With a huge budget deficit looming next summer, the Massachusetts Bay Transportation Authority said Monday it will not rule out service cuts, fare hikes, or layoffs as it scrambles to save or raise $400 million over the next two years.
Transit officials said they are not projecting riders to return at pre-pandemic levels before the summer of 2022, resulting in a budget gap for the fiscal year that starts next July that could range from $308 million to more than $575 million, depending on ridership.
In the short term, the T has been able to use federal funding to paper over fiscal issues, which are afflicting transit agencies across the country. But the agency will need to take even more significant actions to ward off the deficit the following year.
“We are looking for ways to capture savings and increase ... revenues,” general manager Steve Poftak said before a meeting of the T’s governing board Monday. “I think, at this point, everything is on the table. ... We are mindful of the riders of the MBTA and we want to continue to provide them service, but I think this is the beginning of a conversation, and I think it’s premature to take anything off the table.”
The T’s annual operating budget tops $2.3 billion, but fare revenue has collapsed amid the pandemic. Ridership is hovering around 20 percent compared to pre-virus levels on most subway lines. It’s much lower on commuter rail, though closer to 40 percent on buses.
Poftak said the MBTA will consider the operating budgets for this year and next as one big budget and stockpile any savings in either year to address the upcoming deficit. The agency hopes to find $400 million in that period, which he described as a “responsible” goal, though he acknowledged the gap could grow even higher.
The T has already identified two major sources that could help meet about 70 percent of the goal.
One is to borrow money to pay salaries of workers who work on long-term capital projects. The change that would require the approval of the state Legislature, but both the House and Senate have indicated support. That money eventually would have to be paid back, but could help save $120 million in the short term.
Another plan is to tap federal funds that are usually dedicated to those capital projects but are allowed to be put toward maintenance work in the T’s operating budget. While that would eat away at a funding source for long-term MBTA improvements, it would help recover about $160 million for next year.
Brian Kane, director of the MBTA Advisory Board, an agency watchdog that represents MBTA municipalities, said his organization has previously opposed shifting that federal funding into operations. But the MBTA can probably afford to divert the money as a short-term fix to the budget issues, Kane said, because it has increased its capital spending so much in recent years, topping $1.5 billion last year.
The MBTA still needs to find another $120 million. And while some officials and advocates remain hopeful the federal government will send another aid package to public transit systems, Poftak said he will challenge every MBTA department to drum up ideas to reduce costs or increase revenue.
One option could be service cuts; in a presentation to the governing board Monday, MBTA officials said they will lay out “service planning” options in the coming months that could reduce service.
Some MBTA services where ridership has been slowest to return have more riders who can easily work from home, such as the commuter rail; those trends will “inform the service planning process we plan to have this fall.” While the MBTA has a contract with a private company to operate the commuter rail, it can pay less if Keolis Commuter Services runs less service, Poftak said.
Officials also stressed that the budget is a work in progress that will require tweaks depending on how circumstances and ridership evolve.
The T’s oversight board has previously said it would not raise fares again until summer 2022, but that could be reversed with a vote. But fare hikes could also further hurt ridership that is already low.
And given the economic crisis, the MBTA is also facing pressure in the other direction: Advocates want officials to deliver on a long-debated concept of offering discounted fares for low-income riders.
“Despite the shortfalls faced by the T, moving forward with a low-income fare is necessary to support essential workers and environmental justice communities,” Collique Williams, an organizer with the group Community Labor United, told the T’s board, calling on the federal or state government to cover the T’s deficit instead of riders.