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MBTA is overstating budget problems ahead of service cuts, report says

Its financial situation may be good enough to avert major cutbacks, independent panel found

The MBTA has proposed eliminating weekend commuter rail service, among other things.
The MBTA has proposed eliminating weekend commuter rail service, among other things.Erin Clark / Globe Staff

The Massachusetts Bay Transportation Authority is overstating its coronavirus budget problems and may not have to impose major reductions in service planned for next spring and summer, an independent transit panel reported.

The MBTA Advisory Board, which represents the cities and towns served by the T, said Thursday that there was “no budgetary justification” for a host of proposed changes that would reduce bus and train service across the system, including eliminating weekend commuter rail and ferry trips.

Transportation officials say the reductions would help offset a yawning gap in the coming fiscal year that could reach $600 million or more, largely caused by a plunge in fare collections during the pandemic.

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The advisory board, however, suggested the MBTA hold off on making such severe changes, arguing it’s not in as dire a financial predicament as officials have suggested.

“We evaluated everything they’ve put out there. We’ve tested their assumptions,” said Brian Kane, the advisory board’s director. “Our board came to the conclusion that it’s not as dramatic or draconian as they think it is.”

Under state law, the advisory board reviews the T’s budget and major changes in fares and service levels. It does not have final say. Instead, the MBTA’s Fiscal and Management Control Board, which directly oversees the transit authority, is scheduled to vote on the service changes later in December.

The cuts would reduce the MBTA’s costs by about $128 million next year, although the actual savings would be about $100 million because the T would also lose out on fare revenue on the eliminated services; most of the deficit would be filled by other financial maneuvers and cutbacks.

Yet the advisory board argued the overall budget gap may be at least $120 million smaller than the T has forecast.

First, if coronavirus vaccines are widely distributed and riders return to work, fare revenue could rebound much more dramatically than the T’s projection that ridership would reach just 55 percent of pre-pandemic rates by June 2022.

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A more optimistic scenario could also mean transit service is being reduced next spring and summer just as the pandemic is coming to an end. Kane said the MBTA could hold off until later in 2021 before making cuts, to see how the public health situation evolves and riders respond.

And even without a quick rebound in ridership, the end of the pandemic could free the MBTA from spending so much on COVID-related cleaning and equipment, the report said.

But perhaps most crucially, the MBTA may be leaving money on the table. Its own budget documents say that if its conservative estimates come true, it would end the 2022 fiscal year with up to $73 million in cash on hand — money that could be used to keep much of the service operating, the report stressed.

“The advisory board queries using service cuts to generate a major surplus,” its report reads. “[At] the very least the service cuts package should be reduced by the surplus amount.”

MBTA spokesman Joe Pesaturo said the additional money is a “contingency fund” that could be used to “prevent further service cuts in the instance that cost-saving measures are not fully realized.”

The MBTA has not budgeted for a contingency fund in past years, but Pesaturo said the pandemic is different because of the lack of “certainty around operating costs, ridership, and revenue.”

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The advisory board did not outright oppose all service cuts, noting that it may make sense to adjust frequencies slightly downward or consolidate nearby bus routes, given the sharp drop-off in transit ridership, which is still about 75 percent below pre-pandemic levels. But eliminating certain services, like weekend commuter rail and the ferry, are steps too far, Kane said.

That has been a common complaint of MBTA riders who have called into more than 10 virtual public meetings on the cuts over the past month. At a Wednesday night meeting, several suggested the MBTA could lower ferry or weekend commuter levels, but not eliminate the services.

“I figured that could be a happy medium,” said Rachael Hitt, a hospital worker, commenting on weekend trains. “It’s still a reduction, but we front-line workers can still get to work.”

MBTA general manager Steve Poftak said the feedback is “helping inform priorities for maintaining essential service and restoring service in the future.”

The report came on the same day the MassINC Polling Group released a statewide survey that found nearly two-thirds of respondents opposed the service cuts, and about the same rate supported the Legislature providing more money to the T. Most strongly opposed were the weekend commuter rail cuts.

The MBTA has referred to the cuts as a “last resort.” But state officials have sometimes acted otherwise, regularly suggesting that low ridership — not money — is driving the decisions.

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The T has previously said that it would likely move forward with many of the cuts, even if it had state or federal funding to avert them. On Thursday, it said that even if the advisory board is correct and the budget gap is much smaller than projected, the report still forecasts “a significant deficit that underscores the need to realign service with low ridership.”