The MBTA faces a Fiscal 2013 Budget deficit of $161 million (roughly 10% of its budget) and has proposed two alternative scenarios for closing the gap: Scenario I relies primarily on substantial fare increases (overall increase of 43%); Scenario II substantially consolidates bus routes — eliminating many, but improving a few of the most heavily used, while nonetheless still increasing fares by 35%. Constituents all across my Senate district have voiced strong concern about both scenarios but have tended to prefer fare increases to service cuts.

The problem is real: I haven’t heard any knowledgeable commentator suggest that the budget gap is illusory or that it can be substantially narrowed by better cost-control. Moreover, fare revenue currently covers less than half of the operating cost of the system and every route in the system loses money; therefore, it is not practically possible to make the system more profitable by increasing service.

Public transit is broadly beneficial to the metropolitan area, improving air quality, reducing central congestion and providing an essential alternative commuting mode for many workers. In recognition of its importance, state and local taxes already subsidize two-thirds of the total budget of the system, including both operating costs and debt service. Click here for a summary of the MBTA’s budget.

An infusion of additional state subsidy funds might appear to offer an alternative to the grim scenarios proposed, but there is more bad news that we need to absorb: (a) the budget gap is expected to widen in future years; (b) the true budget gap is much greater than stated — if the T were spending what it should to maintain its assets, the gap would be several hundred million dollars greater.

Some additional infusion of state funds is clearly necessary, but that infusion should go first to restructure debt payments that are slated to balloon in future years and to improve maintenance. If we don’t pay down the debt, we’ll face further financial crises. If we continue to under-maintain the system, the likely result will be more breakdowns and surprises and a degradation of service that will drive riders away and possibly threaten the region’s economy.

Some combination of fare increases and service cuts appears inevitable in Fiscal 2013. An infusion of state funds is also inevitable, and I will advocate for that over the months to come. However, it would not surprise me if it takes a another year or two for us to grapple with the long-term issues and structure a new revenue source for the T. We will need to satisfy legislators across the state that the cost structure of the T is reasonable and that all alternatives to greater subsidy have been fully explored.

As to particular routes that are of concern to my district, I think that most have a good shot of being preserved in the coming year. The first scenario proposed by the T, the scenario involving larger fare increases, eliminates only bus routes that have subsidy levels more than three times the system-wide average — the average is $1.42 per weekday passenger bus trip, 3 times the average is $4.26. The routes affected are mostly more remote suburban routes beyond Cambridge, Belmont, Watertown and Boston. For a good view of the how the cuts fall, view the figures that follow page 6 in the T’s impact analysis.

In Scenario II, routes where the subsidy per passenger trip is greater than $2.00 are targeted for elimination. This criterion sweeps in routes all over the metropolitan area. Brighton’s 64 (at $2.33) and 501 (at $2.68) and Belmont’s 74 (at $2.34) are not far above that threshold and so would likely be protected in a compromise scenario. However, Brighton’s 503 and Belmont’s 78 may be harder to protect over the long term with respective subsidies of $3.45 per passenger trip and $3.60. See Table 2-1 of the T’s impact analysis to compare subsidy levels for different bus routes.

I look forward to working with the T and with my colleagues in the legislature to minimize service cuts and to put the system on a firm financial footing for the long-term.

Here is a list of online resources on the issues:

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

47 replies on “MBTA Financial Condition”

  1. Based on the Scenario 1 figures, it looks like the weekday 78 would survive. I truly hope that happens, as the traffic on Brighton/Blanchard and Concord is already significant. Given the 78 is pretty jammed around 8am (our family uses that every day to get our child to school and back), I’d hate to imagine how many cars that would add to the local roads.

  2. The MBTA will continue to struggle until it gets out from under its massive debt. The debt that was caused by Big Dig mitigation projects should never have been placed on the MBTA’s books and that portion of the debt should be forgiven. In the long run, a new revenue stream will be needed. I would suggest a small increase in the gas tax devoted to public transportation — maybe on a sliding scale based on proximity to Boston, so those outside the Greater Boston area don’t pay for a service they won’t/can’t use.

    An interesting comparison is to our streets and highways, which aren’t expected to pay for themselves — various tolls don’t pay anywhere near the costs of maintaining these roads, so they need to rely on gas taxes and other revenues, but that doesn’t seem to trouble anyone. Why shouldn’t the T be the same?

