MBTA governance needs radical makeover

Municipalities need to play a much bigger role

First in a two-part series; second part is here.

THE MBTA’S FISCAL AND MANAGEMENT CONTROL BOARD is properly in the process of developing a strategic plan that will help guide the agency into the future. One element of that plan focuses on the governance of the transit agency, a long overdue and important discussion to have. If anything is clear as we enter 2017, it is that the governance structure of the MBTA prior to the creation of the statutorily term-limited Fiscal and Management Control Board did not enable the operations, management, and maintenance of the T to occur in a manner that effectively responds to 21st Century preferences and needs, or to changing demographics, or to the realities of our increasingly innovation-oriented economy.  What is called for now – and urgently so – is major, perhaps radical, change in how we govern our state’s largest transit system.

The essential problem was summarized in a 2015 report published by two highly regarded transportation policy groups: the Eno Center for Transportation and the Transit Center.  The Eno/Transit Center governance report identified three critical failings of the T’s governance structure: (1) the nearly complete state control over the T, (2) the inability of municipalities served by the T to participate meaningfully in policy making, and (3) the lack of meaningful municipal funding for the T.

The Commonwealth’s complete control over the T is, at best, a mixed blessing.  On the positive side, state control means the state bears ultimate responsibility for the performance and fiscal stability of the T. But it also means that many decision makers in the Legislature have no interest or desire to take action or difficult votes on behalf of the T because they do not consider the T to be relevant to their districts.  This is not universally true, but it is true more often than not.  The Eno/Transit Center Report observed that complete state control “has not always resulted in positive outcomes for the MBTA.”  Because cities and towns and citizens have essentially no voice in T decision making, “gubernatorial priorities may take precedence over regional priorities,” a circumstance that “can result in sub-optimal capital investment decisions.”

The report notes that the “largest governance mechanism that appears to be missing is a way for the riders and localities to have direct input into the operating decisions and capital plan of the MBTA.”  This, it turns out, is a significant barrier to the kind of modern, rider-friendly transit system that would support our current and projected regional economy, and that most of us want.  City and town leaders are, by definition, more directly accountable and responsive to the needs of their local T rider constituents, and more directly impacted by T decision making that relates to the public realm associated with stations, stops, and transit-oriented development.  Unfortunately, the MBTA Advisory Board has been rendered a fairly toothless entity, a pale image of the original advisory board. As the report notes, “few other regions have ceded control of their transit systems to the state with so little input from localities and users.”

Here’s the catch: If cities and towns in the MBTA service district ought to have a direct and impactful role in MBTA policymaking and governance, they also need to have more financial skin in the game.  There is an easy and effective way to do this that requires no increase in local property (or other) taxes, which I will explain in Part 2 of this series. But before I lay out a practical, fair, and inclusive approach to MBTA governance in the 21st Century, it may be useful to understand how we got to the system we now have.

The governance structure of the T has its genesis in decisions made throughout the 20th Century, many of which are not holding up under the test of time, and are no longer in the public interest. What we consider as “public transportation” – moving large numbers of people affordably to and from destinations in high-occupancy vehicles – began as private sector initiatives.  The early mobility entrepreneurs moved urban America from the horse and buggy era to horse-drawn and eventually electric-powered trolleys.  The author Doug Most wrote about this in The Race Underground, a book worth reading for its history of those times. These private sector systems flourished briefly, but were quickly rendered unprofitable when the automobile (made affordable by Henry Ford’s Model T innovation) took hold of the popular imagination and became the 20th Century’s transportation mode of choice.

Policymakers in the post-World War II era made several decisions that had significant and lasting impacts on how we fund, manage and provide mobility services in Massachusetts and particularly in Greater Boston.  In the late 1940s and early 1950s, three public authorities – off-budget entities designed to establish a user-fee approach to transportation services and enable a more professional and stable management of important systems – were put in place at the Mystic River (Tobin) Bridge, the new Massachusetts Turnpike (I-90), and Logan Airport in Boston (Massport).  Establishing these authorities was, in its day, radical change, but it was change that proved to be, for the most part, durable and in the public interest.

