MBTA proposing fare hikes to keep deficit in check
Photo/Grant Welker
Commuter rail passengers prepare for boarding a train to Boston at Worcester's Union Station.
Seeking to contain its budget deficit in the face of rising expenses, the MBTA on Monday announced a proposal to raise the price of bus, subway and commuter rail rides by an average of 6.3 percent beginning July 1 in order to raise more than $32 million in new annual revenue.
The proposal, which is open for public input and must be approved by the Fiscal and Management Control Board, would see the CharlieCard price of a bus ride increase by 10 cents to $1.80, the price of a subway trip climb by 15 cents to $2.40 and the price of a monthly link pass, which allows unlimited subway and bus trips, rise $5.50 to $90 per month.
Not all MBTA fares would increase under the proposal. A bus ride will still cost $2 if paying by cash and the fare to take the Hingham/Hull ferry to Logan Airport will be reduced from $18.25 to $9.75 to equal the proposed new fare to take the ferry to Boston, two exceptions the T said will make it easier to implement an automated fare collection system by 2021.
MBTA officials said the proposed increases would be the first time in three years that MBTA fares have gone up and that the increases for all fare types will be less than 7 percent. By law, the T can't raise any fare by more than 7 percent, nor can it raise fares more than once every two years.
"Fare hikes are an unpleasant bit of this business but they are an important part of the MBTA's funding stream," MBTA General Manager Steve Poftak said. "This is, I think, a modest fare increase, it keeps pace with inflation and I also think doing it on a periodic basis where the rise is not quite so dramatic, I'm hopeful this lands a little bit easier than in the not-so-distant past when the fare increases were larger."
Poftak specifically cited an MBTA proposal from 2012 that would have hiked fares 20 percent while simultaneously cutting T service by 25 percent and said, "That's not the way we want to run this business."
"We want to do what I think are modest and periodic fare increases that allow us to meet our financial obligations and also provide the opportunity to potentially reinvest in certain services," he said.
MBTA Chief Financial Officer Paul Brandley said the T's expenses are going up in fiscal year 2020 due to contractual obligations, debt service payments and pension contributions. The T is projecting that, without its proposed fare increases, its structural deficit would nearly double from a projected $37 million this fiscal year to $74 million in fiscal 2020.
In order to transfer $150 million each year to the MBTA's capital program, which funds infrastructure projects meant to improve service and reliability, the T must keep its structural deficit at or below $37 million, officials said.
"What I think this means is that the MBTA is going to need to find new revenue-enhancing (and) cost-cutting initiatives to move back to that $37 million target," Brandley said. He added, "With a baseline that's nearly twice what it is in the current year, we're going to have to do something to get back to that $37 million and a fare increase is one of the levers that we plan to use."
The proposed fare hikes unveiled Monday are projected to bring in almost $33 million a year, but T officials expect the price increases will come with an associated decline in parking revenue of less than $1 million. If the fare increase proposal is adopted, Brandley said the T's projected fiscal 2020 budget deficit would roll back to $42 million.
Poftak said the T will be undertaking "internal cost-cutting initiatives to the extent that they're necessary" to help further reduce the projected deficit. But he also said that the proposed fare increases could allow the T to make "potential enhancements to service."
"I do hope that customers are at least starting to see some initial improvements in service and we are working aggressively to roll those improvements out over the next year," he said. "So we are working hard to show customers the MBTA is improving and this allows us the ability not only to continue the capital investments that we think are very important but also the ability to consider potential improvements in service."
Before the T formally announced its fare increase proposal Monday, two lawmakers from South Boston addressed the FMCB during its public comment period to urge them to drop the idea of hiking fares for T riders until service improves.
"With the system continuing to suffer from service and reliability issues, a fare increase would not only be unfair to riders, but it would also drive away many potential users and current users from the system, worsening traffic on our roads and driving increased emissions, thereby subverting the mission of public transit," Sen. Nick Collins said.
MBTA Director of Fare Policy and Analytics Laurel Paget-Seekins said the T's modeling forecasts a 1.3 percent overall drop in annual ridership if the fare increases take effect.
Rep. David Biele from South Boston said raising T fares "would be unfair to the riders who are still waiting on improvements," citing the frequent concerns he hears about MBTA bus service from his constituents.
"It's been several years and a lot of people in the neighborhood are still waiting," Biele said. "I take the bus every day, I hear it on a daily basis."
Both Collins and Biele said they worry that the fare increases would disproportionately affect "seniors, youth and low-income residents" who rely on the T, but MBTA officials said an equity analysis of the proposal found that "it is less of an increase for low-income and minority riders than riders overall by a little bit," Paget-Seekins said.
MBTA Advisory Board Executive Director Paul Regan spoke in favor of the fare increases Monday and endorsed the T's approach to its proposal.
"One of the things that the MBTA has not done and needs to do is stay on schedule with regular small fare increases. The temptation is going to be to delay this; you really can't," he said. "You need to keep on that schedule, I think, in order to not have the negative effects of underfunding just accumulate over the years."
On Twitter, former transportation secretary James Aloisi said MBTA fare increases "should automatically trigger a parallel hike in the state gas tax" and in the fees paid on rides with companies like Lyft and Uber.
Asked about Aloisi's comments Monday afternoon, Gov. Charlie Baker noted that the T's proposal conforms to the legislative requirement that fares increase by no more than 7 percent and not more frequently than every other year, and said the MBTA has for years been tasked with coming up with 40 percent of its operating cost through fares.
"Let's not forget that the taxpayers who never ride the system write a check every year for over a billion dollars to the MBTA and the trade on that is that fares need to cover about 40 percent of their operations," he said. "That's a deal that's been in place for a very long time and I think it's appropriate."
The MBTA opened a public comment period on its proposed new fares Monday and will accept input from the public through the end of the month. A public hearing will be held at 6:30 p.m. on Feb. 27 at the MassDOT building. Paget-Seekins said she plans to brief the FMCB on the public feedback at its March 4 meeting.
The FMCB is expected to vote on the fare increase proposal as part of its fiscal year 2020 budget at its March 11 meeting. Before then, FMCB members said they want to get a better sense of the impacts the new fares would have on riders.
"While this increase does not seem big to a lot of people, for a good number of our riders it is a really big difference, especially if you take that and look at what it means monthly and annually," FMCB member Monica Tibbits-Nutt said. "This could be the difference between putting their kid in some afterschool program, being able to eat and things like that."
Tibbits-Nutt said she wants to make sure she and the rest of the FMCB get "a very clear understanding" of how the money raised from the 2016 fare increases was spent before they are asked to approve even higher fares.
"I really just think the riders deserve that because I think for a lot of them, and what we hear from a lot of them, is that their commute has not improved in three years since the last fare increase," she said. "For a lot of people, it's just gotten worse."
Transportation Secretary Stephanie Pollack called the proposal "a fairly policy-free proposed fare increase," and said the T is not attempting to address policy issues like low-income fares or commuter rail zones because those conversations will take place when the T's automated fare collection system comes online in 2021, which would coincide with the T's next available opportunity to hike fares.
"The next fare increase, whether it is two or three years from now, should really be a much broader conversation around fare structure and policy because we will have the new fare collection system which really gives us a lot more options than we could consider this way," Pollack said.
Asked whether the T is planning to increase fares again in two years or if it will wait another three years, Poftak said no decision has been made.
"I don't think we have committed to either option right now," he said. "That's a future policy decision."
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