Lewis Looks at Solving the MBTA’s Budget Woes
[Editor's note: The information below was issued in a press statement from the Office of State Rep. Jason Lewis.]
The MBTA, which provides public transit services to 175 communities in the greater Boston area, is once again in dire financial straits. Facing a $161 million budget deficit, the T has put forward two proposals that use a different mix of fare increases and service cuts to close the deficit. The proposed fare increases would impact subway, bus, commuter rail, and RIDE service, with increases that could exceed 40%. The proposed service cuts could eliminate many bus routes - including those that serve Stoneham and Winchester - and end commuter rail service after 10pm on weekdays and entirely on weekends.
I believe both of these proposals are unacceptable. Fare increases and service cuts of this magnitude would be a huge blow to those who depend on public transportation to get to work, school, doctors appointments, or anywhere else. They would also threaten the economic vitality of the Greater Boston region, increase traffic congestion, hurt productivity, degrade our air quality, and harm public health.
The fiscal problems facing the MBTA are largely beyond their making. The root cause stems from decisions that were made in 2000 when the MBTA was re-born with the passage of “Forward Funding” legislation. Prior to 2000, the state legislature would appropriate money each year to pay for the portion of the MBTA’s costs not covered by their own revenues (all major public transit systems in the United States rely upon a mix of system-generated revenues and public subsidies).
Under the Forward Funding legislation, the T was given 20% of all sales tax revenue collected annually by the state and required to manage its own budget. This seemed prudent since it would force the MBTA to run more efficiently and end each year with a balanced budget. From 1990-2000, sales tax revenue grew at an average of 6.5% per year. Unfortunately, since 2000, the sales tax has grown at a meager 1% per year, far below revenue projections that were assumed in the Forward Funding plan.
A decision was also made in 2000 to transfer $3.3 billion of transportation-related debt from the state to the MBTA. Furthermore, as a result of settlements to lawsuits brought against the Big Dig, the T was mandated to construct a number of new public transit projects that required the assumption of more debt. As a result, the MBTA now owes more than $8 billion in principal and interest to its bondholders, and debt service consumes more than 25% of its annual operating budget, far higher than other major public transit systems.
The MBTA has also had to cope with an aging infrastructure and rapidly rising operating costs. The T is the largest user of electricity in Massachusetts, and has seen its energy costs rise from $40 million in 2000 to $110 million in 2011. Healthcare costs for employees have doubled in the same time period, much as they have for other employers.
The MBTA has made substantial efforts to cut expenses and increase non-fare revenues. They have partnered with NSTAR to use energy efficient lighting, joined the state’s healthcare plan which has a good track record of managing costs, restructured debt, and eliminated positions and overtime spending for employees. New initiatives to increase revenue include expanded advertising and sales of MBTA merchandise.
The state legislature has also made major strides in reforming our transportation system, including the MBTA. An Act Modernizing the Transportation Systems of the Commonwealth, passed in 2009, eliminated the Turnpike Authority and created a consolidated Massachusetts Department of Transportation (MassDOT). It has saved tens of millions of taxpayer dollars, made our transportation agencies more efficient and responsive to public needs, and significantly improved overall management of transportation services. The new MassDOT was responsible for the impressive Fast 14 Project that repaired crumbling bridges on I93 last summer.
However, reforms to the MBTA and other transportation agencies, while necessary, have not been sufficient to address the MBTA’s fiscal challenges or the huge maintenance backlog facing our roads, bridges, and other transportation infrastructure that are so critical to the Commonwealth’s economy.
While some modest fare increases (10-15%) are likely necessary to help balance the MBTA’s budget, the solution to the T’s budget woes needs to be part of a comprehensive financing plan that addresses all of the state’s critical transportation needs in the coming decades. This plan should be: adequate to meet basic operating and capital needs; fair to all regions of the state; fair to different modes of transportation while encouraging greater use of public transit; and sustainable so that we stop lurching from one transportation crisis and short-term fix to another.
There is little doubt that this financing plan will require increased revenue. This, in turn, means that we need to build strong public support and political will to make it happen.
I welcome your feedback on the MBTA or other transportation issues. Share your thoughts at www.Facebook.com/RepJasonLewis or visit our website at www.RepJasonLewis.com. You can also reach me at 617 722-2017 or by email at Jason.Lewis@mahouse.gov.