WMATA: Search under way for the Next General Manager of DC’s Metro System; Transit Authority Needs Dedicated Revenue Source

The Washington Metropolitan Area Transit Authority (WMATA) is searching for another General Manager. Finalists from an initial search were released because of a difference of opinion of what type of General Manager (GM) WMATA should have–a “financial turnaround specialist” or a traditional transit executive. A transit executive would be preferable because (1) transit is a public service, not a profit-generating business, and (2) the system is responsible to the welfare of all human beings using or operating the system each day.

I am skeptical of any financial turnaround specialist because the true test for one was in 2008 during the United States financial crisis. None showed up (excepting the Obama Administration), and, thus, I do not expect any candidates for WMATA.

State Amount of Funding
(components are rounded; in millions of dollars)
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Maryland 215.6 228.1 246.4 263.6 279.7
District of Columbia 201.6 214.15 233.3 249.1 271.7
Virginia 129.4 129.7 142.2 156.5 181.0
Subtotal subsidy 546.7 572 622 669.2 732.4
Debt service 27.5 48.7 48.7 37 33.0
Audit adj fy 2011 and 2012 -30.5
Total (budgeted) 574.2 620.7 670.7 706.2 734.9
Actual* [630.7] [722.51] [687.02] [711.10]
(6/30/10) (6/30/11) (6/30/12) (6/30/13)

The difficulty with deciding to take the GM job with WMATA remains the same as specified in a previous post. Primarily, WMATA still does not have a dedicated source of revenue. It is interesting that Maryland supports a financial turnaround specialist for WMATA, yet Maryland provides funds for Baltimore’s subway and light rail system. WMATA’s unique financial and political circumstances make WMATA a challenge, one most incumbents only keep the job for about 3-4 years, excepting Richard White. Even with the challenges, there should be transit executives willing to accept the GM job, well aware of the high stakes (and potentially short-term nature) of the job.

Passenger Fares and Parking Fees
(rounded; in millions of dollars)
FY 2010 FY 2011 FY 2012 FY 2013
Budgeted 702.7 789.5 767.7 874.0
Actual* 727.8 (6/30/10) 804.5 (6/30/11) 816.7 (6/30/12) 856.8 (6/30/13)
*Actual amount comes from Metro’s statement of revenues, expenses, and changes in net assets. This statement does not identify parking fee revenue; I used the total revenue amount in the table.

The financial statements are not yet available for 2014, and the ridership numbers are estimated for 2013. However, I have updated information for WMATA as it was available at the time of this post.

Ridership
(in number of trips)
2010 2011 2012 2013
Rail Bus Rail Bus Rail Bus Rail Bus
217,219,146 123,670,000 217,052,000 124,173,000 212,188,640 131,780,990 209,000,000* 136,000,000*
* Estimated
Source: Metro Facts.

Interesting Background Facts (source: Metro Facts 2014)

Metrorail system age: 39

Organizational Structure of Metro (Metro Compact Article III)

[Four legislative bodies–Congress (federal government), D.C. City Council, Md. state legislature (Montgomery and Prince George’s), Va. state legislature (Arlington, Fairfax, and Alexandria) (subsidy funding)]

Board of Directors (8 members selected from each jurisdiction [federal government, District of Columbia, Maryland, and Virginia]) [Note:  There are 8 alternates.]

Officers (General Manager, Secretary, Treasurer, Comptroller and General Counsel and such other officers as the Board may provide.)

Metrobus

328 routes (breakdown by jurisdiction not available)

Metrorail stations (by state)

Total: 91

District of Columbia: 40 (38.3 miles of track)

Maryland: 26 (Prince George’s County (15) and Montgomery County (11)) (38.31 miles) [Note: The state of Maryland operates its own subway in Baltimore, Md.]

