PRESS RELEASE

FOR IMMEDIATE RELEASE
May 22, 2008

CONTACT:
Lee Matsueda, 617-442-3343 X 229, lee@ace-ej.org
Eric Bourassa, 617-747-4314 eric@masspirg.org

BOSTON—While public transportation use has surged since the beginning of the year, largely due to rising gas prices, transit advocates worry that budget deficits at the Massachusetts Bay Transportation Authority will force higher fares or diminished service which will negate these positive trends.

Growing debt costs and higher energy bills have created a $74 million deficit in the MBTA’s upcoming fiscal year budget, which begins on July 1st.

“This budget gap makes it clear how shaky the T’s finances are,” said MASSPIRG Advocate Eric Bourassa. “And the bad options available to close it—fare increase, service reductions, or more borrowing—will ultimately have a negative impact on ridership.”

In February the T predicted that the authority’s FY 09 expenses would be $1,510,020,976. But it will generate only $1,435,706,228 in revenues, creating a $74 million gap. T revenue primarily comes from fares, advertising, and an assessment on the cities and towns that receive MBTA service, and 20% of the state’s sales tax. Unfortunately, the state sales tax has not grown according to projections when it was dedicated as T revenue in 2000, resulting in $200 million less than was expected.

To bridge the $74 million gap the T has:

Saved $11.6 million from a debt swap, in which the T was able to refinance fixed interest on a portion of debt.

Freed up $28.4 million is cash on bonds coming due by issuing $29.7 million in debt that was used to pay for debt due on March 1.

Saved $15 million by refinancing the Capital Program and other principal debt due in 2009.

Depleted the deficiency fund by taking out the remaining $15 million, as well as removed $4.3 million from the agency’s capital maintenance fund.

For advocacy groups that want the T to offer reliable service, remain affordable, and grow ridership, these moves are troubling.

“All this tells me we’re headed for service cuts or a fare increase,” said Lee Matsueda of the T Riders’ Union, which advocates for improved T service. “This is bad timing. More riders are using public transit because of the economy and the cost of gas. But with no money left in the MBTA’s rainy day fund and a $8 billion crippling debt load, it’s inevitable.”

Bourassa with MASSPIRG agrees and says the T’s ability to free up cash by issuing debt to pay off debt is like “using a credit card for your monthly mortgage payment.”

For T riders already recovering from the 2007 fare increase, further hikes or service cuts are daunting.

“I can’t afford another fare increase. Not now, not next year, not for the service we get today,” said T rider and Dorchester resident Michelle McGruder. “The poor and those who need public transit the most are taking the biggest hit. I mean the student pass jumped from $13 to $20 in the last fare increase, and as a parent I can’t afford any more.”

MASSPIRG and T Riders Union have been advocating that the legislature and Governor Patrick address MBTA debt, which at $8 billion with interest is the largest of any transit authority in the country. Last year the bi-partisan Transportation Finance Commission recommended that the state assume approximately $1.8 billion in MBTA debt that was the result of Central Artery/Tunnel transit commitments, so the authority can fully fund its state of good repair program.

A handful of legislators on Beacon Hill have worked to move forward legislation that would relieve the T of a portion of the agency’s debt.

"This just highlights the need for the state to take action to reduce the T's debt," said Somerville Representative Carl Sciortino. "The T is a vital part of the Massachusetts economy, and it is our responsibility to ensure that it regains stable financial ground."