MBTA predicts costs will exceed revenues for years – NBC Boston
Darkening an already grim financial picture, MBTA officials predicted Thursday that the agency’s spending will grow faster than revenue until fiscal 2027, when goodwill still won’t bring in as many dollars as it does. before the COVID-19 hit.
The latest five-year pro forma outlook presented by MBTA CFO Mary Ann O’Hara projects that T’s expenses will pile up faster than its income in FY24, 25, and 26 before the trend hits. reversed in 27. She attributed the disparity to the costs associated with implementing new services such as South Coast Rail and the Green Line extension.
A sharp drop in ridership during the pandemic took a toll on T’s finances, leaving officials to use one-time federal relief funds to close the gaps. O’Hara said that up to 23% of the total spending the MBTA will make in this fiscal year and up to 13% of its planned spending for FY2023 is funded entirely from one-time revenues.
As calls mount for the T to phase out fares, ridership has been slow to return, more recently hitting just above 65% of pre-pandemic levels on buses and between 45% and 50% pre-pandemic levels on the rail system.
MBTA officials don’t expect this to change quickly. In the most pessimistic model presented by O’Hara on Thursday, the agency would report 49% of pre-COVID tariff revenue in FY 23 and 68% in FY 27. Even the most optimistic version doesn’t ‘anticipates that 93% of pre-pandemic tariffs – still not a full recovery – by fiscal year 27.
âThis five-year plan, and it is good to look ahead, presents a serious financial challenge for the T and for this board of directors,â said MBTA board chairperson Betsy Taylor after the presentation. âIt’s hard to see how we can survive in the long run with expenses growing faster than income. This shows how important it is to look at the operating costs of expansion projects. And finally, given this operational challenge, I have concerns about how we will continue to raise money to fund the necessary security and maintenance requirements of the T in the future as well. “
While the outlook predicts huge strain on the horizon, the T has cash on hand at the moment thanks to a withdrawal of federal aid and better-than-expected sales tax revenues this year. Officials expect a significant transfer of $ 500 million from operating funds to necessary security and maintenance investments on the capital side, O’Hara said, anticipating further discussion of the idea in January.
âUsing these one-time funds for one-time capital investments is a potential opportunity to strengthen T infrastructure while making more tangible security investments,â she said. âThis is an opportunity for the T to put the money immediately to use for future service and security. ”