Virginia: 25 (Arlington County (11), Fairfax County (11), and the City of Alexandria (3)) (41.47 miles)

 

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DC Earthquake 2011: First Instance of Earthquake Felt Weird, Scary; Post-Earthquake, Questions Arose

I experienced my first earthquake during the afternoon of August 23, 2011. I saw my house move back and forth a little bit. I had thought that a heavy construction truck was moving through the area. A few seconds after that sensation, the movement increased noticeably. At this point, I became concerned, but I did not know what to do in such a situation.

After the movement reached its high point, the movement stopped. I thought that the movement was isolated to my own residence. But when I saw the perplexed look on my neighbors’ faces, I knew we had all experienced the same thing. It was about this time that I realized that the event was an earthquake.

Being a resident of the East Coast for my entire life, I had never really experienced an earthquake (the last-reported one occurred during the early morning hours, when I was asleep. I checked around the residence for damage. The only thing damaged was a lamp that fell off a shelf. As for me, my heart was racing, but it settled down after about 30 minutes or so.

As this earthquake occurred during the day (and was noticeable), I had a several questions.

  • Are buildings on the East Coast constructed to withstand a strong earthquake (greater than or equal to 6.0 magnitude)?
  • What are the steps to take when an earthquake occurs? It may be a practice in other areas of the United States to do earthquake drills, but none of those programs exist (as far as I know) in the D.C metropolitan area.
  • Are people properly insured to cover damage caused by earthquakes? (For example, here is text from the Farmers Insurance website).

I am not sure how to answer how to answer these questions now, but I will have to research them.

Third Way: Think Tank Advocating for Federal Pension Cuts, Adjustments to Social Security Has Deep, Conflicting Ties to Wall Street

It seems that the theme of the day is how to cut programs that will not affect the lifestyles of the wealthy. The United States is not “broke,” the country has a tax system and can collect more revenue.  Despite having extremely costly wars in Iraq and Afghanistan, the search is on for tough cuts on vital services. Two such proposals involve increasing the contributions that only federal employees pay (about 5%), not other pension participants (in particular Members of Congress). The other involves adjustments to Social Security (raising the retirement age, et al., anything except just raising the cap on FICA).

These devastating proposals are coming from a think tank called Third Way. I had never heard of them, but they are having a outsized voice on policy. Indeed, there are former staffers from the Obama Administration and major Democratic party donors in it.  As a result, I decided to find out who is funding such an organization. I discovered with few exceptions that the organization is governed by wealthy scions of Wall Street. [This post does not cover the staff of the group.]

As the reader can imagine, the tough medicine the group is prescribing will not apply to anyone in the Third Way group. I find this reprehensible at best, unacceptable at the worst.

Third Way Board of Trustees

Name

Title

Firm

John Vogelstein Chairman New Providence Asset Management LLC; Lazard Freres & Co.; Warburg Pincus LLC
Bernard Schwartz Chairman-emeritus BLS Investments LLC; Loral Space and Communications Inc.
David Heller Vice Chairman Goldman Sachs
Dwight Anderson Member Ospraie Management L.P.
Georgette Bennett Member Tannenbaum Center of Interreligious Understanding
William Budinger Member Aspen Institute; Rodel Inc.
Jonathan Cowan Member Americans for Gun Safety, et al.
Lewis Culman Member Cullman Ventures Inc.
John Dyson Member Millbrook Capital Management
Robert Dyson Member Dyson-Kissner-Moran Corp.
Brian Frank Member MSD Capital L.P.
Michael B. Goldberg Member Kelso & Company
Peter Joseph Member Palladium
General Claudia Kennedy (retired) Member First Star
Derek Kirkland Member Morgan Stanley
Ronald Klain Member Case Holdings; Staffer with Vice President Joe Biden; Revolution LLC
Reynold Levy Member Lincoln Center for the Performing Arts
Daniel Loeb Member Third Point LLC
Thurgood Marshall, Jr. Member Bingham McCutchen (lobbyist)
Susan McCue Member Message-Global LLC
Herbert Miler Member The Mills Corporation
Michael Novogratz Member Fortress Investment Group LLC
Andrew Parmentier Member Height Analytics
David Roberts Member Angelo, Gordon & Co.
Howard Rossman Member Mesirow Advanced Strategies Inc; Mesirow Financial Holdings Inc.
Tim Sweeney Member Gill Foundation
Ted Trimpa Member Hogan Lovells LLP
Barbara Manfrey Vogelstein Member Retired from venture capital industry
Joseph Zimlich Member Bohemian Companies

