New Report Shows MBTA Finances Severely Off Track

May 24, 1999

(BOSTON) A year-long economic analysis shows that the Massachusetts Bay Transportation Authority could save millions of dollars by bringing costs into line with standards met by comparable transit authorities around the country. The analysis, released today by the Beacon Hill Institute at Suffolk University, shows that the MBTA effectively operates without a budget, pays workers as much as 52% more than other transit authorities around the country and drains scarce state resources away from neglected roads and other infrastructure projects.

“This report puts an end to the story that the T can't do better because it operates an old subway system,” said Dr. David Tuerck, Beacon Hill Institute Executive Director and Chairman of the Suffolk University Department of Economics. “Similar transit authorities, including those with old transit systems, operate, by any standard, more efficiently than the T.”

The report, entitled Financing the MBTA: An Efficient and Fare Solution, found that nearly $60 million could be saved by increasing efficiency to levels achieved by comparable transit authorities and without sacrificing service.

The T operates under a special “backward funding” budget that allows it to spend well beyond its yearly allotment with guarantees that the state will pay its bills. “This basically means taxpayers give the T a blank check to spend what it wants,” Tuerck said. Currently the T costs taxpayers about $608 million per year. This amounts to $203 for the average taxpayer, whether he uses the system or not. That's 8% of the average taxpayer's income tax bill.

T employees, the report found, are the highest paid workers among comparable transit authorities in the nation. An MBTA delivery person makes $21.85/hr plus benefits compared to $14.38/hr for a delivery person working for the Maryland Transit Authority (Baltimore) and $15.96/hr for the New Jersey Transit Authority. A general helper makes $19.83/hr compared to general helpers for the New York Transit Authority who make $16.23/hr. The report also found 20% of the MBTA's budget goes toward administrative costs and 31% to fringe benefits, which is higher than similar transit authorities.

Fares charged by the T are among the lowest in the nation, the report found. Subway fares are on average 38% below those charged by comparable authorities and bus fares are 55% lower.

“Adjusted for inflation, the MBTA's debt has grown an astonishing 1,060% in the last 35 years and we are all paying for it,” Tuerck added. “If the MBTA's subsidy were brought under control, it would free up hundreds of millions of dollars to be targeted for projects needed throughout the state.”

The Beacon Hill Institute applies state-of-the-art economic methods to the analysis of current public policy issues.

Posted: 5/24/99
Revised formatting on 02-Jul-2003 2:54 PM
Comments: fconte@beaconhill.org

1999-2003, Beacon Hill Institute, All Rights Reserved.