and other sources. The District of Columbia, the State of Maryland and local jurisdictions in Northern Virginia have entered into a compact to fund the operation of the Metro’s buses, trains and paratransit. These compact jurisdictions have agreed to split the tab for operating costs each year using a few allocation formulas. The factors have changed over the years, reflecting changes as the rail system was built, populations shifted, and bus service was restructured.
Operating costs are those that occur every year, like a bus and train operator wages and fuel/power for buses and trains. On the other hand, capital costs occur periodically and cover investments in infrastructure, like repairing tracks and purchasing new vehicles.
So, how are the operating costs allocated among the different jurisdictions? The first step is to take the operating costs for each mode and subtract the revenues associated with each, resulting in net operating cost. The allocation formulas apply to net operating costs (costs minus revenues). The remaining steps are different for each mode, illustrated in the graphic below and subsequently described in greater detail.
Simplified diagram of Metro’s subsidy allocation process
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