Report: MBTA faces fiscal cliff

Declining fare revenue, backlog of repairs could cause $200m shortfall

A report released Sept. 16 outlines a grim future for the funding of the MBTA. Local transit advocates say they are not surprised but suggest this signals a moment for needed change.

The report, which was released by the Massachusetts Taxpayers Foundation (MTF), outlines a situation it calls “a fiscal calamity.”

For the MBTA’s operating budget — which pays for things like employees’ salaries as well as materials and fuel — the MTF report outlines a budget gap of $200 million in the fiscal year 2024. The report projects that gap would rise to $450 million in FY2025 and $500 million in FY2026.

The MTF report also describes a “fiscal cliff” for capital funding, which pays for elements of the system including maintaining and improving the MBTA bus fleet, T vehicles and infrastructure like bridges and tunnels as well as funding currently approved expansions such as the Green Line Expansion, South Coast Rail and Red/Blue Line Connector.

According to the report, much of the existing capital funding is set to be exhausted as current projects are finished, leaving limited resources after FY2025. In June, the MBTA, which can only rely on committed sources of funding, estimated it needs about $25 billion in capital funding over the next 10 years. The MTF report says it has only about $12 billion for that period.

The $25 billion also does not include proposed expansions to the system that have not yet been approved, nor adaptations to the MBTA to make the system more climate resilient. The report estimates the latter could bring the needed funding for 10 years up to $32 billion.

With the existing gap in funding, the report says, “expansion projects cannot siphon resources and capacity from essential spending without further damaging the system. In other words, the current system must come first and the MBTA needs resources and capacity layered on top of the $32 billion before undertaking a major new transit project.”

But Stacy Thompson, executive director for the Livable Streets Alliance, an organization that is part of the Transit is Essential Coalition, said that she thinks this kind of choice creates a “false sense of scarcity.”

“[The state legislature is] sitting with a dozen different revenue proposals from advocates that are all well-supported,” Thompson said. “So, to me, it’s just a distraction to ask the trade-offs question when it’s entirely feasible and reasonable to raise the revenue for the needs we have both on maintenance and on new construction.”

Thompson pointed to a 2020 transportation bill that was passed in the Massachusetts House on March 4, 2020, a week before Governor Charlie Baker declared a state of emergency regarding the COVID-19 pandemic. That bill would have raised funds for the MBTA and other transportation systems across the state by increasing gas taxes and placing higher fees on ride-sharing services like Uber and Lyft. It was referred to the Senate Ways and Means Committee, where no further action was taken.

The MTF report projects the operating budget, which is largely funded through rider fares, is set to take a hit due to a decrease in the purchase of monthly commuter rail passes. According to financial statements from the MBTA, in FY2019, the $239 million in revenue from the sale of commuter rail passes made up about 36% of total fare revenue.

The MTF report suggests commuter rail pass sales will drop as workers continue to do hybrid or remote work.

But Jen Benson, president of the Alliance for Business Leadership, said that she expects commutes to shift rather than to disappear entirely. Instead of traveling in and out of the city at the previous peak times that reflected a 9-5 workday, she said commuters might be taking transit earlier or later in a more flexible system. She thinks the commuter rail schedule should better reflect that.

“We really need to be adding services in those lull times in order to allow workers more flexibility,” Benson said. “So, what I hear when I hear ‘remote work,’ I hear a changing workplace that requires more flexibility.”

Some advocates also object to the model of so much of the MBTA’s operating budget deriving from passenger fares.

According to financial statements from the MBTA, in both FY2018 and FY2019, revenue from fares made up 86% of all the Authority’s operating revenue. Jim Aloisi, former transportation secretary for Massachusetts and current treasurer for the group TransitMatters, said that he thinks using fare revenues as such a prominent revenue source is not equitable or stable.

“Whether you take the T or not, you benefit from having the T in so many ways,” Aloisi said. “If the T is a public good — and it is — we need to start treating it that way and not think that we’re going to fund it on the backs of fare-riders.”

The philosophy goes to a deeper concept many advocates echoed: that the MTBA is not a boon only to the people who ride it, but also to the people who do not.

Thompson said that without the T, she envisions a Boston where congestion keeps traffic at a standstill.

“Imagine a future where we have gotten through the worst phase of COVID, we don’t have a running T system and people can just literally not get to their jobs, literally not pick up their kids from daycare,” Thompson said. “It stalls the economy, and that economy drives so many other critical resources, not just in the region, but in the state.”

Benson, who served in the state House of Representatives for 11 years from 2009 until 2020, said that an ongoing conversation when she served as a representative was how to keep transit agencies across the state as public goods. She said that groups like the MBTA “aren’t supposed to be self-supporting.”

With the need for greater funding, the question remains where that money will come from.

Advocates suggest that no matter what the final source of funding is, it must be equitable. Benson said she thinks a fare increase is not the answer.

“We need to be talking about raising revenue in ways that are equitable, that do not put further strain on working families,” Benson said. “And by looking at things that, historically, some of the more conservative-leaning groups have recommended, such as raising fares, that does the exact opposite. It puts the burden on those least able to shoulder it.”

Some proponents suggest the so-called Fair Share Amendment could be a source of revenue. The amendment, which is set to appear on the 2022 state ballot, would create an additional tax of four percentage points on the portion of any person’s annual income over $1 million. If passed, the new revenue — proponents suggest it could be up to $2 billion per year — would go to support transportation and education across the state.

In a statement released to the press in response to the MTF report, Andrew Farnitano, spokesperson for the Raise Up Massachusetts coalition, which supports the amendment, said the Fair Share Amendment offers a chance to help the MBTA.

“In November 2022, voters will have the chance to support sustainable, long-term revenue for investments in transportation and public education, without asking low- and middle-income families to pay a penny more,” Farnitano said.

The MBTA also stands to receive some federal funding through the infrastructure bill passed by the U.S. Senate in August. According to a White House fact sheet, the Infrastructure Investment and Jobs Act could grant an estimated $2.5 billion for public transportation across the state.

Benson said she worries that the Legislature will opt for one-time funding sources that do not fix the root problems that lead to the same kind of dire reports being released year after year.

“My fear is that there will be this effort and pressure on the legislature and the administration to not look for new revenue sources for recurring revenue, and rely on only the federal money coming into Massachusetts — which there is a substantial amount,” Benson said. “But that money will dry up and we will be back to a cliff, and we will be right back to where we have been, not having enough money to keep the trains running.”