Through a series of cost containment measures and increases in ‘own source’ revenue, the MBTA’s structural deficit has been reduced from an original forecast of $242 million to $80 million. The savings outlined in the agency’s $2.02 billion FY17 operating budget will be spent to improve the T’s services so riders get the service they need and deserve.
At a meeting of the Fiscal and Management Control Board on Wednesday, March 16, MBTA staff will report that MBTA own-source revenue – driven primarily by advertising – has increased $10 million, while fare revenue is also expected to grow an additional $43 million due to a recently enacted 9.3 percent fare increase.
In addition to its revenue increases, the T expects $15 million in wage reductions from the implementation of its Payroll Reduction Plan. Overtime costs are also projected to drop 23 percent to $37 million in FY17, from $49 million under the FY16 recast budget.
“We are meeting the statutory requirement for a balanced budget but still continue to work to reduce the structural deficit with internal cost controls and higher own-source revenues,” said MBTA Chief Administrator Brian Shortsleeve.
The remaining $80 million structural deficit must be closed by the end of FY17 in order to avoid ballooning deficits in FY18 and beyond.
To eliminate its remaining $80 million structural deficit, the MBTA will pursue the following: wage and benefit savings; flexible contracting; reducing vendor costs; reforming high-subsidy, low ridership bus and commuter rail service lines; and increasing parking revenues.
“This is not a business-as-usual budget,” said Shortsleeve. “We are going to put the T on a path to getting to balance.”
An increase of $13 million in wages from collective bargaining agreements, and increased pension expenses of $14 million are accounted for in the budget. The budget also assumes the transfer of $100 million “Pay-go” capital and maintenance initiatives into the newly created FY16-17 Capital Maintenance Improvement Fund.
Pay-go funds can address major issues, such as upgrading old technology that contribute to delays in service, and completing Winter Resiliency work on track, rail and signals across the system.
“The FY17 budget is focusing on people and reliability,” said MBTA General Manager Frank DePaola. “We are investing in people.”
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