MBTA eyes another spending boost as ‘austerity’ approach fades

FOR YEARS, the Baker administration sought to tackle the MBTA’s perennial budget shortfalls by forcing the agency to rein in its spending. In the late 2010s, the T cut hundreds of millions of dollars in spending and hundreds of positions from its workforce. But that ultimately led federal investigators to warn in 2022 that the agency’s staffing shortages contributed to serious safety problems on the system.

It’s been a very different spending story lately.

T officials will request final approval this week on a budget that would ramp up spending considerably once again, extending a years-long hiring and investment spree intended to put the darkest days of slow zones and runaway trains in the past. As has become the new normal, the MBTA would lean heavily on state dollars to make the growth — more than $1 billion over a five-year span — possible.

The $3.4 billion budget, an increase of nearly $300 million over the current year, makes some observers squeamish. Jim Stergios, executive director of the Pioneer Institute, called it “bloated.” But to the group that represents cities and towns who help fund the T, transit leaders are simply catching up with what it actually costs to run the system that the region needs.

“Today’s investments are a direct response to years of deferred maintenance and staffing shortages—conditions that worsened under an austerity-driven approach extending from 2016 to 2022,” the MBTA Advisory Board wrote in its endorsement of the budget proposal.

“Such investments have paid off,” the group declared, recapping the elimination of subway slow zones, more frequent trips in the urban core, and an ongoing project to upgrade signal systems.

After accounting for some mid-year spending controls, the year-over-year budget growth would be a bit more than 6 percent, well above the rate of inflation. Mary Ann O’Hara, the T’s budget chief, pitched the plan as “a deliberate moderation of spending” after several years of double-digit growth driven by the landmark 2022 federal safety investigation into the T.

Most of the new dollars would go toward the final year of Keolis’s contract to run the commuter rail system or toward wages, with T leaders pushing to add another 550 employees.

It’s part of a sustained strategy to grow the staff. A decade ago, the T froze hiring and trimmed headcount to balance its budget; the agency’s workforce fell from more than 6,500 full-time employees around the start of the cuts to about 5,600 by fiscal 2022. Then, in the summer of 2022 , the Federal Transit Administration warned that the remaining staff were stretched too thin.

Bob Butler, vice president of the Massachusetts AFL-CIO and member of the MBTA’s board of directors, pinned staffing problems largely on former governor Charlie Baker and his team’s approach that focused on reining in costs in the wake of the disastrous 2015 winter.

“The last administration just let it fall by the wayside,” Butler said at a board meeting last month. “I was here at the time when people got up and stood up and said, ‘Listen, you’ve got to hire people, you’ve got to do this, you’ve got to do that,’ and they did nothing. This place just failed because of that.”

The agency has been playing headcount catch-up since the Federal Transit Administration findings went public. Buoyed by a new collective bargaining agreement that made MBTA jobs more appealing, the T grew its workforce to today’s level of about 7,700 employees, and next year’s budget calls for expanding again to 8,250.

Stergios, whose group advocates for more controlled government spending, is wary of the sustained expansion that’s been fueled mostly by money from the voter-approved surtax on high earners.

“[The MBTA’s] operating costs continue to grow faster than those of comparable transit agencies, to the point where the T has now started cannibalizing surtax revenue to fund its operations,” he said. “Voters were promised that surtax revenues would support new transportation investments, not backfill a bloated transit budget.”

Now nearing the end of Gov. Maura Healey’s first term, the MBTA and Beacon Hill have settled into a cooperative rhythm, with policymakers more open to helping the T close its budget gap than they were even a few years ago.

But the process these days is still ad hoc. The MBTA spends hundreds of millions of dollars more than it brings in, investing in a bulked-up staff and reliability improvements and service expansions, and closes the gap through a combination of one-time state aid and its own savings account. Meanwhile, lawmakers and the governor use a sizable pot of unallocated surtax revenue each year to replenish the T’s recently drained savings, giving it a short-term cushion that dwindles.

The pattern is set to play out again. Lawmakers last week sent Healey a $1.5 billion supplemental spending bill that would direct $595 million in money from the surtax, or so-called millionaire’s tax, toward the T. They’re also negotiating a final state budget for fiscal year 2027, which would boost the MBTA with hundreds of millions more dollars.

Still, all of that investment will only temporarily keep the T in the black as expenses continue to outpace revenues. There are now several years of evidence to suggest lawmakers and the governor are willing to plug the holes, but the insistence on doing so as one-time injections of surtax money — rather than with a permanent, recurring source — means the debate will continue.

The MBTA Advisory Board, which is independent from the T, noted that tension. Architects of the so-called “forward funding” system enacted in 2001, under which the MBTA receives a dedicated portion of sales tax revenue, “likely did not anticipate that by 2027, the Commonwealth would need to appropriate over $1 billion in additional state assistance each year” to close the budget gap, the advisory board wrote. “Nor was the [surtax] revenue generation intended to cover deficits over transportation improvements and expansions,” it added — the same point raised by Stergios of the Pioneer Institute.

However, the watchdog organization pointed out that it could be worse. The Philadelphia-area Southeastern Pennsylvania Transportation Authority, for example, recently slashed service and raised fares to navigate a budget deficit. In California’s Bay Area, voters will consider a ballot measure this fall to increase the sales tax to fund the Bay Area Rapid Transit, or BART. If it fails, the agency might need to impose major cuts.

The T has largely waved off talk of any service cuts as recent improvements prove popular. As for fare increases, MBTA General Phil Eng told CommonWealth Beacon in January they are “not on the table.”