Photo courtesy of the MBTA
The MBTA board of directors spent some time Thursday looking back at what has gone wrong with funding of the transit authority over the last several decades, and then looked ahead to a fast-approaching deadline to get things back on track.
Out of federal relief funds and with spending on employees and new services rising, MBTA officials say the agency is facing an estimated $700 million budget deficit in the fiscal year that starts July 1 next year.
“We’re at the fiscal cliff,” said Mary Ann O’Hara, the T’s chief financial officer.
The MBTA is looking to Washington for help. O’Hara revealed that MBTA General Manager Phillip Eng has been spending a lot of time in the nation’s capital imploring the Biden administration to provide operating funds for the T.
A task force created by Gov. Maura Healey is also exploring a new funding system for transportation. The task force is not expected to issue a final report until the end of the year, and Healey administration officials have indicated the report will likely consist of a series of options for lawmakers and the governor to consider.
That would mean the Legislature would have to pass some sort of revenue package for the T early in the year to deal with the authority’s looming deficit, or else the agency might be forced to start laying off workers to reduce spending and begin paring back the deficit.
Monica Tibbits-Nutt, the secretary of transportation, a member of the MBTA board, and the co-chair of the transportation revenue task force, said nothing during the T board’s discussion about new revenues. In April at an event hosted by WalkMassachusetts, Tibbits-Nutt talked enthusiastically about assembling a transportation revenue package, including new tolls at the state’s borders. Healey four days later disavowed the talk about border tolls, and Tibbits-Nutt has said almost nothing about new revenues since.
O’Hara, after delivering a presentation on historical underfunding of the MBTA, said what the agency needs now is a steady, recurring revenue source not subject to legislative appropriation, which could be used to finance debt borrowings.
The Legislature thought it had that revenue source back in 2000. Beacon Hill policymakers decided they were no longer going to let the T spend money and then pass the bill on to the Legislature. Instead, lawmakers created a forward-funding structure that provided the T with several funding sources, a slice of the state sales tax being the primary one, and told the authority to live within its means.
But the T didn’t start with a clean balance sheet. It was also saddled with $3.5 billion in existing debt and $1.5 billion in debt associated with projects mandated as part of environmental mitigation for the Big Dig. The interest payments on this inherited debt — $8 billion in all over time — acted like a drag on the agency.
Sales tax revenues also didn’t live up to expectations. Sales tax revenues had been forecasted to grow at an annual pace somewhere between 6.5 percent and 8.5 percent; instead, they grew at a rate of 2.29 percent, leaving the agency with $9 billion to $15.5 billion less than expected over the 23-year period, according to T estimates.
Patrick Landers, the MBTA’s treasurer, provided a couple other examples on Thursday of how policymakers have shortchanged the T. In 2000, lawmakers steered 20 percent of state sales tax receipts to the T. But in 2009, when the sales tax was increased from 5 percent to 6.25 percent, Landers said, the T didn’t receive 20 percent of the entire amount; instead, its share of the sales tax money remained the same.
Lawmakers softened the blow somewhat by authorizing annual appropriations to the T, but Landers said the T ended up receiving $725 million less than it would have had the agency received 20 percent of the overall sales tax. He said the T also received $1.2 billion less than what the agency needed from a tax change implemented in 2013. He said the surtax on income over $1 million passed by voters in 2022 is providing new money for the MBTA, but so far that money is subject to appropriation and is not usable as a funding source for bonds.
Board member Mary Skelton Roberts asked why the T isn’t pushing for new recurring revenues not subject to legislative appropriation, including a full 20 percent share of the state’s 6.25 percent sales tax.
“It’s not up to us. It’s up to the Legislature,” said Thomas Glynn, the chair of the T board.
Even as the T is staring at a major budget deficit, the agency is cutting into its own revenues by launching a reduced fare for low-income riders and stepping up hiring to improve service. Board member Thomas McGee said the state needs to get the T’s funding right over the next seven months if the agency is going to get on track. “We can’t go back,” McGee said.
Brian Kane, the executive director of the MBTA Advisory Board, which represents cities and towns in the MBTA service area, said he is preparing to start lobbying for quick action early next year in the Legislature. He said he is reaching out to municipal officials now and plans to begin knocking on doors at the State House in the fall.
Kane said the state needs to break the cycle of providing inadequate funding to the MBTA. Without more money, he said, the impact will be severe. “Bad stuff starts happening in the new year,” he said.
This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons license.
