Low-income fares on track
The MBTA expects to be able to implement a low-income fare program in 12 months, should the $5 million start-up cost included in the governor’s state budget proposal make it through the legislative process.
Roughly 60,000 additional riders between the ages of 26-64, with incomes at or below 200% of the federal poverty level, are expected to become eligible for half-price fares through this program, according to a presentation shared at
Thursday’s Board of Directors meeting.
“The implementation of a low-income fare program is a significant and complex project with a lot of different moving pieces,” said Steven Povich, MBTA director of fare policy and analytics.
Healey, when presenting her state budget earlier this month, characterized means-tested fares as an equity initiative, saying the $5 million investment would provide startup costs to implement such a program.
Those funds would go toward building an online application, hiring additional staff, conducting the standard fare change process with MBTA board approval, and developing a new reduced fare group in the fare collection system, Povich said.
“After the implementation year, we would expect to have a number of additional costs,” Povich said. “The first major cost would be that of fare revenue loss. If we start charging half fares for thousands of riders who are eligible, the cost comes in the form of lower fare revenue.”
The MBTA estimates an $11-$13 million fare revenue loss in the first year, a number that will steadily increase each year. All eligible riders are expected to enroll by year five, when the agency anticipates annual fare revenue loss will settle at $30-$35 million.
Povich said the program, when factoring in that revenue gap, will cost the T $5 million to launch, between $28-$31 million in the first year, and up to $59 million annually after full enrollment is reached.
“It’s important to note that a program like this, we would expect to induce some incremental demand,” he said. “When you make things cheaper, more people ride which is a great value of the program.”