The Washington region’s business community overcame months of internal differences Thursday and agreed on a plan to fix Metro by giving it dedicated funding and restructuring its board so it functions more like that of a private company.
“We can’t afford to wait until we get into 2018 and come up with a solution then,” said W. Edward Walter, chairman of the Federal City Council and former chief executive of Host Hotels & Resorts.
Three leading business groups — the council, the Greater Washington Board of Trade and the 2030 Group — spearheaded the initiative.
The letter, to be released Friday, was addressed to D.C. Mayor Muriel E. Bowser (D), Maryland Gov. Larry Hogan (R), Virginia Gov. Terry McAuliffe (D) and U.S. Transportation Secretary Elaine Chao. The Washington Post obtained a copy in advance.
The business initiative is expected to have influence because the signers represent companies that employ most of the region’s private workers, and because business executives are frequent donors to political campaigns.
The letter says Metro needs to “right size” its board, which in practice means reducing it from 16 members. The proposal also says board members should be required to have expertise in relevant subjects such as transit operations, management, finance or safety.
The implicit objective is a leaner board that would be less vulnerable to political influence and pressure. That would make it easier for Metro management to cut costs and increase workers’ productivity — goals that may require concessions from the agency’s unions and that might be unpalatable to elected officials and current board members.
“You’ve got to have a board with the appropriate expertise to govern and oversee the Metro to be successful,” said Kim Horn, who is chair-elect of the board of trade and president of Kaiser Foundation Health Plan of the Mid-Atlantic States.
A major barrier to restructuring the board is that it would almost certainly require amending the Metro compact, which dictates the system’s governing structure and financing.
Revising the compact would be a time-consuming and politically challenging process, requiring the consent of the District, Maryland, Virginia and the federal government.
Overhaul proposals from Metro General Manager Paul J. Wiedefeld and from the Metropolitan Washington Council of Governments have urged that the region steer clear of trying to amend the compact. They fear that a tug-of-war over governance would delay the more urgent goal of getting the hundreds of millions in additional funding the agency needs for the fiscal years that begin in July 2018.
The business groups reject that argument.
“Additional funding for Metro will only be beneficial if it is accompanied by structural changes that give [Metro’s] board the flexibility to effectively allocate resources,” the letter says.
The business groups make the now-familiar plea for “a dedicated funding source” to pay for new equipment and other capital investments. But they leave it to state and local officials to decide what kind of tax or other revenue source should supply the money.
“We’re not trying to micromanage and get into the weeds,” said Bob Buchanan, founder of the 2030 Group.
Northern Virginia has strongly sought such flexibility. It has objected to a region-wide, penny-per-dollar sales tax — the most widely recommended revenue source — saying it would be an undue burden on Northern Virginia because it would pay more than the District and Maryland suburbs combined. That’s because Northern Virginia has a large population with a higher volume of commercial transactions than the other two jurisdictions.
The business plan also does not specify how much extra money should be raised for Metro. Wiedefeld has said that Metro needs a dedicated funding source to provide an additional $500 million a year to maintain the existing system in a state of good repair.
The business group acknowledged that many of its members, along with other organizations, have been pressing off and on for years to revamp Metro. But it said it was encouraged by recent proposals aired by Wiedefeld, the COG and members of Congress. Metro workers’ unions and church-based activist groups also have proposed overhaul packages.
“Recent developments give us confidence that the time for reform is now,” the business letter says.
It also welcomed the recent appointment of former U.S. transportation secretary Ray LaHood, who is seeking to forge agreement within the region about where to go with Metro. LaHood, who was tapped by McAuliffe to lead a panel studying Metro’s finances and governance, has promised an initial report by September.
The joint initiative represents significant compromises among the region’s principal business organizations, which until now have not spoken with a single voice on what to do about Metro.
In particular, the Federal City Council dropped its call for creating an independent control board to take over Metro. Both the board of trade and 2030 Group had resisted a control board, partly out of concern that it would send a message that the region was incapable of fixing the problem on its own.
The board of trade also compromised by showing willingness to revise the Metro compact. Some of its officials had criticized that idea. And the business groups did not call for dropping mandatory binding arbitration of labor disputes, which many business leaders have advocated as a way to strengthen management’s hand in dealing with unions.
Metro board Chairman Jack Evans applauded the groups for uniting and publicizing the need to fix the system.
“We have gone from a region that was completely clueless [about Metro] to one that has now made this a number one priority,” said Evans, who also is a D.C. Council member (D-Ward 2).
But he regretted that the groups did not explicitly back a region-wide sales tax as the way to fund Metro.
“It never made sense to me that you divide this up into three regions, and everybody decides on their own. That’s parochialism,” Evans said.
Metro spokesman Dan Stessel said the agency was “encouraged to see the business community coming together on Metro recommendations, especially support for multiyear and dedicated funding.”
He noted that although Wiedefeld has not recommended a change in governance, the general manager supports the business group’s recommendation that Metro board members have a single, fiduciary duty to Metro. At present, their legal responsibility is split between the agency and the jurisdictions that appoint them.
The 21 organizations that signed the letter are: Federal City Council; Greater Washington Board of Trade; 2030 Group; Apartment and Office Building Association of Metropolitan Washington; Consortium of Universities; D.C. Building Industry Association; Northern Virginia Transportation Alliance; and the chambers of commerce of the District of Columbia, Northern Virginia, Prince William County, Greater Springfield, the State of Virginia, Montgomery County, Prince George’s County, Greater Bethesda, Greater Silver Spring, the State of Maryland, the Greater Washington Hispanic community, Arlington County, Greater Reston and Greater McLean.
