An Open Letter to the Governor’s Transportation Task Force
An Open Letter to the Governor’s Transportation Task Force:
As members of former commissions, we wish you much success as you embark on the important assignment of figuring out how to adequately finance the state’s transportation system. With respect to MBTA, this will be the fifth major commission analyzing its operations since 2007, and while each commission had a slightly different charge and scope, common themes have emerged that you need not revisit. To jumpstart your work, we have summarized past findings so you can bring a focused and forward-looking approach to your task.
In summary, revenue has been provided and reforms introduced in the past, but neither were sufficient to make a difference. So here we are in 2024 with a public transportation system that is older and still in disrepair, used by fewer commuters and with fare revenue covering a smaller portion of operating costs than ever before. At the same time, climate change poses additional problems and expansion projects undertaken at least in part to mitigate its effects have added to the agency’s financial woes.
To maximize the impact of your work, we urge you to do the following:
- Fix our current assets first.
As the Transportation Finance Commission so aptly stated in 2007:
The Massachusetts transportation system is in deep financial trouble because we have not faced up to the reality of how much it costs to preserve the system. We have frequently chosen to develop new (and often desirable) transportation projects. But these have come at the direct expense of maintaining the system that we have. Further inaction at this juncture will cause the problem to get worse, and the costs to restore the system to a reasonable condition will multiply. The real cost of neglect will be felt in our regional economy and in our way of life.
- Acknowledge that commuting patterns have fundamentally changed and the MBTA must adapt to serve riders’ current and future needs.
The pandemic changed how we work and live, with profound implications for the MBTA. Fewer people are riding the T as they work remotely some or all the time. Others now drive for the relative convenience and reliability it provides, creating more congestion and causing parking and fare revenues to decline. Gas tax revenues will continue to decrease over time as electric vehicles become more popular and emissions standards more stringent, and sales tax may plateau as people spend more on services than goods. The Commission on the Future of Transportation predicted a diffusion in ridership due to wider use of technology. Review their findings as a sound starting point for your work.
- Climate change and the state’s ambitious carbon-neutrality goals make infrastructure resiliency and attracting more riders to public transportation imperative.
Having a good faith estimate of the aggregate cost of making the state’s transportation infrastructure resilient and a plan for completing this work must be part of any transportation financing plan. Any expansion must consider the impacts of climate change and the need for resiliency when making a modal or locational determination of where to site new assets.
- Overhauling the agency’s cost structure to maximize available resources.
While part of the Task Force’s charge is to identify new sources of revenue in a shifting landscape, so too should be finding ways to better deploy existing revenues. The Fiscal and Management Control Board made great progress in maximizing non-fare revenues while reducing operational costs, however, far more work needs to be done.
Start by repealing the anti-privatization statute known as the Pacheco Law. A Pioneer Institute report found that it cost the MBTA more than $450 million between 1997 and 2015. During the FMCB’s three-year exemption from the law, privatization of the “Money Room” reduced costs by 70 percent, reduced time-to-deposit by 80 percent and enabled the MBTA to accurately track cash. Privatizing warehousing and logistics saved 40 percent, nearly doubled inventory accuracy from 50 percent to nearly 90 percent, and facilitated 99.8 percent of deliveries inside 10 hours from 82. The exemption enabled management to renegotiate its contract with the MBTA’s largest union, saving $220 million. Given the sizable savings and operational improvement demonstrated, permanently exempting the MBTA from this costly statute must be one of your recommendations.
- Address the MBTA pension, which is spiraling toward bankruptcy.
At the end of 2022, the MBTA Retirement Fund was about 51 percent funded, down from 94 percent in 2006. Much of the problem stems from a system in which employees can retire earlier than their state counterparts and receive richer pensions. For example, a 60-year-old state employee earning $80,000 annually who retires after 25 years receives an annual pension of around $30,000. At the MBTA, that same person’s pension benefit is nearly $50,000 annually. Unlike state employees, T employees also collect Social Security benefits and they, as well as the MBTA as their employer, pay into that system.
The current system is overly generous and unsustainable. As of Dec. 31, 2022, 5,555 active employees paid into the fund, but 6,783 retirees collected from it. Further changes must be made to the age at which one can retire. Those hired before December 2012 can retire with a full pension after 23 years of service, regardless of age. Those hired after December 2012 can retire with a full pension at age 55 after 25 years. New hires should not be allowed to retire at 62 and the double-dipping into the Social Security system must end.
- Create the political will to act on your recommendations.
Previous commissions and task forces have done a lot of great work examining new potential revenue sources as well as meaningful reforms. Much of this work was released with some fanfare, but did not get implemented because of the lack of political will to do so. Part of your work must be to educate the public on the strategic vision and what it will take to realize it. Without public support for your recommendations, this task force could suffer the same fate to the long-term detriment of our transportation system and economic vibrancy. One of the ways to secure public buy-in is to be very transparent about the implications of these recommendations for taxpayers, commuters and transit riders. Another strategy to ensure that this time will be different is to provide greater accountability for sizable investments by requiring public reporting of progress, performance and outcomes at regular intervals.
While these recommendations are not exhaustive, they have eluded us in the past. Enactment of these changes would be a great start.
Eileen McAnneny Co-Chair
Commission on the Future of Transportation (2018)
Charlie Chieppo
Transportation Finance Commission (2000)
