The Massachusetts Bay Transportation Authority says it has cut the size of a projected budget gap that had been previously forecasted at $242 million to about a third of that size.
The T says the expected deficit in its operating budget—a figure that refers to the transit agency’s revenue minus its expenses, but excludes $187 million in additional money the legislature would provide as part of the state budget process—will sit at about $80 million during the 2017 fiscal year.
In recent years, the T has balanced budget shortfalls with money sent its way by the legislature. Next year, the $187 million appropriation would essentially create a $107 million surplus at the T, allowing it to put extra money toward repair and maintenance work, MBTA Chief Administrator Brian Shortsleeve told reporters Tuesday.
The excess operating funds would supplement the agency’s capital budget, which covers repair, maintenance, and expansion projects, largely through federal funds and debt. The money will go toward sprucing up the T’s aging signals and better preparing the system for winter weather.
“I would describe this as cutting to invest,’’ Shortsleeve said of the budget. “We’re cutting our operating expenses, we’re running the place more efficiently, with an eye toward freeing up capital to be invested.’’
The agency will submit the $2 billion budget to its governing board Wednesday for preliminary approval. The board is also expected to hear about a five-year capital spending plan Wednesday that Shortsleeve said would include enough funding for so-called state of good repair projects—upwards of $750 million per year—to beat back a $7 billion repair backlog if maintained over a 25-year period.
The T had reported some progress in cutting the size of the deficit late last month, and had spoken publicly about its plan to put leftover money toward repairs and maintenance.
Getting there has not come without controversy, however. The plan Shortsleeve detailed Tuesday relies in part on revenue from a 9.2 percent fare increase that spurred protests before a vote to approve the hike last week.
The T says the $43 million in new revenue raised from the hike will go toward the $100 million in repair funds. But, if you include the legislative funding, the T would still have seen a 2017 surplus that could have funded capital projects even if it did not raise fares, an argument transit advocates made ahead of the vote.
And achieving the proposed budget will require significant work throughout the fiscal year to further cut costs. Shortsleeve said the T would need to reduce wages by about $18 million (largely through implementing a retirement incentive program), cut costs of its paratransit service The Ride by about $10 million (by encouraging some users to move to buses and subways and by partnering with companies like Uber and Lyft to provide the service), and more in order to achieve the proposed budget.
Shortsleeve said the T will also need to work to close the $80 million deficit entirely ahead of the 2018 budget. He said those efforts will include generating new revenue from the system’s parking lots (meaning parking prices may go up in the next year or so, at least in busy lots), and contracting services ranging from money counting to running the Downtown Crossing CharlieCard store to Transit Police dispatch services. Efforts to privatize some services have already been met with union opposition.
The lowered 2017 deficit partially owes to projections for more revenue from advertising, real estate, and the T’s share of the sales tax. Shortsleeve also said efforts to control overtime spending will result in a 23 percent decrease next year, matching reductions that have already been seen in the 2016 calendar year so far compared to the average day in 2015.
The T’s “core operating expenses’’ will still go up in the upcoming fiscal year, but at a lower rate than in previous years of just 1 percent. However, that figure does not include the nearly $50 million cost of transferring employees who had been paid from the T’s capital budget to the operating budget, as required by a 2015 law. Overall, operating expenses will increase by 4 percent compared to the 2016 fiscal year, while revenue will increase by 5 percent.
The agency’s debt service, projected to cost about $458 million next year, will increase by about 3 percent next year.