Metro projects $4.2M deficit; managers cite paratransit costs, overtime and parts as drivers

Metro General Manager Jamie Acton told the Madison Finance Committee that Metro’s midyear projection shows a $4.2 million deficit driven by multiple cost pressures, including paratransit contract costs, overtime across operations and maintenance, higher bus parts costs, and warranty expirations for a fleet of BRT articulated buses.

Acton summarized Metro revenue streams and drivers: about 30% comes from city subsidy, roughly 31% from intergovernmental funds (federal/state), and about 30% from fares and purchase-of-service contracts. He said some partner purchase-of-service contracts were not originally set to cover full operating costs and need rate adjustments. On paratransit, Acton said broker/agency rates have not been updated since 2023 and that those contracts and broker rates will need a public process to revise. He noted immediate steps including a discretionary purchase freeze and a review of federal fund eligibility to back-bill payroll to grants.

Committee members asked for more detailed breakdowns of overtime and vacancy impacts; Metro agreed to provide numbers and said it is preparing an RFP for paratransit contracts that expire in mid-2027. On fleet maintenance, staff noted 62 BRT articulated buses recently came out of warranty at once, driving higher parts costs and maintenance needs. Acton said Metro will pursue short-term management steps and longer-term contract and fare updates to narrow the gap for 2027.