Opinion | Jim Stergios

Shame on the Senate for undoing Pacheco Law exemption

The MBTA has hundreds of thousands of daily riders and 6,000 employees. You would think that the interests of the people consuming 1.3 million daily rides might matter more than those of 6,000 public employees.

Not so in the Massachusetts Senate, which used a voice vote to undo a key element of the 2015 reform package that has allowed the Fiscal and Management Control Board to cut the MBTA’s deficit and improve service. The budget amendment senators adopted would dramatically limit the T’s exemption from a state law that effectively bars privatization.

Competitive contracting is a powerful tool to save money and improve service. Sometimes those goals can be achieved without the exemption from the so-called Pacheco Law. The RIDE, for example, piloted a partnership with ridesharing companies that cut the average cost per trip from $46 to less than $9. High customer satisfaction also resulted in rising demand for the service.


In other instances, the exemption is required.

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In February, a private contractor took over the MBTA’s warehouse operations. As a result, costs will drop 40 percent. The time to deliver parts to T mechanics has fallen from an average of over 68 hours to 10 hours. Shipment accuracy has also improved dramatically.

The T also privatized its cash handling operation, which the state auditor found could not account for $20 million annually. Now money room costs will drop from $11.8 million to $3.6 million. The time from collection to bank deposit has shrunk from 120 hours to 24 hours.

The MBTA next wants to outsource bus maintenance. Two independent assessments have pegged annual savings at 30 to 40 percent. The T has two proposals in hand that would cut maintenance spending per revenue hour and per vehicle mile by more than half. The work will still be performed by union mechanics.

The authority also wants to return the train conductors who are station greeters to their original jobs and, instead, fill the greeter slots with people trained for that purpose. Doing so will reduce the need to hire and train new conductors, improve customer service in stations, and save $6 million annually.


The Senate wants to stop such reforms. One imagines senators were particularly disturbed that competition led to compromise in a new collective bargaining agreement with the MBTA’s largest union. The agreement protected union jobs, but leveraged $25 million in annual savings and allowed for some continued privatizations.

Agreements with the Carmen’s Union usually set the precedent for other T collective bargaining units, but the machinists union, which represents bus maintenance workers, is resisting. They have called senators to their aid, and the Senate has responded with language that would have bogged down even the warehouse and money room privatizations in years of lawsuits.

Reforms have taken a $242 million MBTA deficit down to $40 million this year. A big part of that is savings enabled by the Pacheco Law exemption.

Those savings also allowed the T to invest $100 million in winter resiliency and free up $140 million for capital maintenance. Continued savings and reforms will fully close the deficit and improve system reliability and customer service.

Progress at the MBTA is hard won. Sometimes it takes targeted privatizations; other times, it requires compromise with the unions. Neither is possible without the Pacheco Law exemption. Shame on the Senate for turning its back on the T’s hundreds of thousands of riders.

Jim Stergios is executive director of Pioneer Institute.