Metro

How the MBTA makes and spends its money

A breakdown of the 2015 fiscal year budget

The MBTA is undoubtedly debt-ridden, with more than $8 billion in principal and interest owed its bondholders. But on an annual basis, the MBTA budget has stayed in the black in recent years, often by tens of millions of dollars. In fiscal year 2015, it saw a budget surplus of $10.2 million.

Since 1991, the MBTA's revenue and operating expenses have climbed steadily. For example, annual fare revenue has grown, but so has the spending allocated to running the commuter rail or to "Materials, Supplies, and Services," which includes maintenance and utility costs.

For fiscal year 2015, the MBTA’s total revenue is budgeted to increase by $76.5 million, or 4.1 percent, to a total of $1.94 billion. Revenue growth was budgeted for each of the MBTA's revenue sources in fiscal year 2015, with more than half of that funding (57 percent) coming from the state. The amount of state money flowing into the MBTA has increased substantially since the authority’s enabling in 2000, with bumps from tax rate increases and legislative actions.

The MBTA's expenses increased by 3.6 percent between the two years, to $1.93 billion in fiscal year 2015. Much of that increase was driven by growth in operating expenses, particularly for wages. The MBTA is expanding its staff by 284 positions, according to its budget documentation. Increases in spending for service, maintenance, transportation and environment regulatory matters, worker fatigue guidelines, commuter rail support, and employee training, all also contributed to the increased spending.

Debt service payments actually decreased in fiscal year 2015 by 4.5 percent, as the MBTA made lighter principal payments and had fewer vehicles lease obligations for The Ride, the Transit Police, maintenance, and service deliveries.

SOURCE: MBTA

Patrick Garvin, Catherine Cloutier, David Butler/Globe Staff

Understanding the MBTA budget

Here is a breakdown of what the MBTA’s budget lines mean:

REVENUE

Revenue from fares: More than 30 percent of the transit system’s revenue comes from fares.

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Other operating revenue: Advertising, parking, and real estate operations revenue is considered “other operating revenue.”

Dedicated local assessments: All communities associated with the transit authority must contribute to the MBTA. Local assessments are set by the Consumer Price Index and cannot exceed an annual increase of 2.5 percent.

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Dedicated sales tax: The MBTA’s Enabling Act, which established the authority in 2000, dedicated sales tax receipts to the MBTA. The authority receives the higher of a predetermined amount or 16 percent of statewide sales tax excluding the meals tax.

Contract assistance: After fiscal year 2010, the MBTA received an additional annual $160 million in sales tax revenue when the statewide rate was raised from 5 to 6.25 percent.

Additional assistance: Additional assistance is from Transportation Finance Legislation revenue from the state. It first appeared on the MBTA budget in fiscal year 2014.

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Other income: The “other income” category encompasses miscellaneous revenue sources, including interest income, property sales, funds from the federal government, gas tax rebates, Late Night Service support, and Cape Flyer revenue.

EXPENSES

Wages: Salaries and wages for MBTA employees make up the largest chunk of the MBTA’s expense budget.

Fringe Benefits: The MBTA’s fringe benefit budget includes spending on pensions, health care, life insurance, disability insurance, workers’ compensation, and other benefits.

Health & Welfare Fund: This fund of health and welfare benefits -- including dental insurance, life insurance, vision insurance and Medicare Part B -- is for workers not covered by the Group Insurance Commission plans awarded by Local 589.

Payroll taxes: Payroll taxes include Federal Insurance Contributions Act (FICA), which funds Social Security and Medicare, and Unemployment.

Materials, Supplies, and Services: This budget line encompasses maintenance, utility costs, contract cleaning, IT, public safety, uniforms, building rent, and other materials and services.

Casualty and Liability: This spending covers injuries, damages, and risk insurance.

Purchased Commuter Rail Service: Commuter Rail expenses include contracted services, fuel, service changes, capital maintenance, equipment maintenance, and other expenses.

Purchased Local Service Subsidy: Purchased local services include The Ride, commuter boats, private carrier buses, and suburban buses.

Financial Service Charges: Financial service charges are marketing fees, liquidity fees, bond counsel, and credit card processing fees.

Total Debt Service Expenses: Debt service payments go toward interest and principal payments on the authority’s outstanding debt. They also cover lease payments for vehicles supporting The Ride program, the MBTA’s police department, and maintenance.

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