When does reform end and revenue begin at the T?

When does reform end and revenue begin at the T?

At Pioneer, it’s always more reform – never revenue

SO THERE I WAS, enjoying a brisk late April morning and about to dig into the newspapers (and breakfast), when my iPhone beeped and up came CommonWealth’s Sunday Upload. My pavlovian response was to stop everything I was doing and read what was on offer on the Upload. Turns out it was the folks at the Pioneer Institute, beating their privatization drum in a short article that was long on ideology and short on consensus-based solutions.

It happens that Pioneer was all exercised over what appears to have been an ill-timed and ill-conceived letter from our once-powerful congressional delegation, raising concerns about the MBTA’s interest in exploring privatizing bus maintenance. The delegation, a day late and $7.3 billion short, might have considered whether, and how, to engage the urgent issues that face the statewide public transportation system in a comprehensive and effective way. Perhaps they might consider how to build a national congressional consensus around a sustainable mobility platform that political leaders in blue and red states might embrace. But what do I know? Maybe the governor and his transportation secretary read the letter and, fully chided, agreed to look deeply into their respective ideological souls and change course.

The congressional delegation letter may not have changed the hearts or minds of state officials, but it certainly gave Pioneer the impetus to reprise the dulcet tones of their privatization songbook. And generally I’d be OK with that, especially during the quiet early morning hours of a late April Sunday, when I’m inclined toward a generosity of spirit. I even agree with their view that the MBTA retirement system needs an overhaul that would make it function in a manner consistent with the state retirement system. But Pioneer has that way with words that unfailingly pushes my buttons, and there it was, their misleading construct about how to solve the T’s enormous state-of-good-repair gap:

“With a $7.3 billion maintenance backlog and billions more in debt, the T basically faces three options: Cut service, raise fares once again, or enact reforms such as restructuring the MBTA Retirement Fund as an integrated Social Security/pension system with offsets that take pension benefits into account.”

Three options? Just those three? What about raising net new revenue for the T – the kind of stable revenue that would enable the T to accelerate the state-of-good-repair work we all agree is urgently needed? The kind of new revenue that would support hiring the staff resources that the T admits it doesn’t have. I thought those who embraced “reform before revenue” implicitly agreed that once reform took place, net new revenue would follow. But, of course, there is never enough reform to appease these reformers, never enough to trigger the revenue part of the equation.

I didn’t want to spoil my morning, so I dashed off a tweet that chastised both Pioneer and the congressional delegation, in keeping with my determination to approach these matters in a non-partisan manner. My friends at Pioneer must be late risers, because it took many hours before their responses hit my Twitter feed.

And I can’t complain too much about the subsequent exchange because it’s easy to misunderstand, or misinterpret, someone’s meaning when they are writing a 140-character response to something that deserves more substantial attention. As I said earlier, I don’t really have a quarrel with their position on the MBTA pension issue. My quarrel is when organizations like this cherry-pick issues (and fail to address others) in an effort to make people believe that more reform and no revenue is the answer.

I’m all for reforms – appropriate, non-ideological reforms. I share significant responsibility for writing and enacting into law the most far-reaching and comprehensive transportation reform legislation in state history. Unlike many who talk a lot about it, I embraced reform and made it happen. But I was also candid about the need for revenue. When I said at the time that the slogan “reform before revenue” was a meaningless slogan, I did so because I knew that we also needed substantial net new revenue together with the reform. Eight years later Massachusetts still doesn’t have the net new revenue needed to do the job the way (and in the timeframe) it should be done.

These are not just ideological battles. Every single week real people, thousands of them, have to face the consequences of the failure to raise net new revenue — every day they receive an alert that a disabled train at rush hour means another late arrival at work, every time they have to break a subway car window because smoke is filling their car, or every time they’re asked to impersonate a sardine packed in the can of a SL 1, or 28 bus. Calling for MBTA pension reform is fine, but let’s not mislead people into thinking that just another reform is the answer to what ails the transit system.

It is long past time for us to acknowledge the need for substantial net new revenue to build the modern, first-world transit system that is the essential underpinning of our ability to sustain a growing economy. We can talk about and enact reforms until the cows come home, but a $7.3 billion gap cannot be resolved on an accelerated basis without net new revenue. Nor can the T’s other needs, including the need for the system to strategically expand and respond adeptly to the rise of new mobility options that threaten to shrink interest in (and market share for) public transportation.

