Transportation News

Large Fare Increases, Service Reductions, Or Greater Debt Are Options to Close Budget Deficits in Coming Fiscal Years

Boston—The Massachusetts Bay Transportation Authority (MBTA) faces a number of “unhealthy choices” to close an estimated five year budget deficit of between $357 million and $438 million, according to research by the Massachusetts Public Interest Research Group (MASSPIRG).

Largely caused by an $8.1 billion debt with interest, the MBTA will be forced to dramatically increase fares, cut service, or borrow more money to close annual budget gaps if state lawmakers do not address the MBTA’s massive debt burden, says MASSPIRG.

  The projections are based on MBTA budget figures from the Transportation Finance Commission (TFC), which released a report in March documenting a $15 - $19 billion funding gap across all of Massachusetts’ transportation agencies over the next twenty years. The TFC calculated several sets of figures to account for different variables that can alter the budget calculation; basing the most accurate MBTA budget projections on the best revenue/worst cost and worst revenue/best cost scenarios over the twenty-year projection.

“These budget gap numbers paint a bleak picture,” said MASSPIRG Consumer Advocate Eric Bourassa. “The options available to the T to close the deficits—higher fares, less service, or a greater debt—would without a doubt negatively impact ridership.”

The report outlines that fare hikes and service reductions reduce transit ridership. And that many commuters not taking the T will likely drive instead.

“The consequences of more fare increases, or even service cuts, would be worse traffic congestion and air pollution, and greater stress on our already deteriorating roads and bridges,” continued Bourassa.

According to the report, entitled Derailed by Debt: Unhealthy Choices the MBTA Will Be Forced to Make in FY2009 – FY2013, the MBTA has three primary options to close these budget gaps:

1. Fare Increase
Fares would have to increase by at least 38% over the five-year projection to close the gaps. To illustrate, that percentage increase would translate into raising a single ride subway fare by $.65 over five years from $1.70 to $2.35 on a CharlieCard or $2.00 to $2.75 for rides taken with a CharlieTicket. The Link Pass would increase from $59.00 to $81.00 a month. A commuter rail Zone 4 pass holder would see an increase from $186.00 to $257.00 a month over the same five-year period.

2. Service Cuts
If the MBTA chooses not to increase fares, another option for closing its budget gap would be to enact several service decreases in order to reduce costs.  Prior to the 2007 fare increase, the MBTA broadly categorized the types of service decreases riders would experience in order to obtain the same $70 million in projected gains from that year’s fare increase in its draft impact analysis. These include:

• 50 percent reduction in bus and rapid transit service after 9 p.m. weekdays and all day on weekends
• Reduction of up to 20 bus routes, focusing on those losing the most money
• Elimination of 50 percent of Commuter Rail service after 9 p.m. and 50 percent of service all day on weekends
• Increase peak rapid transit headways by removing one train set from each time period before 9pm on weekdays.
• Elimination of The RIDE service in towns not mandated by law
• Elimination of Suburban Transportation Program, which provides partial funding for local municipal bus services in seven suburbs and the Mission Hill Link bus.

According to the impact analysis prepared by Central Transportation Planning Staff (CTPS) on May 10, 2006, these measures would lead to an annual 18 million loss of ridership.

3. More Borrowing
The third option presented in the report is more borrowing by the MBTA, pushing off debt payments into the future and therefore increasing the agency’s $8.1 billion debt in the long run. Currently, annual debt service payments represent about 28% of the T’s operating budget, with payments ranging from $436 million to $504 million over the five-year projection.
 
On Tuesday, MASSPIRG delivered the report to Governor Patrick’s office in the State House, and called on the administration to make the MBTA’s financial troubles a top priority.

MASSPIRG points to the MBTA’s massive debt burden, the largest in the nation for transit agencies, as the T’s core financial problem. Since $1.8 billion of the MBTA’s debt has come from transit expansion and improvement projects associated with the Big Dig, MASSPIRG is advocating that the MBTA be relieved of this debt. MASSPIRG echoes the recommendation of the state’s Transportation Finance Commission, which included relieving the debt associated with Central Artery/Tunnel commitments.

“It’s not fair that the MBTA is suffering because of projects the Authority was forced to pay for as a part of Big Dig air pollution mitigation,” said Bourassa. “The state should have factored in and budgeted for the environmental and public health impacts of the Big Dig, and not dumped those costs on the T and T riders.”

In January a number of state lawmakers, including Representatives Alice Wolf (D-Cambridge) and Carl Sciortino (D-Somerville), filed legislation to relieve the MBTA of a large portion of the agency’s debt.

“The T is vital for the culture, economy, and life of Boston,” said Representative Sciortino. “Relieving the T of a portion of its debt will go a long way towards assuring that our residents and visitors have a public transportation system that reliably meets their needs.”

Echoing this sentiment Representative Wolf said, “Public transportation is essential to the Commonwealth. The newly released report clearly shows that unless we relieve the MBTA of some debt, ridership will decrease, fares will increases, and service will further deteriorate.  It is imperative that we act now to save our public transportation.”