MBTA reining in operating expenses

Officials say FY16 increase will be lowest in 15 years

TOP MBTA OFFICIALS are forecasting that operating expenses at the transit authority will grow by less than 1 percent this fiscal year, the lowest rate of increase in at least 15 years.

Operating expenses at the T have been increasing 5 percent a year on average over the last 15 years, but officials say they expect to hold the line this fiscal year, with either no increase or only a minor increase. Through the first six months of the fiscal year, the agency spent $735 million on operations, up from $734.8 million the year before.

Brian Shortsleeve, the chief administrator of the T, said the agency is working hard to comply with a state law requiring the authority to bring operating expenses and revenues into balance, without having to rely on a discretionary infusion of state funds.  “The core mandate is to get our costs under control,” he said.

The T has squeezed $69 million in savings out of the T’s operating budget this fiscal year, led by cost reductions of $25 million on energy, $10 million on commuter rail, $7.9 million on health care, and $7 million on the RIDE, the T’s paratransit service.

The T also reduced the size of its structural deficit from $170 million to $95 million by paring back spending and increasing revenues from advertising and real estate. Unfortunately, the structural deficit is likely to balloon again in fiscal 2017, which begins July 1. The agency will see its payroll rise $52 million as it begins transferring some 550 employees currently paid with borrowed funds onto the operating budget. The T also is facing a union wage increase of $12.5 million, higher debt service costs of $10 million, and a higher annual pension contribution of $8 million because of slumping investment returns.

T officials undertook an internal review of the oft-criticized pension fund and revised investment return estimates downward, from 8 percent to 7.75 percent. The revision means the T needs to set aside more money to meet its pension obligations.

“It’s painful, but it’s important,” said board member Steve Poftak. “We’ve got to be honest with ourselves. This is a positive step forward.”

MBTA Chief Administration Brian Shortsleeve (right) along with Chief Financial Officer Michael Abramo.

MBTA Chief Administrator Brian Shortsleeve (right) along with Chief Financial Officer Michael Abramo.

Shortsleeve said cost control efforts will continue next year, led by the privatization of fare collection and marketing services in a bid to pare back the agency payroll by 300 people. The MBTA’s oversight board wants to pursue privatization, but some members have expressed caution about moving as quickly as Shortsleeve wants.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Meet the Author

Jack Sullivan

Senior Investigative Reporter, CommonWealth

About Jack Sullivan

Jack Sullivan is a veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

A Boston native, Jack has lived in Massachusetts all his life. He was a major in English and history with a minor in political science at the University of Massachusetts, Boston. A father and grandfather, he lives in Plymouth with his wife, Susan.

About Jack Sullivan

Jack Sullivan is a veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

A Boston native, Jack has lived in Massachusetts all his life. He was a major in English and history with a minor in political science at the University of Massachusetts, Boston. A father and grandfather, he lives in Plymouth with his wife, Susan.

Shortsleeve said the cost of the RIDE should also keep coming down more as some customers are shifted to private ride-sharing services such as Uber and LYFT. He said advertising revenues should increase $6 million in fiscal 2017 and initiatives to reduce overtime will continue.

The state is providing $187 million in discretionary assistance to the T this year and Gov. Charlie Baker has included another $187 million in his budget for fiscal 2017, which begins July 1. Shortsleeve said any money left over in the T’s budget at the end of either fiscal 2016 or 2017 will be plowed into pressing capital projects.