ACT Testimony on WMATA Governance
September 15, 2010
Presented to Riders' Advisory Council
Metro today faces a two-fold challenge: A challenge of governance and a challenge of finance. It is our firm belief that these challenges are closely interlinked, and neither of them can be solved without taking the others into consideration.
Directly before us is the challenge of governance. The WMATA board does not operate by majority vote; rather, when the two members from any jurisdiction vote together they exercise a veto. This structure was created when WMATA's task was to build a rail network from scratch. It succeeded magnificently in this, but it is ill-suited to the organization's current tasks of operating and expanding the nation's second-largest transit system.
The veto creates a potential for gridlock. The difficult course the WMATA board has followed in adopting recent budgets has brought this problem to the fore. But the problems encountered to date pale in comparison to future dangers that lurk in the current board voting system.
When WMATA was originally organized, the two members from each jurisdiction were independently chosen. Over the years, however, there has been a trend toward each jurisdiction voting as a block. This trend is most pronounced in the case of Maryland, where the power to appoint voting members was transferred in the early 1990s from the two counties to the state. But Maryland is not alone; the other jurisdictions, partly in reaction to the change in Maryland and partly as a natural consequence of the legitimate need of each area to protect its own interests, have tended more and more to vote together too.
The risk this creates is that a board member with veto power over routine decision-making might use that power to intervene in management decision-making. At worst, demands could be made about contract awards or hiring decisions. Fortunately, the Maryland secretaries of transportation who have held this de facto veto power to date have all been dedicated public servants who would never try to use it improperly. But governmental structures should not be designed for angels. The perils created by jurisdictional vetos can be seen in the frequent deadlocks of the Washington Suburban Sanitary Commission.
Meanwhile, WMATA is no longer in charge of rail construction – the very function the current board structure was created to manage. Once the initial 101-mile system was completed, further expansions of the rail system have been financed by the jurisdictions rather than regionally. WMATA was responsible for construction management while the jurisdictions were responsible for paying the bills. This opened the way to uncontrolled cost overruns, and as a result the responsibility for system expansions was transferred from WMATA to the jurisdictions a few years ago. This will presumably lead to better cost controls, but a price will be paid in the loss of a regional planning perspective – a price that can already be seen in D.C.'s decision not to terminate the planned Georgia Avenue streetcar in Silver Spring.
We need not discuss in such detail WMATA's severe financial problem. We are all familiar with it. What needs to be emphasized is how closely it is intertwined with WMATA's governance.
It is often said that Metro's problem is that it lacks dedicated funding. This is a questionable diagnosis – other transit systems with dedicated funding have budget crises worse than ours – and beyond that, it is not entirely true that Metro lacks dedicated funding. The WMATA board has, de jure, the power to levy mandatory assessments on the jurisdictions against their will. This is, by any reasonable definition, a dedicated funding stream – in fact, it is better than the dedicated funding of most other transit systems because the board can increase the assessment as needed. But the jurisdictional veto, exercised by board members chosen by government officials who have to pay the bill, restricts this power de facto so as to make it nearly meaningless.
Here is where Metro's governance and financial issues intersect. Any change in the voting structure of the board – whether it is de jure or de facto – affects WMATA's ability to fund itself. If the veto is curbed – a near necessity for the reasons discussed above – Metro is stronger financially. On the other hand, if the veto is retained and appointment power over board members within any of the three jurisdictions is centralized, Metro has less power to fund itself. This point requires emphasis – Metro is weakened financially by any change in the method of appointing board members that makes members from the same jurisdiction more likely to vote together.
For operations as for construction, the current structure separates financial and management responsibility. When roads are bad, voters blame the government officials who fund all forms of transportation. But when Metro is bad, they blame WMATA. This structure creates a strong incentive to tilt budget decisions against Metro. It is a major cause of the chronic underfunding of Metro's operations.
Despite the clearly stated preferences of the electorate for a transfer of funding from roads to transit, money continues to pour into highway projects of marginal value while demands for rail and bus transit are unmet. A recent poll shows that the public, by a margin of 62% to 30%, wants transit prioritized over roads, yet our region's funding from the federal surface transportation program, which by law can be used for either roads or transit, is spent almost entirely on roads rather than transit. In our democratic society, it is the responsibility of government institutions to reflect the will of the people. Undemocratic decision-making about transportation funding is bad governance. Reform of Metro's governance must correct the structural defects that contribute to our region's systematic tilt of funding away from transit.
One potential method of choosing board members, which must be considered alongside others, would be direct election of WMATA board members by all registered voters. Even if it is not what you ultimately recommend, it requires careful analysis as a baseline of comparison because it offers the most straightforward and thoroughgoing solution to Metro's current governance issues. Direct election of board members, without changes in the budget structure, would give Metro de facto dedicated funding in the form of assessments on the jurisdictions. This, obviously, would risk the inverse of the problem created by the current structure – elected board members would be blamed for bad service and high fares but not for the taxes imposed to avoid them – so limitations on Metro's funding power must be evaluated as part and parcel of governance reform.
For the best governance, responsibility for raising money and spending it should be in the same hands. Thus, any reform of Metro's board should replace or supplement the current system of jurisdictional contributions with direct levies for which the board would be responsible to the public. Other transit systems in the United States offer several possible means of doing this. WMATA might, like the PATH system of New York and New Jersey, have the authority to levy tolls on Potomac bridges. Sales taxes, income taxes, corporate profits taxes, parking taxes, or many other kinds of taxes are other possibilities.
When we talk about revenue, the entire public must have the chance to join the discussion. A decision about a change in Metro governance is a decision about who will pay, and how much. Everyone is entitled to an equal voice in such decisions, which must take into account fairness as well as efficiency.
The input of the business community, in particular, is essential to wise decision-making. We applaud your decision to seek out the testimony of the Board of Trade and and look forward to hearing Mr. Dinegar's testimony before the RAC. The business community's views should be integrated with the opinions of other interest groups in an effort to find a solution that gains the widest possible consensus.
Metro's governance is an issue of vast importance to the metropolitan area. As the most broadly representative organization now grappling with this problem, the RAC has a great responsibility. We urge you to give this problem the high priority and broad-ranging examination it deserves.