T deficit cut to $86M
Officials say shrinking gap trending in right direction
STATE HOUSE NEWS SERVICE
THE MBTA FINISHED fiscal year 2016 with a structural deficit of $86 million, a roughly 28 percent decrease from the previous year in the difference between the transit agency’s revenues and expenses.
MBTA Chief Financial Officer Michael Abramo told the T’s Fiscal and Management Control Board that the MBTA’s operating expenses grew at the lowest rate in at least 15 years last year, contributing to the decreased deficit.
Operating expenses declined by 0.3 percent last fiscal year, he said, well below the 15-year average growth rate of just more than 5 percent.
In addition to fare increases, the transit authority over the years has needed infusions of cash from the state budget to balance its own budget, draining funds away from other statewide spending priorities.
Abramo said the T last fiscal year featured increases in the MBTA’s fare collection and revenue recovery rates.
Under a temporary control board, the MBTA is seeking to improve its often faulty service and shore up its books so that it no longer requires regular bailouts from lawmakers.
Abramo told the News Service expenses came in as expected – about $4.5 million less than the $1.5 billion in operating expenses in fiscal 2015 – and own-source revenue from advertising, parking and real-estate were $10.7 million ahead of the forecast.
At odds with the unionized public workers who perform much of the work at the MBTA, the agency’s control board in a Sept. 1 report to lawmakers signaled it might seek outsourcing of its core operations. Lawmakers last year granted the MBTA a three-year window to more freely pursue privatization.
“The Board’s focus to date has been on contracting corporate services, such as cash handling and warehouse operations,” the control board wrote. “But these account for only a small portion of total operating costs. If the T is to continue the progress it has made in improving performance, reducing operating costs and shifting operating funds to meet critical capital needs, the FMCB must also address those areas that make up about 85 percent of all costs, namely operations and maintenance.”Commonwealth magazine reported last week the MBTA plans to terminate its contract with LAZ Parking managing the T’s lots and garages, seeking to incentivize the next vendor to grow parking revenues.
Shortsleeve said the T has also taken back $55 million that had been “sitting in escrow” as part of borrowing deals and has now been recovered, going into the T’s “lock box” account that funds capital improvements.