Transit

Is the MBTA going bust in 2006?

by Seth Gitell

A financial crisis is looming at the Massachusetts Bay Transportation Authority. Or so says the Beacon Hill Institute, which predicts that the MBTA will go belly-up -- well, $181 million in debt -- in six years if current cost predictions play out. The conservative think tank says that the latest plan for T financing -- setting aside 20 percent of sales-tax revenues to fund the transit authority -- is only putting off the inevitable.

"Suppose that T costs rise by eight percent a year for the period 2001 to 2006," calculates an institute study. "Suppose also that the T is able to achieve some cost savings by increasing efficiency. . . . Then, given generally optimistic assumptions about the growth in sales-tax revenues, ridership, local assessments, and other revenues, we project a T deficit of $181 million in FY 2006. In order to cover that deficit, the T will have to double fares."

The gloomy forecast also predicts that "MBTA costs are about to accelerate." The reason, according to Beacon Hill Institute executive director David Tuerck, is the loans the authority has had to take to finance major construction campaigns.

John Simon, a spokesman for the state's Executive Office for Administration and Finance, disputes the Beacon Hill Institute findings and insists that costs are not increasing by as much as eight percent per year. Meanwhile, Lydia Rivera, a spokeswoman for the MBTA, says the potential $181 million deficit is news to her and that the authority is preparing a budget "that has revenue in excess of expense right now."

Three other advocacy groups also take issue with the study. A spokesperson for MassPIRG says that the T can prevent a deficit simply by attracting more riders. Michael Widmer of the Massachusetts Taxpayers Foundation notes that the T could sell off some of its copious real-estate holdings to raise money. And James St. George of the Tax Equity Alliance for Massachusetts points out that a ballot initiative that seeks to cut car excise taxes and turnpike tolls -- which will reduce state income and thereby reduce funding for all state agencies -- is far more dangerous to the financial prospects of the MBTA than rising costs.

Still, it's hard to look at the MBTA's history of dealing with deficits and not be a little worried. Fares have gone up four times since 1969, and all the increases have come during times of economic hardship -- 1979, 1982, 1989, and 1991. If the economy turns downward, that 20 percent of sales-tax revenue is going to mean less cash. And the state's cities and towns aren't going to be happy to fork over their money to bail out the T, as the current back-up plan calls for. That means the fare increase could come when working people need their change the most.