How T plans to balance its budget for next 5 years
'I think it's a good story,' says Transportation Secretary Pollack
WITH THE LEGISLATURE preparing to debate new transportation revenues, the MBTA on Monday released a five-year projection of its operating budget needs that concludes rising revenues should keep pace with expenses until fiscal 2024, when the transit authority is currently forecast to run a small $6 million deficit.
At a meeting of the Fiscal and Management Control Board, state officials said sales tax revenues that flow to the T are surging, and are expected to rise from $1.06 billion this fiscal year to $1.21 billion in fiscal 2024. Gov. Charlie Baker has also proposed two measures to increase MBTA funding, including a $73 million increase in the T’s annual legislative appropriation as well as language in his transportation bond bill that would give the transit authority a lot more flexibility in how it pays the salaries of employees working on capital projects; currently, the money is required to come out of the operating budget.
“That three-part combo, I believe, really gives you the running room you need as a board to make the investments on the expense side that you need, not just for this year and next year but for a while,” said Transportation Secretary Stephanie Pollack. “I think it’s a good story.”
The good news didn’t stop there. MBTA General Manager Steve Poftak said the T is on track to spend $1.4 billion on capital projects this fiscal year, $300 million more than it spent last year. The T is also adding net new employees at a rapid clip, something it hasn’t been able to do consistently in the past.
The T’s budget projections also assume a 4.5 percent fare increase in fiscal 2023 and don’t include any adjustment for the adoption of fares based on income levels, which a majority of the members of the Fiscal and Management Control Board support.
The budget forecast also doesn’t include any significant level of spending for a planned makeover of the commuter rail system, which calls for electric trains providing service every 15 to 20 minutes on the busiest lines. The makeover includes a phase one focusing on the Providence-Stoughton and Fairmount Lines as well as the stretch of the Newburyport-Rockport Line running between Boston and Lynn. The T missed an initial deadline last month setting a timetable for phase one.
Pension costs are another major worry. The T’s contribution to its pension fund is rising and could go up even faster if the fund fails to earn a 7.5 percent return on its invested money, which it wasn’t able to do from fiscal 2015 through fiscal 2017. Spending could also go up if more employees leave the agency; officials say 10 percent of the workforce could retire now if they wanted.
The T is ramping up its staff. According to presentations to the control board, the T is expected to add 547 net new hires in the fiscal year that ends June 30 – 1,047 new employees offset by 500 lost through retirements and voluntary separations. That’s far and away the largest number of new hires in five years, and would be a major step toward bringing the workforce back to the level it was at in fiscal 2017. In fiscal 2017, the T employed 6,547 workers; today it has 6,301.
Matt St. Hilaire, the T’s chief human resources officer, said the T had hired 519 new employees through the end of January and lost 402. He said 111 workers were hired in January, the agency’s biggest hiring month in more than five years. The trend lines seem to reinforcing what happen in fiscal 2019, when the T hired more workers than it lost for the first time in five years.
The average salary of a T worker is now $79,355, up 12 percent from $70,788 when Baker came into office in 2015.
St. Hilaire said the T workforce is becoming more diverse, with 45 percent of workers self-identifying as people of color. But he said the top 500 employees in terms of salary remain overwhelmingly white (71 percent) and male (79 percent).
“When it turns negative, it gets really challenging,” Panagore said.