BOSTON — According to the Boston Globe, the MBTA cannot afford to pay for billions of dollars of expansion projects, including the rail link between North and South stations, without neglecting badly needed maintenance and modernization projects, according to a report released yesterday.
Painting a grim picture of the T’s financial future, the report projects that the agency, based on a review of its capital spending plan, will face a $1.7 billion shortfall over the next 10 years. That only includes the cost for repair and replacement projects, not $4.5 billion in proposed expansion projects, the report says.
The fiscal woes come as the Massachusetts Bay Transportation Authority is adjusting to a new financing system implemented a year and a half ago. Before, the agency spent what it deemed necessary and received the required amount from the Legislature. Now, the T is forced to live by a fixed budget like any other state agency.
The new budgetary system, called forward funding, will jeapordize the T’s future expansion plans, including extending commuter rail service to New Bedford and Fall River, according to the report by the Massachusetts Taxpayers Foundation, a business-backed research group, and the Pioneer Institute, a fiscally conservative think tank based in Boston.
“Capital projects that were easy to support when their costs were covered … now must be evaluated for their impact on the T’s fragile bottom line,” the report reads.
“Expecting the T to pay for these expansions will undercut the fiscal foundation of the T and force it into a sort of fiscal death spiral in which it will have to cut funding for maintenance and modernization, which will result in poorer services,” said foundation president Michael J. Widmer. “The T is in strong fiscal condition now … What we’re warning is that we can’t expect the T to abide by the old rules and simply expand willy-nilly without very serious consequences to its fiscal well being.”
T officials challenged the report’s findings, saying the agency has never been in better financial shape. They said the report assumes that future spending will include several expensive expansion projects that are not listed in the T’s current or future budgets.
Underscoring the agency’s healthy finances, officials noted that the T ended the past fiscal year with a $53 million surplus, a portion of which was placed in the agency’s capital maintenance fund.
But, the report says, “The T can continue to transform itself into a first-class, fiscally responsible transit system or it can try to accommodate the demands for expansion, but it cannot do both.”
To prevent the T from falling into financial crisis, the report calls for state officials to assume financial responsibility for the T’s planned $4.5 billion expansion projects and choose wisely between competing demands for public transit and highway plans. The report also recommends that the T decrease its debt load by being more judicious in identifying future projects. The state sets aside 20 percent of the sales tax for the MBTA.
“Difficult choices must be made and tradeoffs accepted,” the report reads.
The Taxpayers Foundation and the Pioneer Institute include members who served on a blue ribbon committee that helped implement the T’s forward funding policy, on which the foundation’s report focuses.
The report comes two weeks after the T’s board of directors approved a much-debated extension of the Greenbush commuter rail line to the South Shore with a $251 million contract to begin construction. T officials said the project, with a total cost of $440 million, has had funds earmarked for it for years. The only other major project in the current budget is the expansion of commuter rail to the Fall River-New Bedford area, which is still in planning stages.
All other expansion projects, such as the Urban Ring, a subway line that would circumvent the city, or the North-South rail link, remain unfunded, with MBTA and state officials unsure where some of the funding will come from.
“I believe the report understates the MBTA’s commitment to the state of good repair and infrastructure improvements,” said Jonathan Davis, the T’s chief financial officer and deputy general manager.
Davis said that a year ago the agency spent 70 percent of its capital budget on maintaining the current system and 30 percent on expansion. Those figures have now gone up to a 75 percent funding for maintenance and 25 percent for expansion. In addition, the new general manager, Michael H. Mulhern, voiced support this month for maintaining and improving the agency’s existing bus service.
“We do have finite revenue sources, and we’re going to have to find the best balance between both of those … And so far, we’ve done a good job,” he said.
The T board recently approved the next fiscal year’s budget, a total of $1.16 billion, which includes $90 million for replacement and renovation of the existing bus fleet and $13 million for Green Line trolley car improvements. The budget is a 4 percent increase over last year. No fare increases are planned, Davis said.