      1. The problem with allocating gas taxes to the areas from which they originate is that the per-capita tax will likely be much lower in the areas served by the T. There needs to be a split—some percentage of the revenue should go to local projects, so the tax payers feel like they’re getting their local benefit, but the argument also needs to be made that people on the Cape and in central Mass derive indirect benefits from the T in the form of better air quality and economic spillover from a robust Metro region. Working out what the right split is? Well, that’s the sort of thing we elect smart politicians to figure out.

        1. This is something we need firm numbers on, but I am pretty sure that the per capita use of gas in the MBTA service area is still high enough to generate plenty of revenue — as important as the T is, I believe that the vast majority of people within 128 drive to work.

      2. Raising the gas tax at a time when gas prices are extremely high and wages are not rising for the most part makes it even harder for people to make ends meet. Times are hard, prices for everything are going up if they have not gone up already and many many people don’t have the money. That leaves aside the fact that there’s no way that people in parts of the state which don’t use the T would be willing to pay mor, arguments that they benefit notwithstanding.

        Raising the gas tax is a terrible idea. I can’t agree with you on this one, Will.

    1. As an alternative to increasing taxes on gas which is very broad and effects many people who do not use the MBTA, I would suggest a property tax on commercial developments that are located within a quarter mile of a rapid transit stops. Having a MBTA Rapid transit station within easy walking distance of a building is a big advantage for the building owner, adds value to the development and should not necessarily be a publicly provided free good for private developers. I would even suggest that there be a three zone system, property that is a few hundred yards to a rapid transit stop, Property that is beyond that but not inconvenient to a rapid transit stop, and property that is beyond an easy walk.

      Secondly, the T should consider upgrading the fair system to distance based fairs on buses, trolleys and rapid transit. This would allow to charge longer distance users higher fairs, but will be somewhat difficult and expensive to implement.

      1. Interesting idea but I don’t think it is a good idea. It discourages businesses from locating in those higher tax areas because they will focus first on the tax burden when deciding where to locate. It unfairly burdens businesses that are already in those areas and who don’t get much immediate benefit from the T. It also creates further complication to an already complex tax code. Would we have to have assessors go out with GPS units to settle disputes or have businesses taxed because their front door was in the 1/4 mile range?

        Everyone in the region benefits from the increased commerce and decreased traffic burden from the T and so the cost should be spread out across the area. We shouldn’t get into a “Well you got 5 customers off the train but you only got 1” type nitpicking.

  3. Losing the 74/75 would be awful for our family, as both my husband and I depend on that route for commuting– we don’t have parking available at our offices. Speaking for our family specifically, losing those routes is our primary concern.

    Given what you say, Will, I don’t see how a fare increase can be avoided, but even given a general increase, why can’t the T increase the cost of different routes to cover the specific costs of each? It wasn’t that long ago (was it?) that they switched to the smart card system– I hope the system would be flexible enough to allow different bus routes to automatically deduct different fare amounts depending on route, and/or distance traveled. I know other public transit systems have different zones with different fares. Sure, there’d be some confusion at first, but we’d sort it out, and it would be a lot better than losing entire routes.

    I would also support increasing the gas tax to provide more funding for public transport.

    1. Yes on the gas tax.

      I think that the T considered changing the fare structure (as opposed to level) and they feel keeping it the same make sense. If the fares get too high on particular routes, people just abandon them.

      1. Ah, but if there is almost no option BUT to use the route for most riders, then a higher rate for that route is more acceptable. I’d gladly pay subway level fares for the 74/75/78 bus routes if that’d help them stay active. Yes, maybe it could be confusing, but I’d rather folks be confused about the cost of a bus than confused as to where the buses have all gone.

  4. Will, the death of the 74/75 route would be horrible for our family. Its availability was a substantial reason why we moved to the Belmont area. I’d be willing to pay the actual cost (meaning the cost per ride without a subsidy) to keep this service available. I would also support a gas tax. Finally, as a frequent rider of the 74/75, it seems to me as though this route runs too often. I imagine it is hard to achieve a lot of cost savings by reducing the number of runs of a route, as opposed to killing the route entirely. Yet, I’d like for the reduced runs option to be explored. The 74/75 runs between 7:30 to 9:15 am and 4 to 6:30 pm runs are packed. The middle of the day runs are not at all full. If it were necessary to save the 74/75 from total elimination, I’d rather have it run every hour, even at rush hour. I could adjust to that. It would be hard to adjust to total elimination, though.

