MBTA on track to “tax calamity,” says Massachusetts Taxpayers Foundation in new report

As Boston’s gubernatorial and mayor candidates plan for free public transit before the end of the decade, a new report suggests the MBTA could face a “fiscal calamity” in just a few years, requiring 1.25 billion dollars in new annual revenue. just to meet operating and investment needs.

The Massachusetts Taxpayers Foundation released a new report Thursday describing the financial future of the state’s largest transit agency as “unequivocal and disturbing.”

Despite injecting $ 2 billion in federal stimulus funds during the Covid-19 pandemic to offset the drop in ridership, the nonprofit research group said that by spring 2023, the MBTA could consider an operating budget variance of between $ 200 million and $ 400 million. for the next fiscal year.

By fiscal 2025, the gap reaches $ 450 million and by fiscal 2026 it reaches $ 500 million, requiring substantial rate increases or service reductions and layoffs, according to the report. .

The study’s authors described the predicament facing civil servants, including the next governor, as a “Hobbesian choice” between raising incomes or accepting service cuts “that will exacerbate inequalities and derail the economy. economy of Greater Boston “.

The dire predictions for the MBTA’s financial future come just two days after Boston City Councilor Michelle Wu won the preliminary mayoral election. Wu was among the first elected a few years ago to call for making the T free, and that platform has been picked up by Democrats like Ben Downing, who, as a candidate for governor, has promised transportation. in common free by the end. of a first term.

MTF report says for MBTA to properly plan for Beacon Hill, it must decide by spring 2023 whether it will be possible to find an additional $ 500 million per year in the operating budget or to seek alternatives. like rate increases.

The gap on the capital side is even larger, according to the business-backed think tank, with between $ 700 million and $ 800 million per year needed to fund the $ 13 billion in infrastructure repair and maintenance and 7 billions of dollars in climate change investments that will be needed. by 2031.

Part of the problem for MBTA will be the lingering effects of the pandemic long after the virus is under control, MTF said.

Commuter train fares, according to MTF, accounted for $ 239 million or 36% of total MBTA fare revenue in fiscal 2019, but with more people working remotely, the foundation said it these totals were unlikely to fully recover from the pandemic.

Downing presented a plan to pay for its transportation program that would be based on a combination of higher gasoline taxes, congestion pricing, fees on Uber and Lyft journeys, and tax revenue from the “millionaires’ tax. Proposed, which will be on the 2022 ballot.

The Wealth Tax proposes to apply a 4% surtax on all household income over $ 1 million, which proponents say will generate up to $ 2 billion in new annual income that will need to be spent on transport or education. If that passes, the competition for those dollars could be stiff with education advocates also considering investments in K-12 education and debt-free college.

The foundation said that even if Congress adopts a broad package of transport infrastructure, it “will not significantly change” the roughly $ 20 billion gap between the capital available and needed to repair existing infrastructure, reduce greenhouse gas emissions and protect MBTA’s assets against sea level rise and storm surges. .

The transportation bill passed by the US Senate would bring in up to $ 2.5 billion in Massachusetts over five years, according to MTF, but some estimates from the American Public Transit Association suggest that the greater Boston area would not receive that $ 370 million more over five years than it will be under the current authorization bill.

Further funds in the new federal package would be allocated through competitive grants, for which Transport Secretary Jamey Tesler recently said the state would be prepared to compete “aggressively”.

If state policymakers find the new revenue, they still won’t cover expanded service options beyond the extension of the Green Line, South Coast Rail, and Red-Blue Line Connector.

“This report has exposed a harsh reality. Hotfixes and quick fixes cannot save enough time, nor can MBTA fix this problem, ”the authors concluded.

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