In the second year of spending from a new revenue source tied to the state’s highest earners, Gov. Maura Healey plans to allocate the growing pot of money on MBTA fare relief for low-income individuals and leveraging funds to make capital repairs across the state’s higher education institutions.
Budget writers agreed this month to spend $1.3 billion in fiscal year 2025 on education and transportation investments funded by a 4 percent surtax on individuals’ annual incomes over $1 million, approved by voters in 2022.
Of that, Healey recommended spending $750 million on education and $550 on transportation in the budget she released on Wednesday.
It includes a number of programs that were launched last year in the first year of surtax spending, including popular initiatives like covering free school meals for all K-12 students and covering last-dollar costs of community college for anyone over 25 in Massachusetts.
The administration also hopes to stretch some surtax dollars for transportation infrastructure investments through borrowing.
A proposed $250 million injection into the Commonwealth Transportation Fund could increase borrowing capacity for transportation infrastructure by $1.1 billion over the next five years, according to the administration.
Dedicated surtax revenue would increase debt service coverage in the CTF, unlocking the capacity to finance more capital projects at the Department of Transportation and the MBTA through fiscal 2029, starting with an additional $300 million capital investment for the MBTA in fiscal 2025.
The $300 million of CTF bonds would go toward the MBTA’s track improvement program – meant to reduce zones where its unsafe for trains to run at normal speeds and to address safety issues.
The MBTA has had a slew of issues with its tracks over the past year, from several “near miss” safety incidents to slowing trains that cannot safely go at higher speeds over certain areas of track. Shutdowns have caused disruptions throughout the system and left riders without train service sometimes for up to a month at a time, as crews work to fix unsafe conditions.
T Money Pledge Fulfilled but Questions Remain
From the $250 million deposit into the CTF, $63 million will be reserved for debt service on additional bonds, which the administration plans to leverage for future borrowing for capital purposes.
“Without new dedicated Fair Share revenues, the CTF bond programs are at capacity, without only $740 million of planned borrowing available, all of which is already programmed for spending,” says a budget brief from the administration.
The remaining $187 million will be available for spending after debt service obligations are met.
Of the $187 million left over, Healey is planning to fulfill a promise she made in her state of the commonwealth address to “double our support for MBTA operations.”
She proposes using $127 million to double the T’s operating subsidy and $60 million to support MassDOT operations, such as customer service at the Registry of Motor Vehicles.
CTF credit has been used since 2010 to finance the Accelerated Bridge Program and Rail Enhancement Program, and is currently supported by the gas tax and fee revenues from the RMV.
“The dedication of Fair Share transportation revenues will continue to provide additional CTF borrowing capacity for MassDOT in FY26-29 as well, building upon success of previous CTF borrowing programs to help improve and maintain conditions of critical bridge infrastructure. All of these new investments will improve the state’s vital transportation infrastructure, take pressure off of the state’s general obligation credit, put people to work on needed and overdue construction projects, and make Massachusetts a better place to live, work, and travel in,” says a budget briefing from the administration.
Healey’s move to double the T’s operating subsidy won’t fix long-term problems with the agency’s operating budget, however. Presentations by the MBTA’s top finance officials last week showed it has between a $567 million and $652 million deficit looming in the part of its books used to pay for service. Another big deficit awaits later in the decade the part of the T’s budget used to pay for construction programs and new equipment.
To solve that long-term question, Healey announced Wednesday she was establishing a task force of advocates, business leaders and others to find a compromise on how to fund the T, regional transit agencies that operate outside Greater Boston and road repairs going forward. The body, whose work comes five years after former House Speaker Bob DeLeo crafted a similar compromise whose passage got derailed by the pandemic, is expected to report back within 12 months.
