Tenth of a Series: ‘T’ Stands for ‘Trouble’

I now complete my “tour around the country” to find out how major transit providers are faring in their efforts to keep going, despite the deficits those agencies will face when the COVID-19 relief money runs out. Congress authorized it in the wake of the steep ridership declines caused by the virus. We return to the Northeast to examine the situation at the MBTA (Massachusetts Bay Transportation Authority or the “T”). I am concluding this examination of the various transit agencies there, because ridership has come back strongly in the wake of some innovative practices implemented by Philip Eng and his management crew. As I found out, ridership alone cannot overcome the crisis that is looming.

The T runs local transit in and around Boston, including three Metropolitan-style “heavy rail” lines: color-coded Red, Orange, and Blue, a light-rail system known as the “Green Line” that has a single spine, but separates into four branches going outbound from downtown Boston and two newly built extensions north of the city, a historic streetcar line, and ferries and many local bus routes. In addition, there is the regional rail system (they still call it “commuter rail”), which fans out from the city on the North Side (using lines that were historically part of the Boston & Maine Railroad) and the South Side (historically New Haven Railroad lines, plus the Boston & Albany route as far as Worcester).

The system was hit hard by the pandemic, and service was cut so severely that weekend service survived on only five of the city’s 12 regional rail routes. There were also service reductions on weekdays, headways on local rail transit were lengthened, and the service day was shortened everywhere. Since that time, some of the local rail lines have had infrastructure problems that required expensive repairs, which sometimes required lengthy service outages while those repairs were made. Those repairs, which have more to do with the capital side than the operating side, are ongoing.

One of the biggest changes that the agency made during the post-pandemic period was to restructure regional rail service to reschedule many of the trains that operated during peak commuting hours on weekdays and run more-frequent service throughout the day. There are still a few extra “commuter trains” tacked onto the base schedules on some of the lines, but the basic service now consists of service on a fixed headway, or an approximation of same, during the entire service day. Most lines now feature hourly service, and a few with lighter ridership run every 75 or 90 minutes. Trains run every two hours on weekends, although local service is more frequent on the Dorchester Branch every day.

Looming Deficits

There was concern about the fiscal cliff as early as March 10, 2022, when Chris Lisinski reported on WBUR: “The MBTA might inch up to the edge of a financial ‘cliff’ as soon as fiscal year 2024, when the transit agency will have exhausted all the nearly $2 billion in federal COVID-19 aid it received and will face a budget gap of more than $230 million.” He reported a projected gap of $236 million in FY24, adding, “Presenting a multi-year budget projection to board members, MBTA Chief Financial Officer Mary Ann O’Hara said the T will use about $316 million in one-time revenue to balance its forthcoming FY23 spending plan and have about $100 million remaining to put toward the following year.” At that time, the expected shortfall would be $341 million to $551 million by FY27.

Unlike many other transit agencies, part of the T’s financial woes stem from infrastructure problems as well as service expansions. Lisinski quoted O’Hara as saying, “Annual budget strain was a regular feature at the T before COVID-19 upended ridership patterns and revenue streams. Costs are now growing faster than revenues at the T, driven in part by COVID-fueled ridership trends and by significant investment in safety improvements recommended by an independent panel, new service on the Green Line Extension and forthcoming South Coast Rail, and fuel inflation.” Both branches of the Green Line Extension, to Somerville and Medford, began running in 2022. South Coast Rail is under construction and scheduled to open next year. It will use the existing Middleboro-Lakeville line and extend service to New Bedford and Fall River on separate lines south of Taunton. Further plans call for the service to move to the original Old Colony route between Stoughton and Taunton in 2030.

In April 2022, the MBTA Advisory Board, which focused on the interests of the municipalities in the T’s service area, released a comprehensive report on the agency’s 2023-27 Capital Improvement Plan (download below) reported on the anticipated state of the agency’s finances: “As MTF (Massachusetts Taxpayers’ Foundation) reports, by 2025 or 2026 the MBTA will be left with only its federal formula funds, $60 million in state bond cap, and its own revenue bonds which must be repaid from future operating budgets for its capital program, unless something changes. These funds will amount to less than $1 billion in funding starting in FY2025/6, compared with the nearly $2 billion per year the Authority has been investing for the past few years. $1 billion is a lot of money, unfortunately it is insufficient for the deferred maintenance needs of the system, let alone major transformations for safety, climate change, or system expansion” (at 19).

Transit Center, a professional advocacy organization, reported on the fiscal cliff generally on April 7, 2023. Regarding the agency’s situation at that time, Transit Center reported: “In the likeliest scenario, the MBTA will face a budget deficit of $404 million starting in FY2026, which will grow to $473 million in FY2028—about 20% of its operating budget—due to rising costs and planned expansions including a bus network redesign. The short-term outlook has improved since this time last year, when the MBTA projected that its money would run out in a matter of months. Now, it says it can fill budget holes for FY2024 and FY2025.” At the same time, the report warned: “The reserves come from higher-than-projected sales tax revenue, debt service management, and lower-than-anticipated expenses for wages and benefits. The MBTA’s persistent workforce vacancies have damaged its ability to operate high levels of service reliably, but as a silver lining allow the agency to put off drastic service cuts in face of budget gaps.” While revenue from sales taxes is a relatively popular means of funding transit, it also carries the risk that available funds will drop when the economy is slow; a risk that some advocates point out when reacting to proposal for such funding.

