The MBTA is in a financial crunch. The recently convened MBTA Fiscal and Management Control Board painted a “bleak picture” of the MBTA and its finances in September: it has a projected deficit of $242 million deficit in fiscal 2017. Costs of the Green Line Extension have ballooned by an extra billion dollars, seemingly without explanation.
In an effort to get the agency back on track, no option is off the table. Governor Baker has already proposed privatizing lesser-used bus routes, an unpopular move among the labor leaders (despite claims that no union jobs would be lost). It was proposed to increase parking costs at MBTA parking lots in order to close the operating budget deficit. And yesterday, the MBTA Fiscal and Management Control Board floated the idea of raising fares as a solution to this crisis.
It is true, these solutions may help to close the operating budget deficit – assuming ridership is maintained at current levels. But with raising fares comes another problem: it decreases ridership because some may not be able to afford the cost of a ticket or monthly pass. In other cases where commuters drive to an MBTA lot, it may raise the cost of commuting to be equal to commuting by car, especially as gas prices hit record lows.
However, the proposal to raise fares is unsaleable and should not be considered as a serious approach to fixing the T. A recent Boston Globe article cited the cost of subsidizing the various modes of transit:
|Mode||Taxpayer Subsidy per Ride|
|Light Rail (Green Line)||$1.39|
A few things stick out when looking at this table. First, The Ride seems to have a huge subsidy. But this is warranted given the nature of The Ride – it is paratransit service provides door-to door, shared-ride transportation to eligible people who cannot use fixed-route transit (bus, subway, trolley) all or some of the time because of a physical, cognitive or mental disability (according to the MBTA). It is bound to be more expensive.
The table below looks at the total cost of each ride by adding the fare the MBTA charges for someone with a CharlieCard to the reported subsidy:
|Mode||Fare per Ride||Taxpayer Subsidy per Ride||Total Cost per Ride||Percent Paid by Rider|
|Light Rail (Green Line)||$2.10||$1.39||$3.49||60.2%|
The data show that subway riders pay for the greatest percent of their ride, meaning the fare is the closest to the actual cost per ride. The commuter rail has the greatest variability of cost paid for by the rider.
Note that bus riders pay for 36% of their bus ride. This stat has been the basis for further investigation by the Baker administration. The $2.86 subsidy as reported by the Globe is an average, meaning that it is subject to great variability. Outlier routes could pull that number either up or down. The Governor identified several low ridership routes, including night and express routes, that had a net subsidy of $3.51 per ride and cost $8.9 million annually (while they bring in only $1.9 million in revenue annually), according to the T in an article on WBUR.org.
The idea is that these routes, which cost the taxpayers a great amount of money, should be privatized so the private companies pay to operate the routes (assuming the same standard of service) and those subsidies can go toward bridging the T’s operating budget deficit. Governor Baker promises that no union jobs would be lost in this program, since those operators would simply be reassigned to routes warranting greater drivers, dispatchers, etc.
While this sounds like a great idea, it is assuming that the Massachusetts Bay Transportation Authority exists in a vacuum. Yes, it is important to look for ways to make the agency more efficient by reforming it. But reform can only go so far. Transportation advocates tout the phrase “Reform AND revenue,” emphasizing the need for a dual-pronged approach to fixing the T.
But this talk of reform and revenue raises a question: why is the T solely responsible for closing its deficit? The fact is that there are not enough ways for the T to gain revenue without public subsidies. By its very nature it is intended to lose money. This is because it is a public good and ultimately benefits society. (Most) students do not pay to go to school. They attend a public school funded by property taxes because an educated populace is good for society as a whole (indeed, it can be argued that public schools are underfunded as well, but that is a topic worthy of another post and outside the scope of my expertise and research).
The fact of the matter is that the T cannot exist without taxpayer subsidies, and cannot rely on fare increases as a means to fix itself. The MBTA is not alone in this fact. Cars are highly subsidized, too. According to data from the US census, Massachusetts’ drivers only pay for 58.7% of the cost of driving on roads. The other 41.3% comes from – you guessed it – the government.
So, how do these numbers break down?
|Revenue Type||Amount Received by State (Millions)|
|Tolls & User Fees||$467.9|
This means Massachusetts collects $1,506.8 Million from user fees & user taxes. This is a very significant number. But Massachusetts spends a total of 2,564.8 Million on state-local roads. The state has to pony up an additional $1,058 Million to cover the total cost of roads.
In short, drivers only pay for 58.7% of the cost of driving.
Drivers use their cars in lieu of the T because it’s cheap to driver. They drive because it’s sometimes more reliable than the T. They drive because they don’t have access to the T, or because it’s faster than taking three buses.
But in this drivers cause many problems. Not only are they costly to the state to the tune of $1,506.8 Million, but they cause congestion and traffic. They cause pollution through tailpipe emissions.
Using Governor Baker’s logic, the state should raise taxes on drivers to cover the deficit of roads and infrastructure. However, the Governor actively campaigned for a ballot question that reduced the state’s ability to raise the gas tax in order to pay for roads and infrastructure. He has actively opposed raising any new taxes, noting that reform is the answer.
Why then, is it acceptable to raise MBTA fares but unthinkable to raise the gas tax? It seems like a problem of nomenclature. Would it be permissible to raise user fees? If the cost of driving were more accurately reflected in tolls, registration fees, and the cost of gasoline, then driving would be a less economical choice for many people. They might be forced to take the T. With an influx of T riders come higher revenues because there are more people paying fares.
Ultimately, the Governor, the MBTA Fiscal and Management Control Board, and the Commonwealth are interested in finding unique ways for the MBTA to fund itself. The MBTA is impaired from doing this on its own, and government agencies must collaborate to address this problem. The goal of increasing T revenues is achieved by having fewer drivers on the road and more riders on the T. Fares need not be raised.