Next T fare hike likely in mid-2019

CLARIFICATION: Joseph Aiello, the chairman of the Fiscal and Management Control Board, on Tuesday called to clarify comments he made on Monday about when the board might have a discussion about “new revenues for the MBTA. Aiello said the T first needs to show that it can spend the capital funds it has, which he estimated would take at least three years. But he said the “new revenues” discussion would have to begin much sooner, as early as this fall. This story has been changed to reflect his clarification.

THE MBTA’s OVERSIGHT BOARD indicated on Monday that it plans to raise fares in the middle of next year and the chairman of the board said a debate about new, additional revenues for the transit authority could take place as early as this fall.

The comments about revenues came during a debate at the Fiscal and Management Control Board about the MBTA budget for fiscal 2019, which begins July 1. T officials forecasted that the authority’s revenues will increase 2.2 percent next year while expenses will go up 2.5 percent. Within the expense category, operating expenses are forecasted to rise 1 percent, while debt costs will go up 7 percent. The net result is that the MBTA will have to tap $36.5 million of a $187 million legislative appropriation to help cover a shortfall.

Even with the $36.5 million, the MBTA is counting on a number of initiatives to hold operating expenses to 1 percent growth. They include boosting own-source revenues (advertising, parking, corporate pass sales) by $25 million and implementing spending reductions of $36 million. The control board put off a preliminary vote on the budget until next Monday; a final vote is set for April 9.

T officials recommended waiting until July 1, 2019, to raise fares rather than hiking them January 1, 2019, and members of the control board said they would likely go along with that suggestion. Steven Poftak, a director of the control board, noted that raising fares in mid-2019 would mean a three-year gap between fare hikes. He said he favored raising fares every two years, as allowed by law.

Joseph Aiello, the chairman of the control board, said fare increases at regular intervals are preferred. “It’s more helpful to the traveling public to see modest fare increases over time than what has been the pattern in the past, which is these rate shocks of 10 percent, 12 percent,” Aiello said. “In recognition that there needs to be increases over time, it’s better to do it in small bits as opposed to big, lumpy shocking things.”

Asked why the board never debates whether additional tax or fee revenue is needed for the MBTA, Aiello said such a debate could take place as early as this fall. He said any actual move to push for new revenues would have to wait until the T first demonstrates that it can competently spend the money it has, which will take at least three years.

“While we have been allocating more capital, we have not been able to spend it fully. That is changing dramatically now and we are getting to on a glide path where we’ll be able to confidently invest more and more capital over time. So that’s a topic that we’re getting ready to sort of field,” Aiello said. “It’s probably three years out, when we show that we can actually spend all the money that we’ve been given.”

Capital investments – money spent on transportation infrastructure as opposed to operations – has been ramping up at the MBTA.  Samantha Silverberg, senior director of capital planning, said the T’s capital spending budget for fiscal 2019 through 2023 is forecasted to increase to $8.17 billion, up more than 10 percent over the capital budget for fiscal 2018 through 2022. Two years ago the capital spending budget was at $6.5 billion.

Brian Shortsleeve, a control board director, said the T needs to expand and improve its capital delivery staff if it hopes to reach its goals. “It’s people, people, people,” he said. “To hit these numbers, you’re going to have to have a great team.”

MBTA officials recommended the fiscal 2019 operating budget include a number of new initiatives, including new Silver Line service between Chelsea and South Station via Logan Airport ($5 million annual cost); the hiring of additional bus operators, although far fewer than the 123 originally sought ($1.5 million); improved customer relations initiatives, including the hiring of a chief customer experience officer ($6.1 million); and employee training on occupational safety ($6 million). The T is also adding three service pilots – an extra early morning bus on 10 heavily used routes ($1 million cost), overnight bus service between Mattapan and Revere ($2 million), and commuter rail service to Foxborough’s Gillette Stadium ($1 million). In total, the new initiatives will boost spending by $24.1 million.

With those programs included, along with the $36.5 million from the legislative appropriation, and another $27 million in savings from hoped-for legislative relief from a law barring any employees from being paid with capital funds, T officials said they needed to find $61 million in either savings or new revenues to balance the proposed fiscal 2019 budget.

The officials settled on $25 million in new, own-source revenues from expansion of the corporation pass program ($8 million); parking fee increases, with rates rising at the most heavily used garages and lots ($7 million); an expansion of advertising on T properties ($6 million); and investment income ($4 million). The T provided few details on any of the revenue proposals.

The T is also planning to cut costs by improving productivity and trimming expenses across the organization ($30 million), offering retirement incentives to employees who are already eligible to retire ($5 million), and reducing subsidies for paratransit riders using Uber and Lyft to get to their destinations ($1 million).

The $30 million in productivity initiatives include savings of $12.3 million in rail operations and maintenance and $10.6 million in bus operations and maintenance, T officials said.

“That’s a great ambitious stretch goal,” said Shortsleeve of the targets, but he added that T staff need to closely monitor those savings because the track record for savings initiatives in fiscal 2018 failed to reach many of their goals.