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Loudoun leaders pitch alternative Metro funding plan to rival regional sales tax proposal

Loudoun leaders say alternative Metro funding scenario would allow the transit system to issue its own debt. Times-Mirror/Alexander Todd Erkiletian
As regional leaders continue to grapple with the idea of a one-cent regional sales tax proposal to fix the beleaguered Metro system, Loudoun County -- a vocal opponent of the plan -- has come up with an alternative.

The alternative funding scenario was crafted by County Administrator Tim Hemstreet and county staff and recently unveiled to the Metropolitan Washington Council of Governments (MWCOG).

Less than a week after its introduction, county supervisors voted unanimously on a formal resolution opposing the regional sales tax.

To get Metro to a so-called “state of good repair” -- a $15.5 billion effort over the next 10 years -- MWCOG has proposed a one-cent regional sales tax to fund that shortfall. They anticipate the plan will produce $650 million in annual tax revenue.

But under that plan, jurisdictions in northern Virginia would be forced to pay about 50 percent toward Metro. Leaders would also need to come up with about $1.5 billion in annual capital costs to get the transit system back to a sustainable state, and event still a $500-600 million funding gap would remain.

“So then the next natural question was … what’s plan B and how could we better utilize the money that we already get?” said Supervisor Matt Letourneau (R-Dulles), who also serves as the vice chairman of MWCOG.

Because Metro is largely dependent on the funding from localities year to year, the transit system essentially has to pay cash for everything and cannot issue debt, Letourneau says.

What Loudoun aims to do is establish a service contract, or an entity comprised of the member jurisdictions that could issue debt by leveraging the money they already pay toward the transit system. They say the funding approach would allow Metro to issue its own debt, and the entity would be given a credit rating that would correspond to the rank of its member jurisdictions. Loudoun leaders say the entity’s rating would likely be AA+.

It would also split the contributions among all the Metro localities evenly and not force northern Virginia to pay for a majority of the D.C. region’s Metro, as northern Virginia would have to under the sales tax.

“What this model does is examines what happens if you take the existing level of contributions from the jurisdictions, you combine it with the state level of contributions, and then you enter into what’s called a service contract, which essentially obligates all of us together to pay, and then you issue debt over a 10-year period based on that,” Letourneau said.

But Loudoun officials say the county’s plan is only a short-term fix. After 10 or 12 years, new revenue will be needed to continue beyond that point, or jurisdictions will need to start coughing up more money.

For now, it appears Loudoun is the only Metro jurisdiction looking at an alternative plan.

“I’m not aware of any other jurisdictions looking at [another plan],” Hemstreet said. “I think the wide consensus has been … to seek additional revenue if we can get additional revenue.”

Hemstreet says MWCOG is considering Loudoun’s plan, and the body will discuss it further in the fall.

Contact the writer at .(JavaScript must be enabled to view this email address) or on Twitter at @SydneyKashiwagi.


If Metro needs more money, tell them to raise their fares. Metro should also issue bonds to pay for repair/expansion work and us the fare money to service the debt and fund operational expenses (salaries,electric bills, etc).


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