 

Federal Government: Current Fiscal Crises Shows the Failings of both the Obama Administration and the Congress

Despite the sentiment of the politicians that they have to address the deficit (difference between revenues and expenses) and the debt (borrowed to pay for expenses beyond revenues), their obsessive focus on federal employees truly demonstrates the failure of the governing structure of the United States.

It does not help that the many members of  the upper levels of our so-called representative government all come from the same high-income, Ivy-League-educated strata of the society that cannot relate to the legitimate issues of the working people. One example of this is that in the discussions involving Vice President Joe Biden and Congress, the only things they can agree on is cutting farm assistance and making low level civil servants only pay a higher portion for the Federal Employees Retirement System (FERS).

The tax system has been ruined by Congress with excessive tax expenditures that overwhelmingly benefit the wealthy and drain off revenues. It has gotten to the point that the tax rates represent a level of taxes that no one pays.

Republicans have the audacity to act like they are fiscally responsible when they declare that the United States is “broke” (it’s not, not as long as it has a system to collect revenue), steadfastly oppose any increase to revenue, believe that cutting all spending will solve the problem of insufficient revenue. The Republican Party’s beliefs stem from the core of their party is wealthy and therefore can pay for all they need and do not wish to pay for the remainder of the society that cannot be “self-sufficient.”

Democrats are no better. I have absolutely no confidence in most of them. Yes, they support some social policy causes, but when it comes to fiscal matters the core of the party are wealthy elites that also do not wish to pay for services used by the majority of the citizenry. While the Republicans parry, the Democrats, generally speaking stay silent (maybe even secretly hoping that the Republicans make some headway). The only time that I have seen the Democrats speak up is when the tides have already turned against the Republicans and they want to ride the waves to victory. They had the Senate, yet lots of policy proposals were left unaccomplished.

With stagnant income and the Congressional intention to shift the burden to those who earn $100,000 or less, the majority of citizens in this should pay close attention to what these politicians do and don’t do.

U.S. Judiciary: Chief Justice John Roberts Issues 2010 Year-End Report

John Roberts, Chief Justice of the United States, issued a 2010 year-end report on the judiciary.

The report is relatively straightforward, laying out the goals of the judicial branch and its position on handling the financial constraints of the government and seeking additional judges for busy judicial districts.

The Chief Justice mentioned that while the U.S. judicial system is a model for the world, there is no place for complacency and thus courts must adapt to change.

The judiciary has responded to the call for change by issuing its Strategic Plan for the Federal Judiciary, which identifies seven issues critical to the future operation of the federal courts. [The “Strategic  Plan” is located at www.uscourts.gov/uscourts/FederalCourts/Publications/StrategicPlan2010.pdf.]

The Chief Justice noted that there are two obstacles to the goals the judiciary seeks–the economic downturn and the lack of judges in busy judicial districts.  The Chief Justice explains that the judiciary is doing its part to make the best use of the monies given to the judicial branch. The Chief Justice asks the Executive and Legislative branches of government to resolve the problem of judicial vacancies.

[Note 2: Judicial pay is the same as for 2010. See Executive Order 13561 (http://www.opm.gov/oca/compmemo/2010/2011PAY_Attach1.pdf).]

In the appendix to the report, the Chief Justice provides and explanation of the workload of the judiciary. I will focus on the Supreme Courts workload.

