MBTA overseers on Monday unanimously approved a $2.35 billion fiscal 2022 budget and took another step toward launching a low-income fare program, tackling a pair of issues that renewed debate about the transit agency’s long-term financial stability.
While the T continues to grapple with deflated but slowly rebounding ridership amid the COVID-19 pandemic, the agency’s board authorized a spending plan that leans heavily on one-time federal stimulus funding to boost spending about 2.6 percent over the current year.
The budget fully funds pre-pandemic levels of service as the agency positions itself to reverse cuts it implemented in January and in March. That effort has been slowed by labor challenges since COVID-era hirings have not kept up with attrition, but trip frequency is set to increase later this month on subway and bus routes.
The spending plan calls for hiring more than 900 additional employees, including 71 positions to operate service on the Green Line Extension into Medford and Somerville that is slated to open by the end of the year, plus 169 safety and maintenance positions that fulfill the suggestions of a December 2019 report.
Ridership — and, as a result, fare revenue — plummeted to a fraction of its past averages early in the pandemic. While MBTA travel has hit COVID-era highs in the past month, it still remains depleted, coming in around 31 percent of pre-pandemic levels on the subway and 50 percent on buses in late May.
Budget-writers balanced the T’s spending plan using more than $500 million of the roughly $1.9 billion in federal aid that has flowed to the agency, the second straight fiscal year that help from Washington kept it in the black. That leaves about $690 million in American Rescue Plan funding to be spent in fiscal year 2023.
As part of its vote Monday, the Fiscal and Management Control Board empowered T staff to continue a pandemic-era budgeting practice of splicing off any monthly surpluses into a separate savings account.
The FMCB, meeting for the penultimate time before it is set to dissolve on June 30, also voted unanimously to push the T closer toward a pilot program offering free or reduced fares to low-income riders.
MBTA staff will be required to draft plans for a low-income fare pilot program that would run in fiscal year 2023, but the final say will rest with whatever entity succeeds the FMCB as the T’s governing body.
A motion approved Monday, crafted by FMCB Chair Joseph Aiello, calls for T officials to work in the coming months on two draft memorandums of understanding for a means-tested pilot. The pilot program would last for nine months and would encompass at least the T’s subway and bus network, plus other modes such as commuter rail if feasible.
The MBTA would need to partner with a regional community-based organization and, if practical, the Executive Office of Health and Human Services to help administer the program and determine which riders are eligible.
Staff will be required to present options in October and a final plan in December including the implementation schedule and cost projections.
“We all understand the nature of the economic recovery really has taken the shape of the so-called K curve, where people of wealth really didn’t suffer as badly as lower-wage workers,” Aiello said while introducing his proposal. “In the recovery, lower-wage workers have continued to lag in their recovery in household income and household wealth. That has exacerbated the income inequality that existed well before COVID-19 came through.”
With a price tag projected to be tens of millions of dollars per year, board members had been hesitant to implement too sweeping or permanent a policy that they will no longer be in a position to oversee once the FMCB’s statutory term expires at the end of the month. Aiello said he believes the proposal adopted Monday maintains momentum toward a pilot program while granting the successor governing body an exit ramp.
MBTA officials have been exploring means-tested fares since at least 2017. The issue has also long been a focus for racial justice and transit advocates who view it as critical to ensuring that the system supports those with limited resources.
Some public officials, particularly Boston Mayor Kim Janey and fellow mayoral candidates, have voiced their support in recent months for making some or all public transit trips free to riders.
Fares traditionally represented about a third of the T’s operating revenue before the COVID-19 pandemic caused ridership to plummet, and agency staff have indicated the costs to offer low-income fares could be high.
If the eligibility for a means-tested fare program was set at 200 percent of the federal poverty level and the T increased bus and rapid transit service to respond to a growth in demand, the effort could cost $29 million to $44 million to implement and then $72 million to $112 million per year, officials projected last month.
The MBTA Advisory Board, an independent group that represents the interests of the 176 cities and towns that direct their own tax dollars toward the T, called earlier on Monday for the transit agency to hit the brakes on possible free or reduced fare options while deficits loom.
While presenting his group’s analysis of the MBTA financial outlook, Advisory Board Executive Director Brian Kane noted that internal T estimates anticipate a $300 million to $450 million budget gap hitting in fiscal 2025 after the last tranche of federal stimulus funding is spent.
“The benefits of these programs are obvious and true and real, and I wish that we lived in a society and in a state where these things could become a reality and were funded,” Kane told the FMCB. “But that is not where we live right now. Without new revenue, these programs can simply not be afforded by the MBTA. The T cannot and should not be expected to pay for social service programs alone. The T is not a social service agency. It is a public transit provider.”
Partnering with a third party to administer the means-tested fare program is “essential” to its success, Kane said, and he urged its backers to find such an organization or suggest a way to foot the bill.
“The MBTA simply cannot afford to do these programs by itself, and it is really unfair to ask the T to do that because there are sufficient funds in our state to do it,” he said. “We just have to find them.”
The Advisory Board urged the MBTA to cap its annual operating budget growth at 2.4 percent, below the 2.6 percent increase set for FY22, in the coming years unless state or federal lawmakers direct additional funding.
That drew criticism from the advocacy group Transit Matters, whose leaders said ridership would be slow to recover from COVID-19 lows without investment in service improvements.
“Putting a cap on operating expenses hurts both the system and the riders,” the group wrote on Twitter. “We need to be demanding more recurring MBTA funding from Beacon Hill, not starving the T in the name of fiscal responsibility.”
For years, the MBTA has grappled with a structural budget deficit, and Beacon Hill lawmakers have shown little appetite for overhauling how the state funds the transit agency. A House push to generate new revenue from transportation sources for transportation needs died without a Senate vote last session.
Supporters of a proposed income surtax on annual household income above $1 million, which Democratic legislative leaders are poised to advance to the 2022 ballot with a Wednesday vote, say the funding it generates would go toward education and transportation in Massachusetts.
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