The T should not be playing fiscal musical chairs

Legislature needs to step up with additional funding

WE ARE HEADING for a massive MBTA operating budget deficit next year, and no one in power on Beacon Hill is doing anything about it.  This is not a theory or hypothesis; this is a fact, something the T itself candidly acknowledges and has publicly stated.

Why will this happen?  And what can be done to avoid the impending crisis?

One of the immediate consequences of the COVID-19 pandemic was a swift, unprecedented collapse of ridership. Because the MBTA relies rather heavily on fare revenue for its operating expenses (about one third of the T’s operating budget came from fares before the pandemic), this collapse of ridership was catastrophic to its operating budget.

The use of fare revenue to support operating expenses is not unique to the MBTA – every transit agency does this to some extent, some more than others. Collecting fares for transit use is a way to include a user fee as part of the combination of revenue sources we use to pay for this public good.  The appropriateness of transit fares is being debated in real time, as the T and city of Boston experiment with free bus pilots.  I do not mean in this article to engage a discussion of free bus (which I support), or free transit.  Instead, I want to focus attention on the fiscal crisis looming as a result of the combined impacts of pandemic ridership loss, coupled with a recent decision made by the T to transfer a half billion dollars of funding out of its operating budget. Together, these factors will cause an operating budget deficit next June unless the Legislature acts to avert it.

Transit agencies across the nation, including the MBTA, were saved from pandemic bankruptcy by federal funding support through the COVID relief bills enacted in 2020 and 2021.  The T received a total of $2 billion in direct federal funding support to sustain its operations through the pandemic. If you consider that the T received close to $700 million in 2019 from fare revenue alone, this federal funding helped it survive the worst of the pandemic ridership loss and was sufficient to enable the T to manage through a post-pandemic transition through FY 2024 (June 2025). That is no longer on offer, as the T candidly admits it will hit a fiscal wall next June.

About one third of all pre-pandemic fare revenue came from the corporate Perq program, a program that was largely connected to the commuter rail system.  Commuter rail has been the slowest mode to recover ridership, largely because of “work from home” initiatives that continue to this day. Even as these work from home programs are gradually replaced with more flexible work week paradigms (the norm appears to be three days in the office, two at home), it will mean that commuter rail ridership may struggle to quickly recover to pre-pandemic levels.  This is not all bad news, as it means less crowding on trains, something that may entice more people to feel comfortable riding the system. However, less commuting to the office means a more sluggish revenue recovery from the one mode that once provided a full third of all fare revenues for the T.

Ridership on subway and bus systems has been steadily increasing. Bus ridership in particular has proven strong and resilient throughout the pandemic. The T’s own data shows that ridership overall is reaching its most optimistic projection, but this best-case scenario is still not near pre-pandemic ridership levels. Therefore, fare revenues will grow, but not recover anytime soon to 100 percent of pre-pandemic levels.  You don’t need an economics degree to see the problem: without ridership at pre-pandemic levels (or higher), fare revenue will remain unable to play the role it previously played in supporting the T’s operating budget.

We’ve got to face facts.  The MBTA operating budget has routinely been inadequate to meet basic transit needs.  Maintaining operating budget balance on the backs of riders by regular fare increases is not fair or sustainable and has not worked. Every prior fare increase has reduced ridership and the ongoing free bus pilots prove conclusively that transit fares suppress ridership.

The effect of fares on suppressing ridership is not a trivial matter. Ridership is the one essential, vital metric to use when understanding why we think of public transportation as a public good.  We offer public transportation services for one reason: to give as many people as possible access to the places they need or want to reach. In other words, the T exists to provide people with mobility access to opportunities. Raising fares, and cutting service, are simply not appropriate or viable options for balancing operating budgets because they go to the heart of what a transit service is all about, and the MBTA Board of Directors should commit to doing neither.

By transferring a half billion dollars of operating funding to the capital budget, the T is taking lawmakers off the hook.  It is masking the underlying problem: an inadequate capital budget.  If the T needs more money for critical projects, then the Legislature should act to correct that.  Both sides need to come together – the T should not play fiscal musical chairs and the Legislature should not pretend that the problem of underfunding doesn’t exist.

There’s an opportunity to correct this situation through the governor’s transportation bond bill. Instead of waiting for the inevitable crisis to occur next year, the Legislature should act now to prevent it. The Legislature can do that without increasing anyone’s taxes or fees or fares.

For example, the Legislature can provide funding sufficient to (1) cover 100 percent of any state match the T needs to access federal funding for transit projects (including the money recently transferred out of the operating budget), and (2) cover 100 percent of the costs of paratransit for the T and all statewide regional transit authorities.  Together, those cost savings could keep the T on a more stable, sustainable path forward.  Both ideas are rooted in fairness and common sense.

The Legislature could also relieve the T of its remaining “Big Dig” debt, an obligation that should never have been saddled on the T in the first place. A combination of some or all of these actions can save the T and its riders from a crisis next year.  The Legislature could take these steps with clear and specific requirements that the operating budget savings be used by the T solely to avoid an operating budget shortfall.

Massachusetts can no longer afford, and should not tolerate, a recurrence of the failed approach to transit funding that for decades has been characterized by periodic operating budget shortfalls managed by fare hikes and service cuts.  These bad practices prevent us from building back equitably and sustainably from the pandemic.  They hurt our most vulnerable citizens most.  They contribute to the recurring and interconnected problems of traffic congestion, air pollution, and social inequality.

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If the Legislature fails to act now, it will be forced to act next year, in the midst of a needless crisis in the first six months of a new gubernatorial administration. Do any of the gubernatorial candidates want to inherit this avoidable crisis? Would they permit fare hikes or service cuts? Their voices need to be heard now, because we know with certainty that the crisis will come. This is a test of whether Massachusetts has a political and governance system – and the leadership – to manage our public transportation system proactively and avoid yet another crisis that will undermine public confidence in the system and our state’s leadership.

James Aloisi is a former state secretary of transportation and a member of the TransitMatters Board.