T board leader: Pump brakes on spending

Prior to the approval of the MBTA’S $2.55 billion fiscal 2023 budget on Thursday, Advisory Board Chair Brian Kane urged the Board of Directors to “pump the brakes” on the T’s spending growth, citing a ballooning annual budget gap that could reach $340 million by fiscal 2026.

“We have some concerns about the rate of spending growth,” Kane said. “I know the T needs to grow. The T needs to invest, especially in safety, and we’re not saying not to do that. But it is, I think, incumbent upon us to urge you to just be aware that there is very quick growth in spending here.”

Kane said that while the Advisory Board applauds the T’s capital and infrastructure spending over the past seven years, which has been largely supported by state and federal funding, he said there is concern around the operating side of the budget.

Operating expenses are growing by 5.3%, growth that is unsustainable because revenues on that side of the budget are not keeping pace, Kane said.

Complicating matters is the fact that the T’s operating budget is largely tied to fare revenue, which has become an increasing problem since ridership declined during the pandemic.

MBTA Chief Financial Officer Mary Ann O’hara said ridership, and its related fare revenue, accounts for 21% of the budget’s operating revenue.

The T is projecting a ridership scenario where fare revenue is $39.5 million on average monthly, which would be 68% of pre-pandemic levels when average monthly fare revenue was $60 million, O’hara said.

She said this would result in $474 million in fare revenue for fiscal 2023, but the T is also planning for two other ridership scenarios, which would result in an additional $98 million in revenue or a $127 million reduction for the upcoming fiscal year.

Kane said even with the T’s best ridership scenario, there are significant budget deficits predicted for fiscal 2024, at $236 million when one-time federal relief funds are set to expire; fiscal 2025; and fiscal 2026, when the gap could reach $340 million.

Kane said the T’s budget model sets up a structural imbalance. If ridership does not return to pre-pandemic levels, the financial strain could result in service cuts over the next decade, he said.

“The reality is that the T has not had a balanced budget since at least 2001 without resorting to what one former board chair referred to as financial engineering,” he said. “The model is predicated on high ridership and especially high fare-paying riders to pay for over-flat subsidies.”

O’hara said the $288 million budget gap for fiscal 2023 was balanced through a one-time federal relief revenue of $32 million and by drawing $316 million from the T’s deficiency fund.

The T also benefited from $60 million in state assis

tance, which will be used for capital investments.