PART III: Why the MBTA is Broke

FISCAL INSANITY   Until 2000, the authority got its money by simply sending a bill to the legislature at the end of each year. Nobody had much incentive to innovate or find savings. So legislators came up with a plan in 2000 to make the T live within an annually balanced budget. The plan, called “forward funding,” would give the MBTA dedicated sources of revenue and force it to reform. This seemed smart.

FLAWED FUNDING FORMULA   Legislators anticipated that revenue from the sales tax would grow  at 3 percent a year. That wasn’t an outrageous idea; it had gone up at an even higher rate in the 1990s. To enact forward funding, lawmakers dedicated one penny out of every 5 cents of the sales tax to the MBTA. But — and this is a big but — legislators never accounted for the possibility that healthcare, fuel, energy, or, really, any costs at all might ever increase. They also didn’t adequately prepare for future T expansion — not even for projects then mandated by Beacon Hill. To make matters worse, some $3 billion of preexisting debt was piled onto the system — including $1.67 billion in borrowing related to the Big Dig that had less to do with the T and more to do with political horse-trading.

[sidebar]PERMANENT IMPLEMENTATION OF SHORT-TERM SOLUTIONS   A dirty secret: The forward-funding law was designed merely as a temporary fix. “None of us were pretending that [the T] could live within that money in perpetuity,” says state Senator Stan Rosenberg, who helped shape the bill. But no one asked questions about the plan’s longevity, according to one legislative aide intimately involved in creating forward funding, who spoke on the condition of anonymity. “When [the plan] landed on people’s desks, to the extent that anyone took a look at it — and I’d probably guess in the legislature maybe three people did — the underlying assumptions were not challenged; they were not vetted,” the aide says.

LOWER TAX COLLECTIONS   Since 2000, sales tax revenue hasn’t gone up  at nearly the rate the state expected, and in recent years it has actually decreased. Meanwhile, the T’s operating costs have grown by about 5 percent per year since 2000. Last year, the MBTA faced a $230 million gap between expenses and revenue. The legislature stepped up with $160 million — but that wasn’t enough.

BORROWING TO CLOSE BUDGET GAPS   Without the money  to maintain a balanced budget, something that’s mandated by state law, the MBTA has had to keep borrowing to make ends meet. The T has refinanced and restructured its debt every year since 2002.

  • Edward

    No wonder why the T is broke, they can’t grow their customer base. Not every one needs to go to boston. Most live their lives suburb to suburb. The T needs to service this market. Their routing paradyne is a 19th century solution to a 20th century problem that has no place in the 21st century

  • Stephen

    Compared to metropolitan NYC — the T is horrible. I hate to ride it but have to for work and social. At least they should be clean and free of snakes.

  • Ben

    Here are some ideas on how to fix this:

    – Implement a modest hike in fares
    – Charge more to travel at peak hours
    – Charge based on distance — it should not cost the same amount to go from Harvard to Central on the Red Line vs Braintree to Alewife. ex: The Wasington DC Metro system uses a distance based fare schedule and it seems to work fine.
    – Reduce (but don’t eliminate) bus & train routes that are not heavily traveled, and/or charge more to ride a nearly empty train car or bus
    – Run late night train service on the weekend (from 12-3am) and charge $5 a ride; right now people have no choice but to take overpriced cabs after leaving the bars — what a racket!
    – Maximize advertising $ (e.g. by letting more T cars & buses get wrapped with ads) and increase revenue by allowing more vendors inside of T stations and taxing them, e.g. by having food carts, Dunkin Donuts, etc on the platforms
    – Combine the Big Dig debt with Turnpike Authority debt, mandate use of EZ Pass transponders on the freeway, reduce # of toll workers, and charge a usage fee to travel the freeways / have a…

    • Patrick

      Ben, if only you were working for the MBTA. Great ideas!