How to increase revenue for King County Metro operations

Abstract

Like other transit agencies in the United States, King County Metro has faced a reduction in State funding and suffered revenue loses as a result of the recent economic recession. Metro faces an operating budget shortfall of approximately $75 million while at the same time experiencing near-record ridership. Recent revenue proposals have recognized this budget shortfall, but not Metro's current unmet service need and expected ridership growth that will further increase demand on bus service. This study set out to compare the various revenue options available to Metro and determine if there are better options than those currently proposed by the County. While there is an extensive body of literature listing potential revenue options for local governments, less attention has been given to the specific institutional environments faced by individual transit agencies and the realistic ability of them to implement a specific revenue option. Measures based on revenue growth, equity impact, and political feasibility were developed using the available literature to compare these revenue sources. This comparative analysis found that a statewide graduated income tax would offer the best potential for revenue growth and equity, followed by a countywide, percentage-based, property tax without the current State limits and restrictions. The next best option in terms of revenue growth potential and equity impacts is the currently proposed countywide motor vehicle emissions tax (MVET), albeit modified to direct more revenue to transit. It's unlikely that the State will pursue an income tax or make substantial changes to property tax law in the near future, but it's possible that an MVET could be approved to go to King County voters in the next year or two. Metro is not without options while they wait for potential State action. Metro could pursue facility leases, concession agreements, bus advertising/sponsorships, park and ride charges, and the sale of facility air rights. Each of these options alone would not generate sufficient revenue, but implemented in combination, they could potentially fill Metro's budget shortfall and enable service growth. In general, these findings suggest that transit agencies may have additional revenue options that they haven't considered. However, every transit agency will face a different institutional environment that will restrict its available options. It's important for an agency to recognize what steps can be taken in the near term to obtain additional revenue to prevent cuts to transit service and potentially grow service in the future.