T warns of fare hike if agency is not rescued

Says state should step in, help patch rising deficits

MBTA riders face a substantial fare increase - perhaps as soon as 2010 - unless the Legislature steps in to help the debt-ridden transit system, the agency's chief said yesterday.

"If you don't want to cut service, it's going to have to be hefty" unless the T finds some new source of money to patch its rising deficits, Daniel A. Grabauskas, general manager of the Massachusetts Bay Transportation Authority, said in a meeting with Globe editors, responding to questions about the possibility of a fare hike.

Grabauskas did not define what "hefty" means, nor did he say that a specific fare hike proposal is on the table. But he pointed out that the agency has raised fares every three years since 2001 and that the last increase - 27 percent - came in January 2007, sending the subway fare to $1.70 for those who pay electronically and $2 for those who buy a single ticket, and bus fares are $1.25 and $1.50. The previous two increases, in 2001 and 2004, were 25 percent each.

Based on that history, and Grabauskas's comments, it appears that 2010 will be the year of reckoning for commuters, including thousands of riders who recently switched to public transit to escape high gas prices. While Grabauskas has repeatedly ruled out a 2009 fare increase, he has been noncommittal about 2010 and never publicly addressed the scope of a possible hike.

"The next fare increase, I don't know what that number would have to be, but it would have to be pretty substantial," Grabauskas said. A 25 percent increase would mean it would cost anywhere from $2.10 to $2.50 to ride the subway and from $1.50 to $1.90 to catch a bus.

Grabauskas spelled out two other alternatives: cuts in service, such as dropping bus routes or running trains less frequently, or state assistance with the agency's $8.2 billion in debt and interest payments.

Help could include the state assuming some of the T's debt or a law guaranteeing the T at least a 3 percent annual increase in its share of the state sales tax. In recent years, sales tax growth has been much slower than analysts projected in 2000, when the sales tax became the T's primary source of funding.

Interest groups that support public transportation have been warning of a fare hike for months, as the T's financial woes have grown due to slow sales tax growth, higher fuel costs, and higher wages.

"The riders can't take another fare increase, especially low-income communities," said Rene Mardones, community organizer for T Riders Union.

Mardones, who works with commuters from Roxbury and Chelsea, said riders have mixed feelings. They believe the T has wasted money through mismanagement, yet they also understand the agency has a financial crisis and needs more help from the state, he said. Mardones said he would like to see more action from Governor Deval Patrick, who opposed the last increase, which coincided with the beginning of his term.

A spokesman declined to respond to questions about possible fare increases yesterday, instead issuing a statement expressing Patrick's commitment "to work together to deliver quality, affordable public transit."

Mardones's group supported a bill that would have required the state to help pay off the T's debt, contending that the transit system was forced to build several projects - including the Silver Line bus - under deals signed to help the Big Dig meet environmental standards. The bill failed in the Legislature this year, but Grabauskas and advocates continue to speak with lawmakers.

The T drained $20 million of its $55 million reserves and went further into debt to plug a $75 million deficit in the annual budget plan that began last month. Grabauskas has yet to detail how he will pay for an extra $150 million in back pay and wage increases won by the unions over the next two years in recent arbitration.

"I don't think the T's problems are a great secret here," said Representative Joseph F. Wagner, a Chicopee Democrat who chairs the House's transportation committee. "It's going to require a lot of things. Fares may be part of a solution to a larger problem or set of problems. There are limits to what you can do with fares."

Wagner did not offer a specific solution from the state, which is also cash-strapped, but said it would involve "tough choices."

In 1999, the Legislature voted to change the way the T is funded, giving the agency one penny of the 5 cent sales tax instead of continuing to cover its deficits at the end of each year. Since then, fare hikes have been more frequent.

Deliberations about the T's financial future come at a time when many of the state's transportation systems are facing similar crises. Last week, legislators agreed to a plan that uses the state's credit to help the Massachusetts Turnpike Authority refinance some complex financial transactions that are putting the agency at risk of having to make a $200 million lump-sum payment to financial giant UBS soon. Yet the Turnpike is also looking at toll increases and may need further state help.

The T's ridership grew by 6.1 percent in the budget year that ended June 30, mirroring a national trend. But the cost of gas to run buses and commuter trains, and electricity to run subways, has gone up faster than the extra fares, Grabauskas said.

Noah Bierman can be reached at nbierman@globe.com.

Clarification: A story on a possible MBTA fare hike on Page One of yesterday's Globe did not fully explain the agency's fare structure. The current subway fare is $2 for riders who use a CharlieTicket and $1.70 for those who pay electronically with a CharlieCard. The current bus fare is $1.50 for riders who use a CharlieTicket or pay cash and $1.25 for those who use the CharlieCard.