This is a PDF file containing an April 15, 1975 memo to President Ford from his Budget Director, James Lynn, asking the President to decide the Ford Administration’s position on future financing of the Washington Metropolitan Area Transit Authority’s (WMATA) rail transit system (as well as several internal White House follow-up memos). The memo does a good job laying out the project’s history to that point and how the project now faced two financial problems: a shortfall in bond issuances (because “Recent analysis indicates that because of higher than anticipated costs of rail system operations, unanticipated bus deficits, and the current level fare policy, the bond obligations cannot now be fully covered by farebox revenues”) and an increase in the total cost estimate from $3.0 billion to $4.5 billion.

The memo lays out several options for the President:

• Alternative 1 – a special federal appropriation of 80 percent of the cost overruns plus 80 percent of the retroactive costs back to July 1, 1973 (when the main UMTA transit program went 80-20). Not surprisingly, this was the preferred course of D.C., Maryland and Virginia government officials.
• Alternative 1-A – a special federal bond issue of $1.3 billion, paid back over 40 years.
• Alternative 2 – no further special federal funding; make the states and D.C. use local funds, Interstate transfer funds, and future successful UMTA applications.
• Alternative 3 – use accelerated Interstate transfers to allow the District and Maryland (and, to a lesser extent, Virginia) to cancel unwanted and as-yet-unbuilt segments for the Interstate highway system from the map and then receive general fund appropriations equivalent to 80 percent of what the Interstate segment cost would have been, and make those funds available on an accelerated schedule.

The OMB and White House consensus (discussed in the follow-up staff memos in the PDF file) was for Alternative 3, which became policy, starting with a $400 million appropriation for WMATA in the FY 1977 Transportation Appropriations Act through the Interstate transfer program.