      1. Knowing more about the politics of Belmont’s past than I would, is there any way that Belmont as a town can vote to contribute to keeping the 74/75/78 routes active if the T decides the expense is too high?

  5. I would also miss the 74/75 bus route, as it is the only route that serves Belmont Center and the Wellington Elementary School.

    I have depended on the bus 74/75 route for several years in the morning after walking children to the Wellington as part of a “walking school bus”. I drop the children off and then go wait for the bus to take me to Harvard Square, where I catch the MBTA red line to work. While waiting for the bus, I have invariably met other parents who do
    the same thing, and I’ve discussed this with other parents in my role as Walk-to-School Coordinator for the Wellington PTO. Teachers and staff at Wellington also depend on this bus.

    Elimination of this bus service would be very unfortunate because the lack of nearby public transportation access would actively discourage parents from walking their children to school. According to the National Center for Safe Routes to School, 20-25% of morning rush hour traffic is attributable to parents driving their children to
    school. We generally do very well with the new Wellington in keeping traffic down. But if this bus service is eliminated, many working parents will have no choice but to drive their children to Wellington, further increasing traffic congestion around the school and on Common St.

  6. Raising the gas tax seems like such a natural. Three votes in this forum so far.
    But are we fooling ourselves? I notice you don’t mention this option in your
    opening text. Should we infer that you think this option is politically hopeless?
    If so, why? Because not enough people would benefit directly from such an increase
    to outweigh the influence of the people who would resent being taxed? Sounds right.
    But might there be a way to get enough support for such a measure?

    1. I think the gas tax has to be the way and I believe that it is politically possible, provided revenues are allocated back to region that they are raised in. It make take some time for consensus to form on this.

  7. “Public transit is broadly beneficial to the metropolitan area, improving air quality, reducing central congestion and providing an essential alternative commuting mode for many workers.” As usual our concerns disregard the most vulnerable in our society. If we reduce service and increase fares what happens to those people where the T is their only choice for transportation other than taxi and they travel on 3 buses for an hour and one half to two hours to reach an eight hour job that pays $10 bucks and hour??? What about the poor, the disabled, the immegrants and the elderly? What do they do? They have no options and in many cases they have little money. We can not have these discussions without discussing tax increases on those can “afford” to pay them. For the very rich it is clear they can afford to pay more but for many of us it just means we have to give up a few nights out or shorten our vacations or give up something else that is more luxury than necessity. We are so focused on reducing the deficits and not raising taxes that we overlook what kind of a stain on our society continuing to ignore raising taxes while trying to reduce deficits will be. We are burying our heads in the sand or somewhere else on tax increases just like we did on deficits for years. New taxes should be on the table for every budget crisis like this.

    1. I agree completely that it is very important to protect the people whose only option for getting around is bus service. The comments about the gas tax and Will’s idea about being sure to allocate funds collected from the appropriate geographic areas sound great.

      If the Boston metro area has enough of a traffic problem to spend billions of dollars on the least efficient means of fixing them (expanding capacity as in the Big Dig), why not spend more to support a more cost-effective solution in public transit? Has the Big Dig started turning a profit? Why do we hold public transit to a different standard?

  8. Will,

    Yes, the assignment of Big Dig debt to the MBTA was a bad decision and terribly distorted the economics of the T. But in looking at the budgets you helpfully provided (your website is such an amazing website) I note that the fringe benefit rate is almost 60%. That is just staggering, by the standard of private industry, where the number would be in the high 20’s to mid 30’s, or even the richest of the non-profit sector folk (e.g Harvard) where the rate is slightly over 45%.

    Liz Allison

    1. Yes. The Massachusetts Taxpayers Foundation highlighted these issues in a 2009 report, recommending savings of $1 billion in unaffordable health care costs at the MBTA. Many of the recommendations of this report were in fact adopted by the legislature in the 2009 Transportation Reform law, which folded T employees in the Group Insurance Commission, raised health contributions for retirees and raised the T minimum retirement age to 55. Some of the savings from this reform were immediate; the largest savings will take some to work through the system due to retroactivity limitations. The fringe cost issue has to remain part of the conversation, but doesn’t offer a solution to the T’s problems — it is just one factor.

