Underfunded and overextended
moving people out of cars and into mass transit makes sense economically and environmentally, but not if the MBTA doesn’t have enough money to properly operate and maintain its existing system. Right now it doesn’t.
In order to balance its upcoming 2009 budget, the MBTA has been forced to resort to a short-term fix of refinancing its outstanding debt and depleting its “rainy day” fund. These two actions were able to free up $75 million that allowed the transit agency to balance its operating budget. But both actions have long-term negative consequences. An agency can only refinance its debt so often before the refinancing simply pushes debt costs out into the future. And without any reserves in its rainy day fund, the MBTA is less able to respond to unforeseen future events. To quote its own budget document, “the fiscal year 2009 budget reflects a severe and continuing deterioration in the Authority’s financial stability.”
The MBTA will face much tougher choices in balancing future budgets. The two main options available to the agency in order to balance future budgets are to raise fares even higher than planned or to cut back on the service it provides. Neither measure is particularly palatable to the political establishment or transit riders.
Those who advocate for expansion projects believe they are helping enhance mass transit in Massachusetts. Their focus always seems to be on finding the capital to finance these projects. But without addressing how to pay for the costs associated with operating these new transit extensions, we are only contributing to a long-term fiscal crisis. Stated simply, we shouldn’t just ask whether we can afford to build a mass transit expansion. We should also be asking whether we can afford to run it. The burden of operating recent expansions of the system is progressively bleeding the MBTA of its ability to properly operate and maintain its existing system.
The MBTA’s finances are precarious. This year the agency will need $755 million from the state and $143 million from local governments to cover its costs. Given the tough fiscal situation in the Commonwealth, it’s unlikely state and local governments will be able to increase their support significantly for mass transit anytime soon.
The outlook at the fare box is not much better. The MBTA expects to collect about $430 million in fares this year. Over the past decade, it has raised its fares by almost 100 percent, yet, according to the National Transit Database, the agency collects in fares less than 50 percent of what it costs to operate its service.
The MBTA loses money operating every part of its system. In 2006, it lost about $3.15, on average, for each commuter rail passenger trip it provided. It lost an average of 90 cents on each subway trip. If you are losing money on every trip you provide, is it a wise investment to expand into new markets?
MORE RIDERS MEANS MORE DEBT
Expansions often exacerbate the problem because the amount lost per trip with new transit projects is usually greater than it is for existing transit operations. New service tends to operate in areas that have not supported mass transit in the past (the South Shore, for example) or to provide a duplicative service (most riders on the planned Green Line extension are current riders of the bus system).
The cost of providing new service can be substantial. The T spent $500 million building the Greenbush commuter rail line, which opened last year. After subtracting the fare revenue from the cost to operate the line, it becomes apparent that the MBTA is losing $1.25 million a month, or $15 million a year, running the line. This is money that can’t be used for other projects within the transit system, such as an upgrade to bus operations or needed maintenance of the existing rail infrastructure.
Yet several expansion projects are in the works, including the extension of commuter rail to Fall River and New Bedford, the Green Line extension through Somerville to Medford, the Urban Ring transportation system, and a third-phase Silver Line project connecting the two existing portions of this bus rapid transit line. Together, these four proposals carry a capital cost of over $5.5 billion.
As part of its focus on restructuring transportation planning in the Commonwealth, the Romney administration shifted the responsibility for planning transit expansions from the MBTA to the Executive Office of Transportation. A key component of this shift was the Commonwealth assuming the responsibility for paying the capital cost of new transit projects, but it still left the MBTA on the hook for the costs of running them. It’s estimated the four projects under consideration would add almost $100 million in annual operating costs. While it may be desirable to expand the existing transit system, new service should not come at the expense of current riders.
It should be incumbent upon those political leaders who propose expansion projects to identify a new source of funds to help fund the cost to operate them. Any new funds must be above and beyond the already generous state contributions that come from sales tax revenue.
In addition, before any expansion occurs we need to look at what is the best way to spend our next available transit dollar. Before the Commonwealth borrows $1.6 billion to build the Fall River/New Bedford commuter rail line, it is crucial that we have a public discussion about what is the best use of the estimated $14 million a year in subsidies the MBTA will need to spend every year to operate this extension. We should think of these dollars as the focus of a competition between the new (an expansion of the existing system) and the old (improving and repairing what we have).Before we expand service 50 miles from Boston, we should be sure that we can continue to serve, and serve well, those current riders who live in the metropolitan core. At the end of the day, we need to recognize that, without new funds, expansions threaten the long-term viability of the excellent transit system we have built over the past century.
Terry Regan is a project manager at Planner Collaborative in Boston and recently supervised research for the Massachusetts Transportation Finance Commission.