Debt From Big Dig Hampers Mass. Transportation

http://www.wbur.org/2012/04/08/debt-big-dig

BOSTON — For nearly a decade, traffic has been zipping through Boston’s Big Dig tunnels, the nation’s costliest highway project that has also left a gaping financial hole in the state’s transportation budget that isn’t likely to be filled anytime soon.

“Big Dig debt” has lately become one of the most frequently used – if not fully understood – terms in Massachusetts government. It was at the forefront of a tumultuous public debate over the MBTA’s finances that ultimately produced an average 23 percent fare hike and modest service cuts, but no permanent solutions for the chronically underfunded transit system.

Next year, it could spark a debate over whether to raise taxes to fix not only the T but deteriorating roads and bridges across the state.

“The Big Dig debt has never been dealt with, and it’s squeezing our ability to do a bunch of other things that we need to do to sustain the economy and the quality of life here,” Gov. Deval Patrick told a gathering of regional business leaders this past week.

So what, precisely, is the Big Dig debt?

State debt associated with the $15 billion project is spread among a variety of agencies and funded by several revenue sources, making it difficult to pinpoint the state’s exact obligations. The Patrick administration has requested $101.5 million in the next fiscal year to pay debt service on special bonds issued for Central Artery/Tunnel – the official name of the Big Dig – but officials estimate the state’s total annual debt burden related to the project at about $417 million.

Not included in the figure is $1.6 billion in debt issued by the now-defunct Massachusetts Turnpike Authority and covered by turnpike tolls. Also not included is the $1.7 billion in debt that was shifted to the Massachusetts Bay Transportation Authority in 2000 and which became a flashpoint during the recent T fare hike discussions.

Advocates for riders have argued it is unconscionable to ask people who ride buses and trains to help pay for a project that benefits motorists and have demanded that the state assume the T’s portion of the Big Dig debt. But that argument also misses a key point, experts contend.

“It was debt related to transit system improvements that allowed (Massachusetts) to build the Big Dig” said Rafael Mares, staff attorney for the environmental group Conservation Law Foundation.

Before any construction began on the Big Dig, the foundation sued to make sure the project would comply with requirements of the federal Clean Air Act. What resulted was a 1990 “mitigation” agreement that specified an array of public transit improvement projects that had to be undertaken in order for the Big Dig to go forward.

Projects included extensions of several commuter rail lines; construction of new bus terminals; signal improvements; and additional parking at T stations.

A decade later, in an attempt to put the MBTA on more solid fiscal footing and relieve the state of its responsibility to cover the system’s annual deficit, the Legislature adopted a “forward funding” mechanism that dedicated 20 percent of the state’s future sales tax revenues to the T. But it also transferred from the state to the T the burden of repaying the portion of Big Dig debt that was incurred for public transportation projects.

“A lot of people have the misconception that a piece of the tunnel debt was given to the MBTA. That is not true,” said Paul Regan, executive director of the MBTA Advisory Board, which represents the 175 cities and towns within the T’s service area.

Nonetheless, Regan believes it would be appropriate to return the debt to the state.

“These were decisions that were not made by the MBTA. These were decisions that were made in order to get the Big Dig done and in my opinion they are expenses that legitimately belong to the Big Dig and not the MBTA,” he said.

CLF agrees, according to Mares, because relieving the T of the debt would give it more breathing space to operate.

The system’s Big Dig debt service is estimated to cost about $125 million in the next fiscal year, a sizeable chunk of the $159 million operating deficit that the T’s board voted to close last week with the mix of fare hikes, service cuts and one-time revenues.

“Conceptually it’s a fine idea, but it’s a cost shift,” said state Secretary of Transportation Richard Davey of the suggestion to shift the Big Dig debt to the state. “It means you are going to have to find revenue from the state or you’re going to have to cut programs at the state.”

A growing consensus has emerged on Beacon Hill that a permanent and comprehensive solution is needed for the state’s entire transportation network – including the MBTA, smaller transit systems, and highways and bridges – and one that would address overall debt costs that eat up nearly half of every transportation dollar in Massachusetts.

Patrick has called for an “adult” conversation about new revenues – taxes or fees – to fund transportation. He pushed, unsuccessfully, for an increase in the state’s 21-cents-a-gallon gas tax in 2007, but has recently questioned whether the gas tax remains a feasible option, given reduced driving habits and the trend toward more fuel-efficient vehicles.

Whether there’s any appetite for new taxes remains to be seen. Steve Poftak, a transportation analyst at the Boston-based Pioneer Institute, says the cost overruns and massive debt incurred by the Big Dig have left a bad taste in the public’s mind.

“There is a lot of cynicism built up, rightly or wrongly, from the Big Dig,” he said. “People are very skeptical of the state’s ability to do a good job with transportation dollars.”
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