Charles Chieppo is a research fellow at the Ash Center of the Harvard Kennedy School.E-mail: Charlie_Chieppo@hks.harvard.edu
To close a budget shortfall estimated at $161 million, the Massachusetts Bay Transportation Authority and its riders are being forced to choose between unappealing options: a large fare increase, or a more moderate fare hike coupled with significant service cuts.
The Boston region's MBTA is hardly the only transit agency struggling to make ends meet. In an age of scarce resources, it's time to re-think how we fund mass transit.
Not long ago, local governments could rely on the feds to pick up most of the tab for building new transit capacity. But in a speech in Boston in 2010, Federal Transit Administrator Peter Rogoff asked, "If you can't operate the system you have, why does it make sense for us to partner in your expansion?"
Rogoff's common-sense message was that to deliver environmental and economic benefits, transit lines must attract and retain riders. Boosting ridership, he argued, requires investments in maintenance that yield clean stations and comfortable, reliable service.
Sometimes, Rogoff added, making public transit all it should be will require "the guts to say 'no' when everyone ... wants you to say 'yes.'"
When it comes to the MBTA's fiscal woes, a $161 million operating deficit is just the tip of the iceberg. The authority has $8.6 billion in debt and a maintenance backlog that tops $3 billion. The biggest cause of this mess is the state's inability to say no.
More than two decades ago, Massachusetts officials agreed to build 14 new transit projects as mitigation for the added air pollution from additional traffic that would be facilitated by Boston's now-legendary "Big Dig," even though it was unclear whether the new roadways would result in any adverse environmental impact. (It can be argued that there is now less pollution thanks to improved traffic flow.)
As a result of the expansion effort, greater Boston, one of the nation's slowest-growing metropolitan areas, has for the last quarter-century had its fastest-growing transit system—with no way to pay for any of it. Nearly half the MBTA's debt can be traced to the cost of building, operating and maintaining the new projects. And after years of refinancing, the bill is coming due. Annual debt service payments that were $342 million in 2009 will spike to $525 million by 2014.
There are lessons to be learned from Massachusetts' transit-funding debacle. First, cost estimates should be based on projects' lifecycle expenses, not just on what they cost to build. A significant portion of the cost associated with the Big Dig expansions has gone toward operating and maintaining new assets such as commuter rail lines.
Second, we should only go forward with projects we can afford. Utah prohibits funding new projects until sufficient money has been appropriated to maintain existing assets. In California, the Government Performance and Accountability Act, which supporters are attempting to get onto the state's ballot this November, would require that funding sources be identified prior to the enactment of any new program valued at $25 million or more.
Not even the best transit projects pay for themselves, and we need a way to fund those that deliver economic and environmental benefits. That means treating transportation as a single network rather than considering highways, transit and other modes in isolation.
A few examples of such funding approaches are already in place. A penny of the 18.4-cents-per-gallon federal gas tax goes to fund mass transit. In New York City, toll revenue generated by the Robert F. Kennedy Bridge (formerly and still colloquially known as the Triborough Bridge) helps fund the city's transit system.
The Massachusetts Bay Transportation Authority is the poster child for the need to take a new approach to mass-transit funding. The cornerstones of that approach should be thinking outside the box when it comes to revenue sources, basing funding decisions on lifecycle costs and, when necessary, having the guts to say no.