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Scratching the Surface of Metro’s Proposed FY21-22 Budget

It's budget season for Southern California agencies. Today Streetsblog takes a look into Metro's proposed $8 billion budget for Fiscal Year 2022, which will begin June 1, 2021. Metro is seeking public input on the FY22 budget. The board will discuss and vote on the budget in its Finance Committee meeting (and concurrent Budget Public Hearing) next Wednesday and at the full board meeting on May 27.

Metro FY22 budget information is available in an 18-page presentation and an 83-page detail document, as well as several earlier budget development presentations: revenues/resources, transit/highway/regional rail capital expenditures, and transit operations and maintenance.

The good news is that Metro's overall fiscal situation is healthy.

Last year, the pandemic and economic downturn caused the agency to make fairly steep cuts - including a twenty percent cut in overall transit service, impacting buses somewhat more than rail. Mid-year, finances were better than anticipated. Metro hesitatingly made plans to gradually restore transit service to pre-pandemic levels - initially scheduled for July 2021, then pushed back to September 2021.

Metro's pandemic shortfalls in sales tax and fare revenue were more than made up for by receiving more than $3.3 billion dollars worth of federal COVID monies:

The proposed FY22 budget includes quite a bit of CRRSAA money, but neither the ARP transit monies nor FEMA funds. (It also doesn't include the still-in-flux fareless pilot, which the board is expected to vote on this month.)

Overall the FY22 budget is $8 billion, a 14 percent increase over last year's budget.

Metro FY22 revenue - excluding ARP xxx
Metro FY22 revenue - via Metro presentation
Metro FY22 revenue - excluding ARP xxx

As is fairly typical for Metro, sales tax is the largest source of revenue, with transit fares accounting for very little.

Metro FY22 budget expenditures
Metro FY22 budget expenditures - via Metro presentation
Metro FY22 budget expenditures

On the spending side, capital expenditures continue to outpace transit operations.

One poor trend is that capital expenditures are increasing for highway projects much faster than for transit projects.

Metro FY22 budget xxxx
Metro FY22 budget expenditures by program
Metro FY22 budget xxxx

Highway capital spending would increase 80 percent, while transit capital would see a 20 percent increase. Though, overall, for direct Metro capital spending, transit construction ($2.538 billion) is still significantly more than highway construction ($0.477 billion.) Note that Metro passes some monies through to municipalities for their own capital projects, where expenditures serving driving vastly outpace other modes.

Growth of highway spending is a bad sign - especially as many Metro highway projects have come under criticism for harmful impacts to communities, housing, environment, climate, etc. The highway construction budget increases appear to be less of a deliberate board policy than to be somewhat related to the timing of new funding, including: Trump-era grants (that favored highways), new state gas tax monies awarded to highway projects, and longstanding highway projects passing from planning phases to construction phases.

Preliminary Metro Highway
Preliminary Metro Highway Program capital spending - via Metro March 2021 presentation. (Final amounts in budget might be slightly different than this, but the March slide shows phases and regions that are not shown in the final budget)
Preliminary Metro Highway

To a large extent, Metro sales tax revenue is segregated - assigned to a specific purpose: highways, transit, operations, etc. - so the growth of the highway capital budget doesn't necessarily take away from other types of spending. Nonetheless, if Metro is to achieve its stated goals - equity, reducing single-occupancy vehicle use, staving off climate change - the agency should not be increasing its highway spending.

Transit construction continues on the half-dozen new rail lines that many Streetsblog readers are familiar with. Construction should be wrapping up on the Regional Connector and Crenshaw/LAX lines, with testing getting underway for openings expected in early FY23. Construction will also get underway on two new transit projects: the LAX Connector and East San Fernando Valley light rail.

Metro touts transit operations returning to pre-COVID levels in September 2021. This is better than the Metro staff's earlier recommendation (December 2021), but overall annual operations spending remains below pre-COVID years. Some operations monies are going to promising new programs (alternatives to policing, customer experience programs) but other operations funds are going to questionable ones (conventional policing, MicroTransit.)

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