How we can cut transit costs
T HAS BEEN one year since the Massachusetts Transportation Finance Commission released its findings declaring that over the next 20 years the Commonwealth needs an additional $15 billion to $19 billion just to maintain its existing surface transportation system. This staggering number was widely accepted as a conservative estimate of the amount of additional money needed, which of course means the shortfall is even greater.
The recommendations of the commission showed that the solution will involve cutting costs and increasing revenues. There is no avoiding the fact that eventually we are going to have to pay more to cover the actual costs associated with the state's transportation system. Initially, we will also need revenues to cover deferred maintenance, thereby making up for decades of artificially under-investing in the system. Over the long term, we will need to establish and maintain a system where the cost of service delivery is borne in large part by its users, and not foisted upon future generations as has been done in the past.
Yet, given that we must address the problem by cutting costs and increasing revenues, there is little reason to raise revenues first and ample reason to cut costs first. Let's see what the numbers look like after an aggressive round of costs cutting; then we can advance revenue solutions.
The Transportation Finance Commission provided 22 cost-reduction measures. The state should advance the following five key cost-cutting recommendations: One, eliminate the system of free PPO healthcare for MBTA retirees and move them to a system that utilizes HMOs (continuing, out of fairness, to provide free HMO care for those who have worked for longer than 10 years).
Two, shift 1,000 MassHighway Department employees from the capital budget, where we pay interest on their expense for 20 years, to the annual operating budget where they belong.
Three, eliminate the practice of exclusively using police details to manage traffic on transportation projects and move to a system where police are utilized only when public safety dictates.
Four, recognize the vital services provided by the Regional Transit Authorities and move them to a system of forward funding, thereby eliminating millions of dollars of unnecessary interest payments.
Five, enact tort reform to give transportation agencies the same protections that cover other municipal and state agencies.
These five actions would eliminate more than $2 billion of the estimated $15 billion to $19 billion shortfall. It would also demonstrate a willingness on the part of the administration and the Legislature to tackle the "business as usual" practices that waste precious resources and infuriate the public.
The reforms requiring Legislative approval could be part of the transportation bond bill under consideration. Passage of the transportation bond bill is essential to providing the money necessary to maintain the state's road and bridge system over the next few years. It is also appropriate, as the Legislature decides how much money to allocate over the next few years, to enact measures that will save money as well.
It took decades to create the transportation problem and it will take years of effort to correct it. We can't afford another year of talk. Let's start now by enacting these common-sense reforms. The return in dollars and sense will go far to improve the transportation system and earn the public's trust.
Stephen Silveira is a vice president at ML Strategies. He served as chairman of the Transportation Finance Commission.