Meet the Author

We ought to strive to reach and build a consensus across ideological lines to address the unquestioned need to rebuild and modernize the MBTA. To do that on a timeframe that keeps up with the pace of our region’s current and forecasted growth, and with an eye toward achieving sustainable and equitable outcomes, we need to honestly confront the need for substantial net new revenue. Finding excuse after excuse to avoid that fundamental issue doesn’t advance the debate, or enable the kind of non-ideological, non-partisan decision-making that ought to be at the core of how we make and implement transportation policy in the Commonwealth.

James Aloisi is a former state secretary of transportation and a principal at Trimount Consulting and the Pemberton Square Group.

  • Beeker

    As a result of studying the budget for the last ten years, the T’s problem stems from lack of needed revenue despite Gov. Baker saying otherwise and budget mismanagement both by management, employees and the executive and legislative branches through the years that hobbled the agency’s mission. While Pollack has done a good job of pushing the needed reform but is constrained by Baker, I have to agree with the author on this issue of needing the revenue in order to push for needed repair backlogs and other modernization effort to make it the best system. If other transportation agencies in London and Japan can do it so can we.

  • Mhmjjj2012

    “Net new revenue” is mentioned by James Aloisi no less than EIGHT TIMES in his commentary without once…not once…detailing where that “net new revenue” for the MBTA would come from. If you want to know then you’d have to go back to Aloisi’s previous writings for CommonWealth where he stated the net new revenue “can be accomplished in a fair way by significantly increasing municipal funding for the T.” LOL! The Pioneer Institute has its “privatization songbook” and “misleading construct” while James Aloisi has his stick-it-to the cities and towns to fund the MTA songbook with “la la la” and no specifics. If Aloisi had a real case to be made for tapping cities and towns to finance the MBTA then he’d come out and make it…wouldn’t he? For Pete’s sake, municipalities are struggling trying to find funding to make up for the state’s shortfall in the Foundation Budget…the mechanism distributing aid to local public schools…that shortchanges special education, low income and English language students. Aloisi and his buddies need to go back to the drawing board for the MBTA’s net new revenue.

    • James Aloisi

      If the reader would go back and re-read my prior articles, he or she would realize that I was not asking municipalities to bear the burden of these costs – I proposed a new revenue source which would be a carbon impact fee on non residential parking. So this would be net new revenue – not “sticking it” to cities and towns. I have also made other proposals for revenue in prior articles, none of which “tap cities or towns”, which the reader is free to explore.

      • casmatt99

        That was the most polite burn I’ve read in a while. Well done James.

      • Mhmjjj2012

        James Aloisi, thank you so much for acknowledging my point that readers would have to peruse all your previous commentaries in CommonWealth’s archives to fully understand your “net new revenue” proposal for the MBTA that…according to your 1/18/2017 commentary…would be “Empowering municipalities, and giving them the power and tools to have more financial skin in the game, is the way to go.” LOL! So much for not tapping cities and towns. Would I have been more correct to use “municipalities” and “financial skin” in my comment?

  • Jim Stergios

    If Jim was being forthright, he would note that the February 2015 plan (http://pioneerinstitute.org/better_government/pioneer-institute-statement-on-the-mbta/) to fix the T that Pioneer articulated and which forms the basis for the many of the reforms put into place since that time included a recommendation for additional funding. Our recommendations fell into two categories:

    1. Place the MBTA in “soft” receivership, removing the power of the MBTA Board and establishing a Control Board, halting expansion planning, emphasizing the purchase and placement into operation of new cars, signalization, and other maintenance and repair upgrades, restructuring bus services, reinstating management rights, establishing performance metrics, increasing the sale of monetizable real estate assets, re-opening procurements.
    2. Combine “soft” receivership status with debt relief and strict controls on hiring; as part of this recommendation, Pioneer suggested that the commonwealth assume tens of millions of dollars annually in the MBTA’s debt service payments. Over four years, Pioneer recommended that the state assume more than $100 million in the annual debt load paid by the MBTA.

    But as Jim has demonstrated repeatedly, facts find it exceedingly hard to make their way into his thinking.

    • Mhmjjj2012

      OK. I give up. I clicked on the link you provided and got: “Nothing Found Sorry, the post you are looking for is not available.” So where’s the Pioneer Institute’s MBTA “plan?” I couldn’t find it on your website or doing an internet search using “pioneer institute mbta february 2015 plan.”

