Panel calls for MBTA fiscal control board

The special panel appointed by Gov. Charlie Baker to examine the MBTA after the transit system’s winter collapse proposed a nuclear option – a fiscal and management control board, to take over the long-troubled transit agency.

“There is a pervasive organizational failure at the MBTA,” said Katie Lapp, the panel’s co-chair and a former executive director of New York’s Metropolitan Transportation Authority. “This failure inhibits the MBTA from providing modern, reliable, high quality transportation services every day, every rush hour, and in all weather.”

The panel’s plan, delivered Wednesday at a State House news conference, serves up a menu of fixes that can be implemented in the short term, allowing the Baker administration to put off any requests for new revenues for several years until the MBTA can show some progress in the way it operates and delivers transportation services. But the commission concluded that new revenue must be part of the long-range plan. “I want to be clear, the panel rejects the reform versus revenue debate because we feel strongly the MBTA needs both,” Lapp said.

If approved by the Legislature, a five-member control board would take over management from the seven-member MassDOT board which currently oversees both the state transportation department and Greater Boston’s transit system.  Baker has asked the seven current members to resign. The new governing body would be charged with overhauling the agency’s operations, finances, capital planning, and internal structure over a three-to-five-year period.

Braintree Mayor Joseph Sullivan, a member of the Baker panel, described the control board as “the first step toward the fix” for the MBTA. “People don’t have faith…in the system currently,” he said.

The control board, in turn, would appoint a chief administrative officer to implement the governor’s program. Baker said he wants to see the new board in place by July 1. He said that legislative leaders had been briefed on the plan but demurred when asked how they responded. “The Legislature should take seriously the question of a fiscal control board,” he said.

“The control board is probably the easiest part of the legislative fix,” said Paul Regan, executive director of the MBTA Advisory Board.  “Given the performance of the MBTA this winter, there is going to be an appetite for change.”

Unlike previous studies of the MBTA, which dealt largely with the transit agency’s weak financial underpinnings, the Baker panel zeroed in on the agency’s management failings. “Measured against national benchmarks and other transit systems, the T’s operating costs too are too high and its productivity and performance is too low,” said Baker.

The panel’s report sought to dispel the “myth” that the agency is saddled with debt from the Big Dig, noting that the cost of the debt service is less than the assistance that the state provides and that the debt service that the agency pays is declining over time.  The panel proposed linking any future state additional funding to the agency to directly paying down debt. The MBTA has $5.5 billion in outstanding debt; interest brings the total debt carried by the T to nearly $9 billion.

The MBTA came in for criticism for what the panel termed “chronic capital underinvestment.” According to the report, the agency spent only about half of the $4.5 billion available for capital projects.  The T has been using capital funds to pay the salaries of 444 employees, a move similar to a MassHighway practice that the Transportation Finance Commission unearthed in 2007.  Baker proposed putting a “firewall” between the capital and the operations budgets to guard against this practice.

The panel found that the T’s maintenance backlog, currently estimated at $6.7 billion, is “unquestionably higher,” likely due in part to the deficiencies in the agency’s data and capital asset management systems.

The study also revealed high rates of absenteeism among MBTA employees that led to the cancellation of thousands of transit and bus trips and increased overtime expenses, according to the governor.  “The average worker at the MBTA takes off 57 days per year, not counting weekends and holidays,” said Baker. Workers in some agency department take almost 15 weeks a year off, he said. Those rates are double the national average for peer transit systems.

One of panel’s more controversial recommendations is to raise and restructure fares, which would lift the cap on fare increases that currently stands at an average of 5 percent every two years. Single trip fares are “underpriced” and monthly passes are “steeply discounted” compared to peer transit systems, according to the report. Increases in the assessments that cities and towns pay to the MBTA were also suggested.

“One of the issues we have with the proposed legislation is removing the fare cap,” said Kristina Egan, director of Transportation for Massachusetts, an advocacy group. “We want to make sure that the system stays affordable.”

Baker called on the T to “maximize” its opportunities to increase revenues beyond fares, including taking tougher stances against fare evasion, increasing advertising and concession revenues, and selling or leasing of real estate holdings. The agency is the second largest landowner in Massachusetts.

The panel delivered its complete findings after about a month of study.  Bits and pieces of the report, such as high worker absenteeism and unspent capital funds, have trickled out through leaks to news outlets in recent days. In addition to Lapp and Sullivan, panel members included Jane Garvey, a former head of the Federal Aviation Administration; Robert Gittens, a Northeastern University vice president; Jose A. Gomez-Ibanez, a Harvard University professor of urban planning and public policy; and Brian McMorrow, Massport’s chief financial officer.