The Massachusetts Bay Transportation Authority expects to lose between $25 million and $35 million in fare revenue for the month of March, reflecting the huge drop in ridership and precarious financial position facing public transit agencies across the country from the coronavirus pandemic.
That’s about half of what the T collects from riders in a typical month. Fares cover about one-third of the agency’s $2.1 billion operating budget.
The agency’s financial plight is exacerbated by the turmoil in the credit markets that is making it hard for public transit systems and other government operations to borrow money at affordable rates — if at all. On Monday, the state authorized the T to identify new lines of credit for short-term debt worth up to $200 million because of disruption to one of its regular borrowing lines.
The major form of relief transit agencies are looking to is in Washington, D.C., where Congress was finalizing a $2 trillion dollar stimulus bill that is expected to include $25 billion to help transit agencies to recoup virus-related losses.
The ridership collapse in Boston — by more than 80 percent on the MBTA’s subway and 50 percent on buses — is, in a good way, a sign that much of the public is taking social distancing orders seriously, even as the transit system remains in operation to ensure essential employees such as hospital and grocery workers can still get around. Washington, D.C.’s transit system has gone so far as to boast about its ridership losses on social media. Several transit systems, including the T, are essentially forgoing fare revenue on buses by allowing riders to enter through back doors to limit interaction with drivers. (On Wednesday the T disclosed that three bus drivers tested positive for COVID-19.)
But these measures come with major financial ramifications. New York-based advocacy group TransitCenter estimated the MBTA could lose more than half its income if current ridership trends held steady for an entire year. Across the country, transit systems overall could lose as much as a third.
“This is an existential type of number,” said Ben Fried, a spokesman for the group. “Transit agencies will not survive in their current state in these conditions.”
The March fare estimate was shared by the MBTA late Tuesday. Those losses will only mount if the pandemic and economic shutdown continues for several months, because ridership on the T was only down slightly the first week of March, and many riders paid for nonrefundable monthly passes. The March estimate also does not account for losses in other forms of revenue that is tied to ridership, such as parking or advertising.
Kurt Forsgren, a managing director at S&P Global Ratings focused on the transportation industry, said such ridership drops are “unprecedented," and especially unique because agencies also feel pressure to still run enough service to ensure remaining riders are not crowded.
“This is not a sustainable status quo situation whatsoever,” Forsgren said. “They don’t have the flexibility to scale back their service levels to meet demand. A lot of it has to do with the orders you place around the country — telling people not to ride transit. Until those are lifted, we’re looking at severe restrictions on cash flow.”
Forsgren said transit agencies typically have enough cash on hand to pay for about three months of operations. MBTA spokesman Joe Pesaturo said the T, which has already rolled back some service, “has available resources to maintain service levels and, over the coming days and weeks, we will be presenting further details of revenue impacts and mitigation measures.”
Massachusetts Transportation Secretary Stephanie Pollack on Monday said the state’s highway department would be able to absorb losses in toll revenue that could be as high as $38 million if car traffic volume remains low through June. But the T did not answer repeated questions about how long it could afford to keep operating without a cash infusion.
On Monday, T officials hinted that the vote for the new $200 million initiative may prove useful with cash flow so low.
“I think this is a very important, proactive approach to gain flexibility to cope with what are challenging times,” Transportation Department board member Betsy Taylor said on Monday. And Pesaturo, the T spokesman, said the vote “gave the MBTA additional financial tools to ensure that short term decreases in revenues don’t undermine the MBTA’s ability to fulfill its responsibilities.”
Greater relief will likely come from Congress. After days of deliberations, negotiators said early Wednesday they had reached a deal on a huge relief bill that, in addition to aid for businesses, expanded unemployment benefits, and checks for most Americans, would also include billions of dollars for transit agencies.
“I’m very relieved that congressional leaders heard us, and took that warning seriously and took decisive action,” said Beth Osborne, director of the national group Transportation for America, which had pushed for transit funding. “We couldn’t wait. It needed to be handled right now.”
However, she said, more funding may be needed if the pandemic stretches for months on end.
The virus may have other long-term ramifications for transit. The T, for example, receives a significant amount of its funding from the state sales tax, and its budget for the next fiscal year is predicated on collections that now seem optimistic in light of the coronavirus shutdown, and will likely need to be revisited.
“To state the obvious, the direction that we’re going to be taking with respect to the [upcoming budget] is not clear at this point,” Joseph Aiello, chairman of the T’s board of directors, said Monday.
And S&P’s Forsgren wondered whether transit systems may lose some riders even once the pandemic is over. Some may be out of work, some may be wary to go out in public, and some may transition to working from home more often after being forced to try it out during the crisis, he said.