WASHINGTON — At least $300 million in funding to the Washington Metropolitan Area Transit Authority for its 2011 fiscal year budget is at risk over a dispute between Northern Virginia municipalities and Gov. Robert F. McDonnell over his request to appoint half of Virginia's share of the WMATA board of directors.
The funding is needed to reduce WMATA's future debt issuance, according to one rating agency.
Officials with Virginia's participating WMATA municipalities said they are shocked by the state's request for the appointments, which arrived on May 26, five weeks before the start of WMATA's fiscal year on July 1.
The state needs to appropriate the first installment of its funds by July 1, or the partnership agreement for $300 million of WMATA funding could collapse, officials said.
The governor has threatened to withhold a $50 million state contribution to WMATA if he does not get the appointment authority, sources from the municipalities say. In response, the Fairfax County Board of Supervisors late Tuesday sent a letter to McDonnell protesting the governor's request to appoint two of Virginia's four WMATA board members.
The $50 million is the state's matching portion of $300 million WMATA is expected to receive in fiscal 2011 to help finance safety upgrades approved by Congress under the Passenger Rail Investment and Improvement Act of 2008. This is the first year the $300 million package would be included in WMATA's budget.
If Virginia does not make its contribution by July 1, the entire $300 million could be at risk because the District of Columbia and Maryland would likely withhold their $50 million payments. The federal government will provide the matching $150 million only if all the members contribute. The funds are to be used to replace old Metrorail cars and pay for infrastructure improvements.
The cost of the dispute could be greater than $300 million if it also ends up affecting federal grants to WMATA stemming from federal stimulus funds, said Catherine Hudgins, chairwoman of the Northern Virginia Transportation Commission, which comprises 20 commissioners from municipalities and state representatives. She is also one of the four Virginia WMATA board members appointed by NVTC. WMATA has 14 board members.
A May 2009 Moody's Investors Service ratings report said WMATA could receive about $202 million of federal stimulus funds in fiscal 2010 and 2011. The report said both the stimulus and federal $150 million allocation "will reduce the need for future debt funding or jurisdictional subsidy."
"Our federal dollars are at risk," Hudgins said. The dispute could also affect costs at the Metropolitan Washington Airports Authority Metrorail extension project to Washington Dulles International Airport, she said, if a contract for new rail cars needs to be reworked.
In a response, a spokesperson for McDonnell said Wednesday that "Virginia is simply requesting to have representation on the board as the federal government, District of Columbia, and Maryland already do."
"This letter appears to be more about partisanship rather than the important and pressing issue of reforming and improving Metro for all who utilize it," said Stacey Johnson, McDonnell's press secretary, in an e-mail.
Part of the dispute centers on the way Virginia allocates its funds to WMATA. Maryland and the District of Columbia allocate all of their WMATA funds from their respective general funds without any local government contributions, but Virginia's funding is divided between the state and municipalities.
In a May 26 letter to Hudgins, Virginia Transportation Secretary Sean Connaughton, who was appointed by McDonnell, said that the state appropriates 52.2% of the state's total WMATA funding, more than any individual municipality.
Hudgins and the WMATA municipalities dispute Connaughton's math and said the state's proportion of WMATA funding is about 29%.
Hudgins said the municipalities are not opposed to discussing with state officials reworking the WMATA appointments, but with the fiscal year starting, now is not the time to threaten funding.
"We are always looking for an opportunity to build a better partnership," she said. But appointment process "was not part of any discussions" with the state earlier this year, she said.
WMATA last issued bonds a year ago, pricing $55 million of Build America Bonds. The bonds are rated A1 by Moody's and A by Standard & Poor's. It had $121.1 million of rated long-term debt outstanding as of May 2009, according to Moody's.
The citizens in the WMATA local governments "should be represented by people who live in the jurisdictions, who ride the [Metro] system and pay the property taxes," said Christopher Zimmerman, an Arlington County board member and a WMATA board member.