Transit Center reported that the state had enacted a “millionaire’s tax” in 2022 for several purposes, including transit, but also reported: “In her first budget proposal, Governor [Maura] Healey proposed sending just under $200 million of the tax revenues to MBTA, mostly to cover capital costs.” That will not do much toward funding operations to keep the system going without severe service cuts.

The situation did not improve as 2024 began. On January 29, Phil Tenser reported for WCVB: “Revenues are way down, expenses are way up and the Massachusetts Bay Transportation Authority is under an enormous pile of debt, leading the agency’s chief financial officer to warn that the transportation agency is in a fiscal ‘predicament.’ The projected MBTA budget deficit discussed during Friday’s meeting for the next fiscal year was $182 million. CFO Mary Ann O’Hara’s presentation projected that could grow to $859 million by 2029.” Tenser also reported that O’Hara acknowledged, “We now stare at the fiscal cliff.”

Perhaps the most important quote from Tenser’s report was that O’Hara had said, “One-time, pandemic-era federal funds will also run dry during the 2025 fiscal year.” That year is now upon us. According to Tenzer, farebox recovery has also taken a hit. He reported: “Before the pandemic, the MBTA said that fare revenue covered 41% of the system’s annual operating expenses. Now, that has dipped to 19%.” Looking at the big picture, “The grim fiscal outlook comes after the MBTA said it would need approximately $24.5 billion to bring the system into a state of good repair through projects like replacing or rehabilitating tracks, facilities, power equipment, trains and other parts of the Boston-area transit system.” Tenzer quoted Healey as saying: “We’ll double our support for MBTA operations, and tackle deferred maintenance, to build a system worthy of our economy.” But will that be enough?

WBUR reported on Feb. 21 that the governor had appointed a Transportation Funding Task Force, and that the FY24-25 (now in effect) budget gap would range from $573 million to $656 million. A June 6 report by the MBTA Advisory Board explained the current budget in greater detail (download below).

The Operating Budget Oversight Committee consists solely of appointed representatives from Boston and other cities and towns within the system’s service area. The first paragraph of the report (at 1) warned: “The budget is in deficit, and only balanced by the liquidation of reserve funds. Without action, the budget deficit for the following fiscal year (13 months from now) is projected at just under $700 million. Without external support, the internal ability of the MBTA to close such a deficit is nearly non-existent. In FY21, for example, the MBTA proposed draconian service cuts to realize $142 million in savings. The FY26 deficit is projected to be nearly five times greater. The service cuts and layoffs needed to close a $700 million deficit suggest an existential crisis for public transportation in Massachusetts.” The report had more details on the sad story for the agency (at 6): “Fiscal Year 2025 is balanced only through the transfer of $307 million from cash reserves and $93 million in internal savings. The total revenue projection for FY25 of $2,714,236,292 represents low single growth of 2.49%. This level of revenue growth does not support the fast-growing expense budget driven by headcount growth. This revenue issue is made even more concerning because the actual operating revenue line item, reflective of ridership/fares, is declining 3.60%.” The report went on to warn that expenses are “exploding” with double-digit increases, while there would be no reserves left for FY26 (Id.), and that the agency would be saddled with “a persistent structural deficit” (at 7).

The report detailed the severe service reductions implemented for FY21, noted that projected deficits are now much greater, and then said: “There are no service cuts 4.9 to 6.1 times greater than those in FY21 possible without basically ending all public transportation service outside of short windows on weekdays. The MBTA cannot solve these deficits internally.” The report concluded (at 14): “Given the draconian nature of the cuts proposed in FY21, there was significant opposition from cities and towns, advocates, elected officials, and the public. The service cuts required to close a $696 million deficit in 13 months are simply impossible to propose and still be considered a public transportation provider. To prevent these death-spiral-inducing actions, the MBTA Board urgently needs to begin discussions of financial restructuring to be able to plan rationally for the foreseeable crisis ahead.”

Dennis Kirkpatrick, an advocate, former journalist and Board Member of the Rail Users’ Network (RUN) has observed the scene at the T for many years. He told Railway Age: “Those of us who have been watching developments at the T and the State House knew that the fiscal cliff was coming, but much of the press was surprisingly silent about it. They would mention it, but there would not be a ‘breaking news’ quality about their stories.”

