MBTA nearing a financial cliff
Agency forecasts a budget gap of $230m in fiscal 2024
STATE HOUSE NEWS SERVICE
THE MBTA might inch to the edge of a financial “cliff” as soon as fiscal year 2024, when the agency will have exhausted all of the nearly $2 billion in federal COVID-19 aid it received and will face a budget gap of more than $230 million, officials said Thursday.
Presenting a multi-year budget projection to board members, MBTA Chief Financial Officer Mary Ann O’Hara said the T will use about $316 million in one-time revenue to balance its fiscal 2023 spending plan and have about $100 million remaining to put toward the following year.
But that holdover will not be enough to close a widening gap between money the MBTA brings in and money it spends to run trains, buses, and ferries, particularly with ridership slow to rebound after cratering in the early days of the pandemic.
The MBTA’s financial team expects the pressure to continue to grow in subsequent years. Depending on revenue and cost arcs, the T could face a budget gap between $341 million and $551 million by fiscal 2027, according to O’Hara’s presentation.
Costs are growing faster than revenues at the T, driven in part by COVID-fueled ridership trends and also by significant investment in safety improvements recommended by an independent panel, new service on the Green Line Extension and forthcoming South Coast Rail, and fuel inflation, O’Hara said.
She added that fares and own-source revenues only accounted for 9 percent of the money the agency expects to collect in FY22 with the rest coming from local, state, and federal government subsidies.
Officials have not floated any specific plans for fare increases or service cuts to address the impending funding shortfalls, and legislative leaders have shown minimal interest in rethinking how the state funds public transit. During Thursday’s preliminary discussion, O’Hara said the T is “limited in ways to fully resolve our budget challenges independently.”“Service levels, maintenance and safety make up 90 percent of our operating expenses. If we look at the (fiscal year) ’22 budget, that leaves about $200 million in spending to analyze,” she said.
The MBTA is already planning to redirect $500 million toward a range of capital projects including safety investments, electric bus infrastructure, workforce retention efforts, and matching grant programs to address short-term needs with the support of one-time federal funds.