Some questions and answers on fare hikes, long road to addressing MBTA's financial challenges
Soon, perhaps this week, a detailed debate over an MBTA fare hike will begin in earnest, following a prelude that has seemed as long and painful as the reconstruction of Kenmore Station.
The overarching question for the commuting public will be a simple one: Does the MBTA need the money?
The answer will depend largely on how people define "need."
The most urgent needs could be relatively small, assuming the Legislature chips in $160 million (a still questionable assumption, but we'll get to that below). The problem starts getting much worse 13 months from now, when the T's interest payments balloon.
The push and pull over how high to raise fares will depend a lot on estimates and other types of educated guesses about a moving target.
"Any number is a projection," said Ferdinand Alvaro Jr., a member of the Massachusetts Bay Transportation Authority's board and chairman of its finance committee.
This could prove the toughest part of the debate. We're two weeks from the beginning of the T's next budget year and the key numbers remain elusive. In the meantime, the MBTA's board says it wants to accelerate the public hearing process required to raise fares and cut service.
"It's been mum's the word," said Lizzi Weyant, staff attorney for the Massachusetts Public Interest Research Group, or MassPIRG. "If you're going to say things are going to happen on a faster timeline, you need to give people information."
Some of the challenges with predicting the T's needs are beyond the agency's control - swings in the larger economy will affect how much the agency collects in fare revenues and how much it pays in fuel costs.
But politics play a large part. The state Legislature has been meeting behind closed doors on the budget, making everyone else sweat it out about how much help transit commuters will get from the state.
And Secretary of Transportation James A. Aloisi Jr., though largely dependent on the Legislature, has left several specific questions about the MBTA's needs unanswered since announcing a fare hike earlier this month.
Eventually everyone will have to show their cards. Aloisi has promised that the T will spell out a menu of potential service cuts and fare hikes of 15 percent to 20 percent within the next week.
Here's a primer that is, as noted, subject to change:
Q. Does the T need more money this year?
A. Yes. The T's deficit, beginning July 1, is officially projected at $160 million. Officials say that number may be going up, but have not changed the official estimate.
Paul Regan, executive director of the MBTA Advisory Board, said the most significant factor in enlarging the budget deficit will be an expected decrease in the number of passengers who take the T as a result of the recession. And it could take a few months to get a better estimate of the impact.
Q. Will the Legislature rescue the T?
A. Both the House and the Senate have left enough money in their respective budgets to give the T about $160 million, but they are still negotiating those always pesky details. Whether the T gets the full amount will depend on how many strings are attached to an overall pot of money set aside for transportation.
Aloisi has said he is operating under the assumption that the T will get the full amount, but he is hamstrung by the Legislature's habit of stretching things out until the very end.
Q. If the T gets the money, does it still need more cash this year?
A. That case has not yet been made specifically. Aloisi and the MBTA's general manager, Daniel A. Grabauskas, both say this year's deficit is growing, but have not given an exact amount.
But even if the budget is officially balanced, the T has had problems in recent years keeping it that way. The agency has been forced to refinance its debt and deplete its reserves just to stay afloat, and the margin for unexpected adjustments has dwindled.
Q. So what happens in 13 months?
A. The T's interest annual payments, the agency's biggest financial problem, get much worse. One preliminary MBTA estimate has the deficit shooting up an additional $75 million to $235 million in July 2010, and an added $17 million the following year to $252 million.
Q. If the bigger hit comes next year, why are they raising fares this year?
A. Aloisi, Grabauskas, and others are talking about a two- to three-year fix. The sooner they begin collecting more money, they say, the smaller the increase will need to be.
"They're going to have to get a fare increase. The question is when does it take effect and how large is it," said Andy Bagley, research director for the Massachusetts Taxpayers Foundation.
A. That's another open question. Aloisi has said he will rely on public input to decide the level of service cuts, and could eliminate them altogether if riders say they would rather trade them off for a bigger fare hike. The T Riders Union has been especially worried that cutting some costly bus routes could have a devastating effect on people who lack alternatives.
Q. So do all the expert-types believe fare hikes, however painful, will work?
A. Far from it. Weyant, of MassPIRG, points out that fare hikes almost always result in fewer riders, which can diminish the impact. That's one reason she and other transit advocates are pushing the T and the state transportation department to get all the information out to the public soon, so the details can be debated.
Q. So if this is a two- to three-year fix, what happens after that?
A. You really don't want to know. Annual interest payments on the T's $8 billion debt-payment plan take another huge leap in July 2012, going from $464.4 million to $517.9 million. To put this in perspective, interest payments in the budget year that ends later this month were a mere $367.8 million. And you can see how well that's going.
