Boston's mass transit system burdened by debt and increased ridership
A flawed highway construction project has put the Massachusetts Bay Transport Authority nearly $9 billion in debt. The costly project forced MBTA officials to answer two fundamental questions about their 100-year-old system: Who benefits from it and ultimately, who should pay for it?
Rising demand and increased costs have pushed mass transit systems in cities across the United States to their financial breaking points as they struggle to keep up.
Few have had a harder time balancing their budgets than the Massachusetts Bay Transport Authority in Boston, known commonly as the T. Steadily increasing ridership and compounding debt continues to burden the city's 100-year-old system of subways, buses, ferries, commuter trains and street cars.
"The MBTA is in pretty dire shape," said Stephanie Pollack, associate director of the Dukakis Center for Urban and Regional Policy at Northeastern University in Boston. "We've basically been charging all the bills and making the minimum payments on the credit card. And we just figured out that if you keep making the minimum payment, you never pay it off."
Until 12 years ago, budgeting wasn’t a problem for the T because it didn’t have a budget. If there was a shortfall in running the transit service at the end of the year, state lawmakers used general revenue funds to make up the difference.
Then in 2000, the state legislature passed a measure called forward funding, which requires the authority to have a plan to generate enough revenue to cover its entire budget. The T was told to come up with a balanced budget in exchange for 20 percent of all the revenue from the state sales tax.
But it also inherited $3.3 billion in debt for the Big Dig, a construction project in downtown Boston that quickly became the largest, most complex and costly highway project in U.S. history.
Delayed by a decade and plagued by design flaws, the price tag for the Big Dig soon tripled. Revenue from the state sales tax didn’t increase as expected. Instead, the MBTA has had to borrow money. It's issued bonds, and now its debt troubles have dramatically worsened. The original $3.3 billion owed to bondholders plus new debt has ballooned to almost $9 billion.
The budget has spiraled out of control for the MBTA. Brian Kane, a budget and policy analyst with the T advisory board, said the transference of "Big Dig" debt broke the T's budget from the beginning.
"Going forward, they will continue to basically pay every dollar they earn in fares, basically, in debt service," he said.
Both the revenue from fares and cost of debt services are about $450 million a year.
Fares have gone up three times since 2000, while the T's budgetary hole has only gotten deeper. It was $160 million short at the start of this year. Transit riders were outraged after T officials proposed a 43 percent increase in fares and massive cuts in services.
The T backpedaled and decided instead to sell off some real estate and cut workers and benefits. It cut fare hikes in half and preserved most of its services.
But transit riders with disabilities will bear a disproportionate share of the rate hikes. For those who use the federally mandated transit system known in Boston as The Ride, the cost of a trip will double.
Wilhelmina Melrose, 61, called The Ride her lifeline.
"Either there's gonna be a lot of appointments I'm not going to make, or I just have to cut my grocery shopping down," she said. "And I'm a diabetic and, you know, the doctors want you to eat properly."
At the end of June, fares for Melrose and others with disabilities taking The Ride will increase from $2 to $4. But the actual cost of this trip for the MBTA is about $40, meaning 10 percent of the T's budget goes to providing service for one percent of its passengers.
Kane says transit systems nationwide are confronted with the same questions: Who benefits from mass transit and who pays?
"It's important that people with disabilities have access to transportation services, but it's also important that we figure out the right financial model to pay for that," he said. "Putting it on the backs of the public transportation provider of mass transit is not necessarily the right way."
Finding the right funding model remains an elusive task for the T and other mass transit systems across the county. But knowing who benefits from those systems is easy for Kane.
He says even drivers benefit from mass transit because of less traffic, fewer accidents and more parking spaces. And everyone benefits because from less pollution and climate changing emissions.
"Every time someone gets on the T, the authority loses money," Kane said. "But that's OK. This is a public good."
With 75 percent of Americans living in urban areas, transit ridership will likely keep rising in cities around the U.S. Kane says that makes mass transit more important than ever, despite the costs associated with it.
"I think people are coming back into the city and want density and they want public transportation, because it’s a huge quality of life," he said. "Investing in public transportation is investing in our city, in our society, in our state, and in our people."
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