On Aug. 22, the Commonwealth Beacon ran a story about how state policies over the past 20 years had given the T less money than the agency should have received, especially its share of sales tax revenue. The report was grim, warning of a budget deficit of about $700 million in the coming fiscal year and quoting MBTA CFO O’Hara acknowledging: “We’re at the fiscal cliff.” The report also warned: “The Legislature would have to pass some sort of revenue package for the T early in the year to deal with the authority’s looming deficit, or else the agency might be forced to start laying off workers to reduce spending and begin paring back the deficit.” Regarding the politics of the situation, the report went on: “Monica Tibbits-Nutt, the Secretary of Transportation, a member of the MBTA Board, and co-chair of the Transportation Revenue Task Force, said nothing during the T board’s discussion about new revenues. In April at an event hosted by WalkMassachusetts, Tibbits-Nutt talked enthusiastically about assembling a transportation revenue package, including new tolls at the state’s borders. Healey four days later disavowed the talk about border tolls, and Tibbits-Nutt has said almost nothing about new revenues since.”

After questioning Tibbits-Nutt’s role in the drama, the report again cited O’Hara: “O’Hara, after delivering a presentation on historical underfunding of the MBTA, said what the agency needs now is a steady, recurring revenue source not subject to legislative appropriation, which could be used to finance debt borrowings,” and concluded by explaining how the sales tax did not always deliver enough money and how state officials could have treated the agency better.

Where Do T Riders Stand?

As I was planning this series, I remembered reports that ridership was recovering well from the levels experienced during the COVID-19 pandemic. In addition, Philip Eng had moved to the agency from the Long Island Rail Road, where he had established a good reputation. There was reason to believe that he could use his expertise and experience to improve matters for riders in Boston and nearby cities and towns. To an extent, he has done that. He has pushed hard to bring the local transit system into a state of good repair, even ordering long shutdowns of some lines to concentrate the work and get it finished sooner. According to Kirkpatrick, he and his team found additional deficiencies once they were on the job, so more repairs became necessary. On the regional rail front, he and his team got away from over-concentration of service during peak commuting hours, and scheduled trains to run at regular intervals throughout the service day. Most lines run hourly on weekdays, while a few run less often, but still on regular headways. On weekends they run every two hours. These changes have improved service and brought some riders back, but apparently not enough to make up the anticipated deficits.

Even so, it would be difficult to get enough money to surmount the deficits that T-watchers expect to ravage the system, beginning as soon as ten months from this writing. Kirkpatrick mentioned efforts to restructure property taxes in Boston, now that there has been a decline in commercial real estate activity and a new emphasis on residential use. That restructuring requires State approval as a home-rule measure, but the legislature has not acted yet, so a measure that would have helped Boston get more money for transit and other needs will probably be delayed until next year, at least.

At this point, it seems difficult to believe that anything less than a large infusion of state or federal aid (or both) can enable the T to keep serving the people of Boston and the surrounding area with transit that they can use to live a reasonable urban lifestyle. I had saved the T for the final agency to be examined, in the hope that a leader and his team who are doing things right could deliver a reasonable expectation of a positive forecast for getting past the fiscal cliff and providing good service into the future. Sadly, it does not seem to be working out that way, but blaming the T and its managers and other employees would appear misplaced. In any event, blame won’t bring in the money that’s needed.

On Aug. 23, StreetblogMass ran an article by Christian MilNeil headlined A Rider’s Guide to the MBTA’s Looming Financial Crisis. It’s a frank description of the situation, and it’s grim. MilNeil started by mentioning the federal pandemic relief funds that have helped keep the system going, and then said: “But that federal assistance is about to run out, and the T needs an infusion of roughly $700 million from Massachusetts lawmakers to avoid massive service cuts in 2025.” He included a scary-looking bar chart that he got from the agency and summarized the history of its current woes this way: “Like every transportation system, the T relies on public subsidies to operate. But the Commonwealth’s financial support for the T has been steadily eroding for the past quarter-century, and the T has run out of gimmicks to try and patch over the growing gaps between what the state’s politicians offer and what it really needs.”

Like others before him, MilNeil warned: “Without new funding from the Legislature and Governor, massive layoffs and service cuts might be the only option for MBTA management, which ultimately can’t spend money it doesn’t have.” He concluded by quoting Gov. Healey as saying: “Public transit is key to our economic growth and development, to opportunity, and to Massachusetts competitiveness.” Now the question is whether she and other elected officials can come up with money to save it. They need to raise a lot of money, and they don’t have much time.

As the summer of 2024 and this series wind down, I will return to the big picture and what might happen to transit generally because of the one-shot nature of federal operating support. While it is true that the COVID-19 relief money has kept much of the nation’s transit going for the past few years, it is still only a reprieve, and not a solution. I will examine that situation in the next article in this series.

David Peter Alan is one of North America’s most experienced transit users and advocates, having ridden every rail transit line in the U.S., and most Canadian systems. He has also ridden the entire Amtrak and VIA Rail network. His advocacy on the national scene focuses on the Rail Users’ Network (RUN), where he has been a Board member since 2005. Locally in New Jersey, he served as Chair of the Lackawanna Coalition for 21 years and remains a member. He is also a member of NJ Transit’s Senior Citizens and Disabled Residents Transportation Advisory Committee (SCDRTAC). When not writing or traveling, he practices law in the fields of Intellectual Property (Patents, Trademarks and Copyright) and business law. Opinions expressed here are his own.