MBTA rescinds 9% raises for top earners

Boost for nonunion staff drew widespread criticism

After a public rebuke from the Patrick administration, MBTA General Manager Daniel A. Grabauskas agreed yesterday to rescind a 9 percent pay raise for executive employees that had been criticized as excessive for an agency struggling to pay its bills.

Grabauskas granted the raise, which took effect last week, to 273 employees not covered by the MBTA's union contracts, saying it matched an increase recently won by unions that had gone without one for three years.

But he backed down yesterday after state Secretary of Transportation Bernard Cohen, who is also chairman of the MBTA board, sent him a letter urging him to rescind the raises for the most highly paid employees. Grabauskas issued a statement saying he would halt the payments in the next paycheck, while, at Cohen's suggestion, reinstating a 3 percent increase for the 87 nonunion employees making less than $70,000 a year.

Grabauskas, who makes $255,000, also said he would decline a $10,000 cost-of-living increase due under his contract this year. The MBTA's general counsel, William Mitchell, who makes $157,000, is also declining a cost-of-living raise of about $6,000, according to the T.

Grabauskas and Cohen declined interview requests through their spokesmen.

Grabauskas, as general manager, has the authority to unilaterally set pay for executive employees, but his latest decision had left some riders angry.

The Massachusetts Bay Transportation Authority carries an $8.2 billion debt load and is struggling to keep a balanced budget. Earlier this month, Grabauskas warned of a substantial fare increase on subways, buses, and trains in 2010 unless he receives help with the debt from the Legislature.

Grabauskas said last week that the raises were only fair, given a recent arbitration decision that gave the T's largest union a 9 percent increase: 3 percent for each of the two years it was without a contract and an additional 3 percent for the current year. He has said that not all of the nonunion employees are highly paid managers, but are instead administrative assistants and budget analysts.

But Cohen's proposal to give the lower-paid employees a 3 percent raise addressed that concern. In his letter to Grabauskas yesterday, Cohen said it was important to "leave no stone unturned in restoring financial health to all transportation agencies." An e-mail from Cohen's spokesman added that "other MBTA Board members have been made aware of and support this request."

"While recognizing these employees' important contributions to the success of the T's daily operations and the fact that they have received no salary adjustments for three years, the current serious financial challenges facing the MBTA require the board to pursue every avenue to find cost savings," Cohen wrote.

Grabauskas is one of the most visible Republicans left in state government, running a widely used system that has recently been beset by controversy, including a fatal Green Line crash, a skirmish with hackers, and the prospect of fare increases. His contract runs through May 2010, making it both financially and politically difficult for the Democratic administration to buy him out if the governor decides he wants a new leader.

Last week, at an MBTA board meeting, board member Janice Loux said she had "lost all confidence in our general manager" and criticized how he handled questions about the agency's automated fare collection system.

"I think the administration is trying to create friction," said Senator Steven A. Baddour, a Methuen Democrat who chairs the Transportation Committee and is a strong Grabauskas ally. "The reason they don't fire him is they can't find anybody better."

Rescinding the raises does not solve the MBTA's larger budget problems. The T still has to pay cost of living increases for 96 percent of its employees, or about 6,000 people, who belong to unions. That is expected to cost some $150 million over the next two years, according to earlier estimates.

Last month, an arbitrator settled a contract between the MBTA and the Boston Carmen's Union, Local 589, the largest of the T's unions. The pact, which generally establishes precedent for smaller bargaining units, gave workers a 3 percent increase for each of the first three years of the contract, which covers four years, beginning in 2006. The fourth year, they will get a 4 percent increase. Grabauskas has not said how he will pay for it, but has acknowledged it will be a challenge, given the need to borrow money and tap reserves to patch a $75 million deficit in this year's budget.

The MBTA also realized some smaller long-term savings from the arbitrator's ruling. Active workers now have to pay higher deductibles when visiting doctors, and retirees have to pay a portion of their health insurance costs for the first time ever. Grabauskas said in his statement last night that those reductions in benefits will be applied to executive employees, even though they will no longer get the raises granted to union employees.

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