The MBTA’s rebate hot potato

A rebate program for the MBTA’s winter nonperformance snafus might make commuters happy, but does it make fiscal sense for a functionally insolvent agency to hand back money?

Jonathan Davis, the agency’s well-respected financial chief, seemed resigned to some token gesture to placate commuters. At Tuesday’s audit and finance committee meeting, Davis emphasized that providing refunds or discounts is not a zero sum game: The agency has a snow mountain of bills: removal costs for the white stuff, preparations for next winter, not to mention the ever-present billions in overall maintenance issues that go unaddressed for lack of funding.

The MBTA presented five rebate/discount proposals that could cost the agency anywhere from $3.6 million to $10 million. The board could also come up with a hybrid of the options or decide not to give any money back to commuters.

Transportation Secretary Stephanie Pollack did not tip her hand, although she noted that if the board decides not to offer discounts or rebates, they need to have a plan B for service improvements. (Her boss, Gov. Charlie Baker, has said he’s “open” to the idea of refunds.)

News reports focused on the split on the board, with several members expressing reservations about the rebate push. The naysayers, like the always vocal Janice Loux, a labor union leader, got most of the media’s attention. “I do not think it makes sense, “ she said. “We do not have the money. The [department] resources we are using for this, it is appalling to me. I would not vote for it.”

Dominic Blue, a Massachusetts Mutual Life Insurance Company executive, argued that commuters deserve compensation since they did not get the service that they paid for. MIT engineering professor Andrew Whittle had the most cost-effective idea, suggesting that the nearly $3 million in fines paid by commuter rail operator Keolis be used to finance a discount/rebate plan.

Lost in the din were reservations voiced by John Jenkins, the MassDOT board chairman. Jenkins sussed out that the agency had no legal obligation to provide refunds and expressed concerns about setting precedents. He noted that even a token gesture by the agency would create the expectation that refunds would be issued for future episodes of nonperformance.

Jenkins raised valid concerns. Compensating commuters for poor performance by a crisis-prone transit system would ultimately generate only infinitesimal amount of goodwill. Refunds would put the agency in a bind during the next weather event that shuts down service (which could come before next winter).

Former transportation secretary Rich Davey eliminated the MBTA late-train refund program several years ago for a reason. It cost the agency about $1 million. With little money going into addressing maintenance backlogs, that figure would only increase over time.

The recalcitrant board members can expect intense political pressure. More than 50 lawmakers are demanding that the MBTA fork out millions to pacify people. These would be the some of the same lawmakers who dither when tasked with devising with long-term financial strategies to get the system operating with a modicum of reliability. That, as Mr. Spock might say, is illogical. No good can come from racking up political brownie points, especially where the MBTA is concerned.



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