After the tumultuous winter of 2015 sparked a wave of reforms at the MBTA, the Baker administration gave a directive to the transit agency: no more using money meant for long-term improvements to fund daily operations.
Now faced with a new crisis, the MBTA is looking to do just that.
Watchdog groups say it’s an understandable move for an agency facing an unprecedented crisis that could not have been predicted. With the coronavirus pandemic likely to depress ridership and fare revenue for months, the MBTA is facing a deficit as high as $600 million that has to be filled somehow.
But using money earmarked for improvements, repairs, and expansions could mark an about-face for the MBTA, after a panel appointed by Baker in 2015 recommended a “firewall” between the capital and operating budgets.
“The best laid plans sometimes go awry,” said Joseph Sullivan, the former mayor of Braintree, who served on the panel. “At every turn, organizations are adjusting to the context of what we’re facing. Hopefully those decisions are being made to help us get through this current situation, and once we come through it we can get back to the way we want it to be.”
The MBTA is considering other options to confront the deficit, including widespread service cuts and smaller measures to rein in costs. But its financial forecasts largely rely on tapping the capital budget to address the shortfall.
As a result, it seems the firewall has “been lowered,” said Andrew Bagley, a vice president of the Massachusetts Taxpayers Foundation, a government watchdog group. “It’s becoming a little more porous.”
Massachusetts Transportation Secretary Stephanie Pollack disagrees, arguing the MBTA is only considering the move as a short-term strategy to stave off the COVID-19 crisis “with a goal of getting that money back into the capital budget as soon as possible.”
Officials are committed to “making sure that we don’t go back to the bad old days, where the MBTA cannibalized money that was necessary to invest in the system and its assets in order to run the operating budget,” she said.
The agency is seeking approval for two ways of using its capital budget to ease the operating crunch. First, it would shift as much as $460 million in federal funding over the next three years to certain operating expenses, such as maintenance work.
MBTA officials are also lobbying the Legislature to allow the agency to pay certain employees who work on long-term projects through the capital budget by borrowing money. That would free up another $67 million a year, though the debt and interest would eventually be paid back through the operating budget. This idea, which predates the pandemic, would be in line with general accounting guidelines, Pollack said. But it stands in stark contrast to the administration’s previous push to not borrow money for salaries.
Yet the MBTA and other transit agencies across the country have no good choices, said Ben Fried, a spokesman for the national advocacy group Transit Center.
“It’s the best of the bad options that present themselves,” he said. “This is an extraordinary circumstance and agencies have to break rules that would ordinarily be sacrosanct.”
“Under these conditions, it’s justifiable,” he added.
Fried said the best solution would be a new round of federal transit funding as part of a broader stimulus package, allowing agencies to maintain service and capital plans. House Democrats pushed for that funding this fall, but on-again-off-again negotiations with the White House broke down before the election. It’s unclear how the outcome of the election will affect the debate.
Under Baker, the MBTA has focused on increasing capital spending, mostly to improve aging infrastructure but also to expand the Green Line to Somerville and Medford. It set a record last fiscal year by spending more than $1.6 billion on capital projects.
The agency has not detailed how shifting capital funds to operations will affect specific projects, but officials have acknowledged that some projects will be paused or delayed.
Bagley, at the Taxpayers Foundation, said there may be more trouble on the horizon. The agency could face a steep decline in capital funding in the latter half of the decade, making it harder to finance major projects, such as making the system more resilient to climate change, he said.
But the MBTA should still be able to spend more than $9 billion on capital work between now and 2025, even if it shifts some money to operations, officials say. That’s why some advocates who have opposed this approach during past budget crunches are more forgiving now.
“We are OK with it — I wouldn’t say happy about it — because the T’s capital spending has been as high as it has been the past few years,” said Brian Kane, director of the MBTA Advisory Board, which represents the municipalities that help fund the agency. “The federal funds [diverted to operations] won’t make a huge difference in the overall total.”