Imagine if a university found to have violated Title IX and ordered to strengthen its women’s athletics program passed the cost of required improvements in women’s programming on to the female students who enrolled in them.
Imagine if a defense contractor found to be operating an unsafe workplace charged the workers for the cost of addressing the health and safety violations.
These are (hopefully) absurd examples of passing the buck for mitigation… but that’s exactly what the Mass. Legislature did when it saddled the MBTA — and its ridership — with the debt service to pay for the federally mandated transit improvements required as Big Dig mitigation. According to MBTA Manager Richard Davies, the T’s $452 million in annual debt service eats up the entire $450 million in annual farebox revenues: “every dollar of what we take in from our customers goes to pay off the credit card.” Fully 1/3 of that debt service — and an amount approximately equal to the annual operating deficit — is paying off transit improvements that were part of the State’s Big Dig SIP obligations.
Instead of passing the buck for mitigation — and burdening transit riders with fare increases and service reductions (which Mr. Davey predicts will cut ridership by 9-17% and will ironically – think SIP – put more people in cars) — the Legislature should shift the Big Dig SIP-related portion of the debt service out of the MBTA’s budget and back to the overall State Budget.
To quote the MBTA Advisory Board’s April 2009 report entitled Born Broke, “The MBTA is stuck in a financial, not organizational quagmire. No amount of reorganization, reform, or efficiencies can generate the $160 million needed to close the FY10 budget gap, let alone the even larger deficits projected in the future. Until the MBTA’s underlying debt and financing weaknesses are addressed, all such changes, at best, will only delay the T’s day of reckoning. Relief of the $3.3 billion in Commonwealth debt currently on the MBTA’s books is the fairest, most efficient and most feasible way to solve for the MBTA’s underlying financial deficiencies.”
Fully half of the debt (excluding interest) that the State transferred to the MBTA as part of the Forward Funding legislation of 2000 ($1.7 billion of the $3.3 billion) — and about one-third of the $5.2 billion total debt (not counting interest) on the books at the time of the 2009 Advisory Committee report — was attributable to the capital cost of meeting the State’s legal SIP obligations in conjunction with receiving federal funding for the Big Dig. Including interest, the total debt was over $8 billion. (This doesn’t include the cost of yet-to-be-financed SIP-related projects, which the State re-assumed responsibility for in 2007; nor does it include the cost of future borrowing to complete already-started SIP-related projects which the T remains on the hook for.)
While it makes sense to force the T to operate within a budget (as the Forward Financing legislation required), and while it makes sense to provide the MBTA with a predictable funding stream (as the 2000 legislation purported to do in designating one cent of the sales tax to the T), it doesn’t make sense to saddle that budget with unsustainable debt.
Is erasing the T’s $160 million operating deficit by shifting SIP-related debt service to the State a long-term solution? No. But it provides temporary protection for public transit riders, protects the air quality improvements that SIP projects enabled, and buys the Legislature and Governor time to devise a long-overdue plan for financing transportation and public transit.
As described in the Massachusetts Transportation Finance Commission’s 2007 report entitled, Transportation Finance in Massachusetts: An Unsustainable System, the Commonwealth faces billions of dollars of deferred infrastructure maintenance and improvement costs — including repairs and upgrades to MBTA stations, tracks, and vehicles — and has been borrowing faster than it pays off the debt for such projects since the William Weld Administration.
Without such a plan, we will continue to dig ourselves deeper into debt, transportation infrastructure will continue to deteriorate, T riders will hear more messages about “disabled trains” and “service delays” — and even with the proposed MBTA service cuts/fare increases — Mr. Davey can “almost guarantee” that the T will be facing the need for further cutbacks and fare increases in a year or two.