Assignment: D.C. Metro

Metro wants more money; without it, officials say, rail service might be cut back By Paul Duggan.

Metro warns that unless Washington-area jurisdictions increase their subsidy to the transit agency by more than 10 percent for the next fiscal year, subway riders could see cutbacks in service.

Metro officials have drafted a budget for the next fiscal year that includes a contribution of $892 million from the jurisdictions it serves - a 10.3 percent increase over the current subsidy - to help the transit system meet its operating costs.

In a spending plan to be presented this week to the Metro board's finance committee, the agency's budget staff anticipates rail ridership for the fiscal year that begins in July will be about the same as the current fiscal year.

That means, for the first time in several years, Metro is projecting no increase in fare revenue, while operating costs are rising, the agency's financial staff said. As a result, Metro will need substantially more money from the eight counties and cities that help pay for transit operations, according to the budget proposal.

Metro increased fares this year, and they want to avoid another fare increase, although this is certainly a possibility.

Some board members already have balked at the idea of a large boost in subsidies. But if such an increase is not forthcoming, Metro spokesman Dan Stessel said, "then there are some really difficult choices that the board is going to have to wrestle with. And that's when you start talking about running trains less frequently."

The potential consequences are detailed in a section of the 40-page budget proposal titled, "More Aggressive Cost Cutting Needed If Funding Is Not Available."

Translation: Fewer trains.

The overall budget proposal for the next fiscal year - calling for $3.1 billion in spending on capital improvements and day-to-day operations - will be made public Monday and formally submitted Thursday to the board's finance committee, officials said. The overall budget this fiscal year is $2.9 billion.

A. Draw a diagram for Washington Metro. Show me and explain what is happening in this industry as it relates to the reading. Be very specific as it relates to the changes in budgets, fares and trains.

B. What are two alternative approach that Washington, DC, could use to solve this situation (two pricing approaches). Explain and show on the graph. What are the impacts of these changes. Explain.