The more-than-$1 billion the Los Angeles County Metropolitan Transportation Authority is expected to receive in initial federal COVID-19 relief funding will not be enough to cover all of its losses due to the pandemic, board members said Thursday.
Metro officials said they are anticipating a loss of more than $1.8 billion between this fiscal year and the next, financially affecting each of its departments due to low ridership and sales taxes.
Metro Board President and Inglewood Mayor James Butts said, “This pandemic has created an economic condition that I have never seen.”
The Metro Board voted to adopt a continuing resolution to its budget and accept the federal funding through the county, but the full financial outlook for the transportation authority is not expected to be finalized until September or October.
According to Metro CEO Phillip Washington, the agency is not expected to see ridership numbers return to what they were before the pandemic until September, although in the first week of May, ridership did increase slightly compared to weeks prior.
Additionally, the authority’s cash flow may be affected by a state order that allows deferrals of sales tax payments for small businesses, which Metro officials said is good for those businesses, but which could result in $200 million not coming to Metro for months. Washington said the money will be returned to Metro eventually, but the next few months could be difficult.
Under the Coronavirus Aid, Recovery and Economy Stability Act funding, Metro is working with the Southern California Association of Governments and other regional stakeholders, asking approval of the allocations.
Metro will have to submit invoices for the CARES Act funding that will be reviewed by the Federal Transit Administration, and it could be September or October before Metro receives the funding.
“Obviously, these first four or five months, until we can get our hands on the money from the CARES Act, become very, very important in terms of how we work,” Washington said.
Washington said Metro is trying to claim expenses that it has incurred as of Jan. 20 to be reimbursed by the FTA and assistance from the Federal Emergency Management Agency as well as state funding resources.
Metro service plans have been amended to reduce capacities of people on board rail and buses during the pandemic, and there could be service changes coming every two months, Metro officials said. This could include increasing capacities — but only if health officials say it is safe to do so.
Metro officials also said they’ve been making weekly or daily changes to service based on the most-used service lines during the pandemic, and a report on service changes will be brought back to the board at next month’s meeting.
“We have a lot of different obligations. We have a lot of different responsibilities, but I think chief among them has got to be our commitment to those who have continued riding during this crisis,” said Los Angeles Councilman Mike Bonin, who sits on the Metro Board. “We have to make sure that we are taking care of our existing system and existing passengers.”
Melissa Wang, Metro senior finance officer, said the agency is losing $100 million a month in sales tax and fare revenue a month, and delaying the start of some of its projects is estimated to save the agency $82.5 million a month.
Projects already under construction will continue, but Washington said new projects could be deferred about three to six months until the CARES Act funding arrives.
Washington said one of the major Metro projects, the Crenshaw/LAX Line, is expected to be completed in December, but the agency will need four or five months to test the line, meaning it could open next May.
Metro officials said they are not abandoning projects, including those that are related to the 2028 Olympics coming to Los Angeles, and that an update on projects would be reported in August.
Los Angeles Mayor Eric Garcetti, who sits on the Metro Board, said the agency needs to be sure its planned projects are ready to commence once funding is available and the pandemic subsides.
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