    2. It’s shocking the Warrent Committee Chairperson would serve a softball advocating benefit cuts. Is it possible their benefits were offered in lieu of compensation? Even more surprising is that Will’s policies are being driven by the business backed Mass Taxpayer’s foundation. I suppose if you’re raking in half a million a year, health insurance cost don’t matter much.

  9. Is there any way to see in a format that a regular person could understand that breaks down the costs for the T? What are its major costs? Is it pensions? Unfunded mandates from the Big Dig as many have mentioned here?

    Please be careful about a gas tax. Many of us have no choice but to drive as we don’t have public transportation to our jobs.

    1. Yes — see the list of online resources at the bottom of my article above. I recommend especially the budget projection for the raw numbers and the D’Allesandro report for an independent perspective. We have to look hard at the cost side of the equation, and the MBTA fringe benefits are high, but there is a serious capital deficit as well.

  10. I too would be in favor of retaining service and bigger fare increases. It also seems that by loading the MBTA with big dig debt, the subsidy per passenger figures end up inflated. This makes it appear that public transport is more expensive than it actually is, thereby undermining political support for it. MBTA riders should not be asked to pay larger share of the cost of a project that benefits the entire region.

    As opposed to a gas tax, a better solution might be a tax on parking spaces and an increase in street parking rates to be comparable with commercial garages. This revenue could be used to fund public transport services.

    1. Thanks, Gene. All the “Big Dig” debt supported by the T is transit related — the T isn’t paying for the roads. The T is paying for the Silver Line, etc. So, the subsidy per passenger is real. But one can ask whether all the expansions made sense from a pure transit standpoint.

      The T has made considerable efforts to raise revenue from its own parking system but your thought raising general street and garage parking costs may make sense in some areas.

  11. Just adding my plea to save bus 74/75 and increase fares if necessary to save the service. The round-trip fare for the bus+subway is still far less than parking for 5+ hours in Harvard Sq. ($20) or downtown Boston ($30). Even Alewife parking costs more than the bus ($7? but the garage is full in the morning so it’s usually not an option anyway). And if Belmont Center is to stay vital (or be revitalized, depending on your view), cutting the bus line isn’t going to help.

    1. Got it! The 74 cuts, like many of the other cuts proposed in Scenario II have big impacts.

      Yes, parking fees go up in both scenarios. Scenario I takes the cost at the Alewife garage from $7 up to $10; scenario II takes it to $9.

  12. We should certainly remove the Dig debt from the T, which is being forced to pay for the mitigations the Central Artery promised (they aren’t MITIGATIONS if the T has to pay for them!). We should have had a gas tax increase long ago.

    But there’s another source of money we should examine: corporate subsidies. The governor is giving away hundreds of millions of dollars a year to big corporation for bogus “job creation” pretexts. The mutual fund and film industries each get about $150 million, almost enough to cover the shortfall just by themselves. But we also waste over $2 billion in business tax expenditures that go into what Auditor Suzanne Bump called, in a committee hearing, a “black box.” We can’t even get a disclosure bill passed to see where exactly that money is going. And it doesn’t could many other “business development” subsidies given by the state and by quasi-public authorities. Example: Recently, the governor gave the fabulously wealthy Liberty Mutual Insurance Co $22.5 million (and it’s going to CUT hiring!), and to Vertex Pharma/Fallon Development, he has given a cash and loan combination that will ultimately cost us $110 million. (These state subsidies were combined with $34 million in City of Boston tax breaks!) And he knows that subsidies don’t sway business decisions; he’s said so publicly. Why don’t we stop the hemorrhage of our tax dollars to corporate tax breaks — that will cover all the T costs, and restore a fair playing field for business competition in the state.

    Would you look into that? For a start, there are bills on this issue in committee that are languishing; Rep. Jay Kaufman can fill you in.

    1. Thanks, Shirley,

      I’m a strong supporter of reforming the tax code to simplify it and eliminate these often-ill-advised development subsidies. I’m the lead sponsor of the bill to eliminate the film tax credit and active on this issue generally.