In 1947, the urban subway and bus system was consolidated into a new Metropolitan Transit Authority (MTA).  The MTA served 14 cities and towns, including Boston, and was financed by municipal subsidy allocated among those cities and towns.  This construct limped along until the 1960s, a decade of great transition and turmoil in many sectors.  The dual consequences of the Interstate Highway System and the emergence of affordable commercial travel by jet aircraft put a quick and decisive end to passenger rail travel across the nation.  The private sector companies that had operated these systems and richly profited from them now rushed to declare bankruptcy and seek relief from their federal obligations to operate passenger service.  The public sector stepped up to fill the vacuum, and in so doing had to accept an intercity passenger rail system that had been poorly maintained, had lost its monopoly status, and was costly to operate. In addition, the increased suburbanization of Massachusetts, facilitated by unprecedented federal and state highway spending, pushed transit to the sidelines as disproportionate funding and policymaking emphasis went to satisfying the unchecked appetite for auto-centric infrastructure.  The MBTA was created in 1964, in the midst of all this change, and charged with providing public transportation to people in an expanded service area (78 cities and towns) that eventually would comprise about 75 percent of the Commonwealth’s population.

Initially, cities and towns served by the MBTA had significant skin in the game — they were responsible for paying for the T’s operating costs (through an assessment based on population and ridership).  Yet these municipalities had no say in the make-up of the T’s oversight board – the then 5 members of the board were all gubernatorial appointees.  Instead, the cities and towns wielded power through an advisory board, which could cut (but not increase) proposed annual budgets, and had the power to approve fare hikes.  This approach did not last long.

The 1970s was the decade when Gov. Francis Sargent and his transportation secretary, Alan Altshuler, engaged in some game-changing decision making.  They put an end to the proposed massive superhighway that would have destroyed several urban neighborhoods, and famously pushed out Massport’s executive director in order to establish a more community-friendly approach to urban aviation. And they refashioned the MBTA to increase gubernatorial influence.  This was justified in part by the reality that the state had taken on a larger (50/50 split) share of T operating costs, and paid 90 percent of debt service costs.  The state constitution was changed to permit some use of the gas tax for public transportation needs.

It was during this period that cities and towns became essentially marginalized, and full gubernatorial control over the T became the governance model.  It was also during the 1970s that the MBTA acquired the assets of what is now the commuter rail system, picking up the pieces from the shambles of a failed private sector passenger rail system, and the Legislature created the regional transit authorities that currently provide bus services across the Commonwealth for communities not served by the MBTA.

Two events – one in 1980 and one in 2000 – sealed the T’s fate, and not for the better.  The enactment of the so-called Prop 2½ property tax limitation (a local variation of California’s infamous Proposition 13) made it more difficult for municipalities to contribute a fair share to T operating costs, as the Legislature imposed the 2.5 percent annual cap on increased contributions to the T, even though costs might rise in excess of that amount annually.  The original concept of a 50/50 split of T operating costs to be shared by the state and the municipalities served by the T was shoved aside without much thought about its governance (or fiscal) consequences.

In 2000, in an effort to deal with what was considered a transit “budget buster,” the Legislature enacted so-called forward funding legislation. Forward funding was designed as a breakthrough in transit funding.  It dedicated 1 percent of the state sales tax to the T.  In theory, it was a way to put an end to unpredictable annual state subsidies, but the projections of sales tax revenues were unrealistic, and never reached the levels predicted. The decision also played havoc with the notion of regional equity, as citizens outside the MBTA service area ended up paying 1 percent of the sales tax for the T, but saw no equivalent benefit for their regional transit authorities. Worse still, municipal contributions were decreased, and the T wasn’t given a clean fiscal slate. Instead, it was given the burden of paying off all legacy debt service, and a significant portion of Big Dig debt, a decision that might have been considered “fair,” but in reality was a fiscal albatross on the neck of the transit agency. Saddled by debt, and given a new revenue source that proved inadequate almost from day one, the T has never really recovered from this fiscal arrangement.

Meet the Author

Now we are at one of those opportunity moments that come rarely in public affairs.  The Fiscal and Management Control Board, created as a reaction to an unprecedented transit crisis, has wisely sought to engage the topic of MBTA governance in a serious way.  I was opposed to the creation of the control board in 2015 because I was skeptical of how a new board would respond to the urgent needs of the MBTA.  I now believe that Gov. Charlie Baker got it right: The board has done a good job setting the T on course for a better future.  I do not always agree with the board’s policy decisions, but the board itself is comprised of very strong and capable people who have demonstrated a willingness to take on difficult issues and openness to listening and responding to other points of view.  In large part because of the confidence I have in this board, I say that this is no time to play at the margins. Instead, bold action is required. In the next installment of this series, I will propose a governance solution that will restore some measure of municipal and rider influence over MBTA policymaking, enhance T revenues, and energize (and democratize) the decision making process.

James Aloisi is a former Massachusetts secretary of transportation.  He is a principal at the Pemberton Square Group and serves on the board of the advocacy group TransitMatters.