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Report: Let's Get Moving
Keeping On Track
FY14 Projections vs. Actuals
We now have, for the first time, data to help us evaluate how close the revenue and spending projections match the actual revenue raised for and dollars spent on state transportation. Massachusetts has completed its first fiscal year since passage of the Transportation Finance Act of 2013.
Overall, actuals fell $41 million short of projections, a small difference for
a budget of over $2 billion. This is as expected; the greater financial pinch will be felt in future fiscal years, when the projected funding gap grows and the uncertainties increase.
Overall, the actual FY14 budget for transportation fell $41 million short of projections.
Below is a list of the most significant ways revenue and expense projections differed from revenue that was actually collected and spent in FY14:
• Estimates for ice removal costs borne by MassDOT ($44 million for last year) are much less than actual costs ($134 million last year, and an average of $80 million a year between FY08
and FY12). Coupled with increased costs for road salt starting in FY15, this category is a likely candidate for continued higher spending than expected in the future.
In FY14, the MBTA brought in $31 million more in fares than originally projected, all stemming from an increase in ridership, prior to any fare increaseNone of the gambling revenue, projected at $25 million for FY14, became available due to the delayed implementation of the Gaming Law. While this funding is now expected to begin to flow in FY15, this new revenue source may be lagging behind the projection schedule from here on out.
• The motor vehicles sales tax, which became the transportation system’s dedicated portion of the sales tax as part of the changes implemented pursuant to the Act, brought in
$32 million in FY14 more than was projected. Presumably, this is a result of an unexpected increase in car sales, a national trend since people held
off purchasing cars during harder economic times. Additional revenue, although not likely at the same level, may be sustained in the future.
• The employee payroll and benefits of the Massachusetts Department of Transportation (MassDOT) were down, while construction and maintenance, and materials, supplies, and service costs were up.
Achievements of the Transportation Finance Act to Date
Even without sufficient revenue available for additional capital projects in FY14, MassDOT and the MBTA were able to begin a number of capital improvements. These rely on the new revenue from the Transportation Finance Act of 2013 that will be available in the coming years. For example, a new stop on the CapeFLYER was added in Wareham and the MBTA signed a contract for the procurement of Red and Orange Line cars. MassDOT also revealed that a new commuter rail station will be built in Allston and Governor Charlie Baker made $100 million in additional funding for local roads available. In addition, there currently are bids out for the rehabilitation of the I-91 Viaduct and for 30 diesel multiple units, which are independently powered vehicles that run on commuter rail tracks and require no separate locomotive.
Wages at the MBTA were up about 6.8% from projections due to back pay wage accruals as a result of arbitration, costing the transit agency an additional $29 million.Operational improvements, such as all- electronic tolling on the Tobin Bridge, service improvements at regional transit authorities (RTAs), MBTA late- night service, and new and reinstated weekend commuter rail service have also been implemented. Many planning requirements of the Transportation Finance Act of 2013, such as the Project Selection Advisory Council and the RTA comprehensive service plans, have been advanced; a few deadlines were missed.
Revenue from the Transportation Finance Act enabled the addition of a new stop on the CapeFLYER, the seasonal rail service between Boston and Cape Cod.
The Commonwealth has added a new stop on the CapeFLYER, signed a contract to get new Red and Orange Line cars, announced a new transit stop in Allston, bid out rehabilitation of the Springfield Viaduct, improved regional bus service, and started installing electronic tolling.
On the Horizon
Looking ahead, there are some challenges that will have to be met. In addition to the likely higher costs of snow and ice removal, funding that was expected to be raised through
the indexing of the gas tax will be missing, since this portion of the law was repealed by ballot initiative in November 2014. In FY16, the first full year of the indexing of the gas tax,
this source of revenue was expected to raise $27 million. By FY18, it could have been more than $60 million, which now will need to be replaced as a result of the repeal.
These pressures will be balanced out in part by some of the positive developments on the revenue side, but it will take more to make future transportation budgets work. In addition to the optimistic outlook on motor vehicle sales tax receipts we can point to the fact that the MBTA signed favorable contracts for commuter rail and paratransit services. These contracts provide some significant savings over projections, likely allowing the MBTA to meet its own-source targets—the Act’s requirement to raise revenue through sources the MBTA controls, such as fares—in the foreseeable future. Likewise, the MBTA succeeded in procuring Red and Orange Line cars at almost $200 million below the original estimates. As designed, (i.e., prior to any reductions in funding the transportation system has recently experienced) however, there would be insufficient resources for capital investments by FY16 to meet the state’s real transportation infrastructure needs. Considering that some important spending on transportation infrastructure improvement is already fully committed, such as the additional spending on Chapter 90, the Commonwealth can unfortunately only expect to continue to face significant operational and capital challenges in the coming years.
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