      Rep. Kaufman has a group working on the issue of these reforms broadly.

      We actually did get a tax credit disclosure bill passed in 2010, in part as a result of my efforts on general transparency issues.

      We are on the same page.

  13. I have to get this off of my chest: It makes no common sense that just after your customer base increases you decide to raise prices and cut service.

    Like other writers, I believe that the T is a critically valuable service to the larger Boston community, for business,individual and environmental needs–and for all economic classes of people, but especially for those who cannot afford cars and have no other way to get to work. I liked the person’s comment about the Walk-to-School program at the Wellington too. That helps health, environment, education and family pocketbooks. We really need to build the support base so that people can take pride in the MBTA and give it as much respect as the highway system which is not expected to support itself.

    That said, work needs to continue in improving management and reducing costs. We should aim to be among the nation’s best metro systems, not the most decaying one. I am for a gas tax and probably any other reasonable fiscal change to help the T. Will spoke about a small gas tax. Think about it, gas prices are always making small ups and downs. A small tax increase is not much in the larger picture. We really need a large gas tax increase, but if a small one is more realistic, at least that is something. It would be great if we could get the Big Debt off of the MBTA budget. Keep the ideas coming!
    Helen Soussou

    1. Thanks, Helen.

      I think it was another commenter who used the word “small”. I would support an increase greater than that previously proposed. However, there is a practical limit as to how much one can go above surrounding states.

  14. Although I’m not a daily rider of the 501 bus, cutting that service will have a big impact on traffic and ridership on other services, particularly the 57 bus. Based on the latest figures I can find there are nearly 1,800 daily boardings on the 501. If the service is cut, those riders will end up in cars or on the already crowded 57 bus though Newton and Brighton. I do ride the 503 from Brighton several times a week, and although the daily boardings are less than 500 (due to less service as buses are generally full), a similar affect will be felt. The same goes for the 64 bus with over 1,200 daily boardings. Assuming those riders remain in the area, that’s a lot for the remaining infrastructure to handle, and will leave those who can’t afford other options in the dark.

    As you correctly point out, the financials are more favorable to the 501 and 64 but I believe as many services should be saved as possible. I support a fare increase that is accompanied by other long term changes, such as debt reduction and the addition of new revenue sources, in the interest of keeping existing services running.

    Thank you for your support on this issue.

  15. I’d like to add another plea for the 74, which I use to commute, and which was a major factor in my choosing to buy a house in Belmont.

    Will, would a campaign to get as many Emails to the MBTA as possiible pleading for the 74 make a difference? I have sent in a comment, but many of the Belmont folks I’ve talked to about this, including bus riders, hadn’t heard about the proposed cut to the 74. If comments would be helpful, is there any way to get the word out to Cambridge and Belmont residents to send in an email?

  16. Every time this comes up on the Boston Globe, the comment section fills with rage against unions and taxes, and occasionally with rage against eastern MA. So, I think it’s going to be politically difficult to get money into the T.

    But the T needs more money. It has a maintenance backlog that absolutely cannot be denied.

    Boston needs more transit. More service. Longer hours. To more distant locations. I know Arlington was afraid of poor people taking the train to Arlington Center, but seriously: Ridership is up. Everybody wants this service. Why is it so hard to fund it sufficiently? Especially a “Maintenance Backlog stimulus” of some kind?

  17. Another vote here for an adequate, dedicated revenue stream for the MBTA. In addition to raising the gas tax, some solution to the T’s debt structure should be found that takes the Big Dig debts off the T’s balance sheet. Those financial obligations should not be competing against transit service quality. They should be the state’s obligation as a whole. As a small measure, how about ending the ridiculous “sales tax holiday” every August? I suggest this as someone who until recently ran a retail store. The holiday just shifts people’s purchase dates around – it doesn’t create any business, and it saps funds from the MBTA.

  18. It would be a huge difficulty for me if the #78 bus route was cut out or even substantially diminished. This has been my life line to Harvard Sq. and a prime reason why I moved to Belmont. I would be fine with increased fares, (which are likely in any case) but to cut the service during the week, and/or to eliminate this bus route on weekends, would prove to be a huge burden to the people who live in the #78 area, especially older, retired, or disabled people who depend on the bus to get back and forth into Harvard Square (and then beyond) during non-rush hour times.

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