2005 2006 2007 2008 2009
Filings 8521 8857 8241 7738 8159
In forma pauperis 6846 7132 6627 6142 6576
Paid docket 1671 1723 1614 1596 1583
Cases:
argued 87 78 75 87 82
disposed 82 74 72 83 77
signed opinions 69 67 67 74 73

President Barack Obama: His Tax-Cut “Framework” is Another Example of His Facially Neutral, Cruel, and Merciless Decisionmaking

President Barack Obama over his term has shown an affinity to please those with power and pummel those without it. The recent decision to make a deal to extend the soon-former Bush tax cuts is only the latest example of this characteristic. His approach of making the decision for the framework is not satisfactory for a President. In addition, the President is making facially neutral, cruel, and merciless decisions on the income classes of the nonwealthy, but seeks to divorce himself from owning his savage knockout blows.

I read the President’s statement (his press conference was nearly intolerable to watch). It seems that the President would like the regular citizen to think that he is a judge: He heard the arguments from representatives of both political parties, thought about them, and made a decision to favor one over the other in an attempt to spare the public from an extended debate.

I find this method of decisionmaking to be completely unacceptable. First, a President of the United States, as Commander in Chief and Chief Executive of the United States, should have had his own proposals rather than just sit down passively to wait for others to bring policy options to him. Second, his decision-making style is far more appropriate in the the judicial branch than the executive.

Usually, Presidents make their own tax policy because they will be personally and institutionally identified with it. What the current President did is adopt his predecessor’s (George Bush) tax policy in some misguided thought that any problems would lay at Bush’s feet. As I have stated previously, once the President signs the extension bill, the tax act–with its many warts–will belong to President Obama alone; no more will he be able to blame Bush (Boehner or McConnell) for the soon-to-be-coming failures.

Moreover, the President has decided to implement the real reason for the deficit commission–destroying Social Security. The tax cuts are not paid for it is said, but I argue that the surplus funds of Social Security (paid for through FICA by the wage-earners of the United States) will be used to pay for the wealthy class’s tax cuts. The general fund being insolvent means that the workers’ monies will not be returned.

The President’s decision to have a FICA (a.k.a. payroll) tax cut sounds innocent enough until one realizes that taking contributions from Social Security for the current tax cuts will harm the Social Security system’s financial position over the long run. His decision also provides ample political cover for his GOP successor to accelerate the damage to Social Security.

In addition, the President–without any prodding and with a contented, solemn visage–decided to use his figurative cudgel to strike executive-branch employees with a two-year pay freeze proposal. The costs of living indifferently increase, so the employees could suffer a pay cut for years to come. The economic costs endured by those employees will not be recoverable in the future; it is likely the pay freeze could be made permanent.

Who could have ever imagined that a Democratic President would govern as a Republican. The recent turn of events is heartrending and devastating to witness.

WMATA: Washington Council Of Government’s “Moving Metro Forward” Has Flaw–Lack of Evaluation of Metro’s Funding

While the Joint Washington Metropolitan Area Transportation Authority (WMATA or Metro) Governance Review Task Force produced a document (“Moving Metro Forward“) for discussion of the organization structure of Metro.  But the reason why the current structure is ineffective is that the people on the Metro Board do not control or govern revenue to maintain or operate the system. That responsibility is in the control of Congress, and the state legislatures Maryland and Virginia and the District of Columbia’s City Council. Because the Joint Council of Governments and the Board of Trade Task Force dismissed the critical effect of the funding situation, the document falls short on providing a way beyond the Metro’s challenges.

Other challenges facing Metro:

  • Metro’s Compact is designed for constructing the system as it stands, not for operating it. The Compact is long overdue for an overhaul (perhaps the Joint WMATA Governance Review Task Force could be helpful during that activity).
  • The WMATA is subject to jurisdictional budget processes (not necessarily coordinated).

The DC metropolitan area’s rail and bus system is a capital asset, requiring money to build and maintain, but also assists to produce money for the separate jurisdictions through the movement of people to the various points of destination. Despite this fact, the Metro system is left to beg for money for its capital goods and operations. This is an unacceptable situation given Metro’s contribution to the daily lives of many residents and visitors to the DC area and must be resolved.