MBTA board eyeing possible new revenue streams

In transit authority survey, T derives least self-generated income

THE MBTA board, nervous about looming budget shortfalls, is starting to look at developing some new revenue streams.

Betsy Taylor, the chair of the MBTA board who earlier this week indicated to lawmakers that the transit authority needs additional funding, said on Thursday at a T finance subcommittee meeting that the agency has to come up with some ideas.

“If we are to solve the serious financial problems facing the T, we need to be as inventive as we can,” she said.

At the meeting, two MBTA officials outlined the transit authority’s current sources of revenue and how they compare with revenue sources of four US and three foreign transit agencies.

The presentation indicated the MBTA is the least reliant on self-generated income from fares, advertising, parking fees, and rents. In fiscal year 2021, which started in July 2020 and ended at the end of June 2021, the MBTA derived only 7.6 percent of its revenue from self-generated income, well below New York (21 percent), Philadelphia (14 percent), Chicago (18.6 percent), London (21.8 percent), Hong Kong (46.2 percent), and Vancouver (24.7 percent).

Only the Washington Metro was in a situation similar to the T, with 7.7 percent of its revenue self-generated.

Prior to COVID in fiscal 2019, the MBTA was next to last in self-generated income at 35.1 percent. The only transit system at a lower level was Vancouver at 32.7 percent. Philadelphia came in just above the MBTA at 36.5 percent; Hong Kong and London were the highest, both above 60 percent.

The MBTA’s chief sources of revenue are, in order, a share of the state sales tax, federal grants, local government assessments, fares, and own-source revenues\.

T officials said other transit authorities have access to a wider group of revenue streams, including fees on car sales, car rentals, and ride-share rides; a cut of traffic and parking violation payments; road usage fees such as gas taxes, tolls, and congestion charges; and efforts to capture and monetize real estate gains from transit investments.

Chicago, for example, assesses fees on rideshares and rideshare drivers, with the money going to the Chicago Transit Authority. In London, a portion of parking or traffic fines is sent to the transit authority, as are congestion fees charged to those entering the city.

A portion of the gas taxes collected in the service area of New York’s Metropolitan Transit Authority go to the authority.

Value capture schemes center on leveraging real estate gains from transit investments, either directly through assessments or development deals. Another approach is to use higher property taxes collected in the wake of transit investments to finance bond issuances for transit initiatives.