    • James Aloisi

      Jim Stergios reminds us that Pioneer wisely called for MBTA debt relief in 2015, as did I. My plan for debt relief was more robust that Pioneer’s (no surprise there), but I said at the time that our agreement on debt relief might pave the way for consensus building across ideologies. Alas, my optimism was misplaced as no debt relief was on offer from the Administration or Legislature. But neither Pioneer nor Jim S have ever, to my knowledge, called for raising net new revenue (as opposed to freeing up existing revenue). I would be pleased to be proven wrong on this, as I hold fast to the hope that Pioneer might actually present a forward-looking approach to transit investment. I strive to keep my writing and observations rooted in facts, rather than ideology, and I have sufficient self-awareness to embrace correction when appropriate. In this instance, Pioneer is attempting to pass off debt relief (freeing up cash) with raising net new revenue, which doesn’t pass the forthright test. If we could stop the bickering and find common ground to build consensus on, perhaps something groundbreaking could happen that would benefit the T and its riders.

    • casmatt99

      With all due respect Mr Stergios, you are lying through your teeth.

      According to the plan you cited, there are no sources of additional funding included in your recommendations. As Mr Aloisi correctly states, restructuring existing debt is not generating new revenue. Will you point out this section in Pioneer’s plan that states your support for a new source of funding for the MBTA, or will you continue to insist that spending less money on debt and other parts of the operational budget is the same as generating more revenue?

      The only possible answer I would expect is the recommendation to sell off the agency’s real estate holdings. But, again, liquidating an asset that was already in their possession does not fit the description of additional funding.

      If your institution supports a new source of revenue for the MBTA, why not just come out with it? Perhaps because your biggest donors would never write you another check if you explicitly stated it…

      • Jim Stergios

        casmatt – I’ll let you stick with the ad hominem and I’ll stick to substance. Your argument seems to be the following: Having the state or a state agency, or some combination of the two, assume the equivalent of $100+ million of the T’s annual debt service payments is not the equivalent of new revenue for the T. The fact that such a move would free up 5% of the T’s budget for spending on operations is not enough for you — it has to come through, what, a new tax? OK, that’s an argument, though not a good one.

        Pioneer does believe that the T should seek to monetize its real estate assets (through a more robust approach to transit-oriented developed around its stations and other actions). But that is not where we see the debt relief coming from. I think the answer on this is pretty straightforward: Relief from the debt burden placed on the T through the various Big Dig-related infrastructure commitments made by the state should come from the state or state agencies.

        • James Aloisi

          Jim: a gentle reminder that in your article you did not call for debt relief – your narrow construct said that there were three options to solve the revenue quandary: raise fares again, cut service or more reform. I agree with your reform idea. What I disagree with is Pioneer’s unwillingness to look to creative and fair ways to raise net new revenue. I supported debt relief before Pioneer did. Your article’s setup of the false impression that the alternatives to more reform are punitive fare hikes and service cuts (that we both know do not work) is what started this discussion in the first place. I’m not calling for a new tax, but more creative and fair approaches to raising net new revenue. I understand that you have earnestly held ideological beliefs, but there are many (myself included) who do not share those views and it is our obligation to call out the false alternatives that were presented in the Upshot piece. In the meantime, I’m happy to collaborate on the debt relief and reforms that we apparently both agree with and that bridge the ideological divide.

          • Jim Stergios

            I have earnestly held ideological beliefs? Thanks for the insight into your thinking: Chi altri giudica, rischia sè condanna.

          • James Aloisi

            Well, at least I thought they were earnestly held. That wasn’t meant to be a judgment; it was meant to be a compliment. Non sono disposito a giudicare, o essere giudicato.

          • casmatt99

            Chi giudica il giudice?

  • Charlie Chieppo

    I’m no accountant, but how is reducing what the T pays in annual debt service by say $100 million different from them getting $100 million from a new tax?

    • James Aloisi

      As you know Charlie, I was out front on debt relief I believe even before Pioneer was – and my proposal was more aggressive. So we agree one debt relief. But a $7.3 billion (which is likely a low estimate) SGR gap requires a number of solutions if we want to accelerate the pace, and therefore some next new revenue is called for. I have not called for a new tax, but rather other approaches (e.g. carbon impact fees on non residential parking) that would appropriately bring net new revenue to the transit table. Let’s remember that what started this conversation was Pioneer’s article which presented 3 “solutions” to the T’s revenue needs that did not include either debt relief or net new revenue. Threatening people with the prospect of more fare hikes or service cuts as the only alternatives to reform (which you did in your article) is purely ideological, not forthright (to borrow Jim Stergios’s phrase), and frankly not even accurate. That’s what sparked this, and what keeps being forgotten or ignored.

  • Charlie Chieppo

    Your obsession with the “ideological” puzzles me, especially given that you are a good deal farther from the center than I am (it’s way easier to caricature me as some guy who spends weekends with the Koch brothers than understanding what I actually believe). In any case, I appreciate you explaining your views.