Metro on course for record $1.76B in spending thanks to rising costs, slew of new projects

By Dug Begley | Houston Chronicle

A combination of rising costs and a spate of upcoming projects will surge Houston Metro's fiscal 2023 budget past $1.75 billion for the first time, as transit officials seek to rebound ridership and lure more Houstonians aboard.

Of that, a record $1.4 billion is for the agency's capital and operating needs. Combined with payments on debt service and the one-quarter of Metro's 1 percent sales tax used for local street repairs, the agency's total spending for 2023 is slated to rise to $1.762 billion, $355 million more than its previous high in 2013, when the Green and Purple light rail lines were at peak construction.

Metropolitan Transit Authority's board of directors is scheduled to approve the budget Thursday, after a final public hearing slated for noon Wednesday. As of last week, no comments had been received during the month-long public comment process, Metro Budget Director Phil Brenner said.

The agency's fiscal year starts Oct. 1.

Meanwhile Metro's spending, which often hovers around $1 billion when major projects such as rail lines are in progress, is increasing significantly, on both the operations and capital sides. Operations, which was $626.2 million before the COVID pandemic three years ago, has ballooned to $855.2 million for the upcoming year. That is $115 million more than the 2022 budget.

Officials attributed the 2023 increase on the operations side to rising costs — particularly fuel and maintenance — as well as expanded service, including new on-demand routes in the Kashmere and Hiram Clarke areas, restoration of park and ride service after months of reductions because of the pandemic, and additional buses on some frequent routes to defray delays as buses fill up during peak times.

Ridership, however, has yet to return to normal levels despite Metro spending more. Daily use is about 70% of what it was prior to 2020, Metro CEO Tom Lambert said. Officials also say work days vary greatly, continuing a trend seen last year.

"We are still seeing a strong Tuesday-Wednesday-Thursday," Lambert said, noting a drop-off in transit use for Mondays and Fridays.

Fewer riders, however, have not diminished the agency's long-range plan, which also will increase as major projects begin. Design work on some early projects in Metro's $7.5 billion long-range plan will increase, as will construction of new stops and shelters as part of efforts to make the bus system more accessible to elderly and disabled residents. Construction also will increase on so-called BOOST corridors along Airline, Montrose and Scott.

Brenner said some of the aim for next year is to spend money on design and engineering, to capture more money from federal programs that could cover later construction projects, such as bus rapid transit along Interstate 10 and the 25-mile University Corridor project that stretches from northeast Houston to Westchase.

"It reflects the seed money to pave the way, so we can seamlessly apply for grant funding," Brenner told Metro's administration and finance committee last week.

As a result, Metro's capital budget will jump to $570.7 million, up from the $276.8 million allotted for fiscal 2022. It will be the highest capital outlay since 2013, when $719.2 million was budgeted.

Though the budget may reflect a rise in spending, officials said the national and local economy will determine how fast that money flows out. If signs of distress appear, or projects stall, Metro could slow down on opening its wallet.

"We are going to be very cautious," board member Terry Morales said.

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