MBTA maps out growing budget deficits
The MBTA has sketched out a growing deficit within its transit system that would balloon to $427 million in four years, as expenses far outpace growth in ridership and revenue.
News of the looming budget deficits arrived two years after the Democrat-controlled Legislature attempted to finance transportation through a 3-cent gas hike and a few other measures, two of which were subsequently repealed.
Part of the deficit includes the $88 million it will take to quit using capital funds, from debt and federal grants, to pay the salaries of roughly 530 T employees who work on construction, vehicle design and engineering, among other tasks.
The MBTA plans to shift those employees onto the operating budget in fiscal 2017 and 2018 with some additional moves made in fiscal 2019, MBTA Interim General Manager Frank DePaola and Chief Administrator Brian Shortsleeve told reporters Wednesday afternoon.
While increasing operating expenses, the shift of workers from one budget to another will free up funding in the capital budget.
"We can repurpose that to do more physical work," DePaola said. He said transit officials will need to be organized to make sure those freed up capital dollars are put to work.
The deficit analysis shows a $242 million gap in fiscal 2017, which begins July 1, 2016, that grows larger annually as revenue is expected to rise 1.6 percent per year while operating expenses and debt service grows at about 4.4 percent per year.
"This is really current course and speed, status quo," said Shortsleeve.
In December the MBTA Fiscal and Management Control Board plans to recommend proposals to the Legislature to try to reduce or eliminate that structural deficit, the T officials said.
"Between now and December we're going to run some scenarios of what it would take to balance the budget," DePaola said.
In fiscal 2016 the state is providing $986 million to the MBTA and cities and towns in the service area are contributing $163 million, while fares are expected at $618 million and other revenue is pegged at $50 million. The state funding includes $187 million for fiscal 2016 that MBTA officials consider as "discretionary," helping to bridge a projected $170 million deficit in the $1.57 billion MBTA operating budget.
Borne out of last winter's major transit problems caused by the snow and cold, the control board is now wrestling with a variety of financial challenges, from the potentially $1 billion uptick in the cost of the Green Line Extension to the new pricetag of $7.3 billion for bringing the system into a state of good repair.
The MBTA has been working to protect tracks and trains from future blizzards, and will need to consider how to comply with the requirement for a new commuter rail safety feature called positive train control.
Partially owing to an arbitration award to the Boston Carmen's Union, the MBTA's expenses outran its revenues and ridership growth by even larger measure in fiscal 2013 and 2014, when operating expenses - outside debt service - rose 6.5 percent annually while ridership grew a quarter of a percentage point per year and revenues grew at a fifth of a percentage point.
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