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MBTA projects big gap in new budget, bigger holes in years to come

An inbound train at Kenmore Station.Lane Turner/Globe Staff

Next stop: Another budget gap for the MBTA.

The agency’s long-running record of weak finances is set to continue into the fiscal year that begins in July, officials said Friday, as T leaders projected needing at least $182 million to balance its next operating budget.

“We now stare at the fiscal cliff,” Mary Ann O’Hara, the MBTA’s chief financial officer, told a MBTA Board of Directors subcommittee. “Expenses are significantly outpacing revenue growth.”

T leaders identified the projected gap as an immediate problem to solve amid broader discussions of the origins of the agency’s financial predicament, customer dissatisfaction with cost-cutting measures, and growing reliance on state and federal funding by US public transit systems.

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The MBTA has been using federal pandemic relief funds to make up for lost fare revenues from decreased ridership and sluggish sales tax returns — and cover extra costs from expanding T service, satisfying safety demands from federal regulators, and hiring more personnel, O’Hara said. But this year the T will spend the last of the federal money and budget gaps could balloon beyond $600 million by next year and to $859 million in 2028, MBTA figures show.

During her State of the Commonwealth address on Wednesday, Governor Maura Healey said she wants to double state funding for MBTA operations, but didn’t reveal any details. The specifics are expected to be made public next week when Healey files her budget plan, her office said Friday.

The budget projections revealed at Friday’s T subcommittee meeting didn’t take into account any additional state funding called for by Healey.

The T balanced its current $2.7 billion spending plan through June by tapping $261 million from backup funds, according to a presentation at the meeting.

This year, the T plans to use $303 million in remaining backup funds, but it won’t be enough to balance the next budget, O’Hara said. In the fiscal year beginning July 1, the MBTA expects operating expenses to exceed $2.8 billion while revenues top out at just under $2.7 billion, agency figures show

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The MBTA plans to present a more complete budget proposal in March, O’Hara said. Its board of directors must approve its spending plan for the upcoming fiscal year by June 15.

This year’s budget debate also must consider another policy decision facing the MBTA: whether to reduce fares for low-income riders ages 26 to 64.

The T estimates about 60,000 additional riders would become eligible for low-income fares if the program is approved, and the plan is backed by Healey, who signed a budget last year with $5 million to launch the initiative.

The T has proposed a plan to cut ticket prices in half for adults who earn no more than $29,160 annually or up to $60,000 for households of four people.

The T board is expected to vote on the plan on March 28 and public meetings to collect feedback are scheduled to begin at the end of January, according to a presentation to the subcommittee.

If approved, the program would cost $25 million in the fiscal year that begins July 1 and rise up to an estimated $58 million annually by 2028, MBTA figures show.


Laura Crimaldi can be reached at laura.crimaldi@globe.com. Follow her @lauracrimaldi.