MBTA fiscal woes take center stage at State House
By State House News Service | November 30, 2015, 21:07 EDT
BOSTON – The Massachusetts State House was abuzz Monday with reports and comments concerning a financial crisis gripping Boston’s public transit service and how to pay for a planned Green Line expansion into Somerville and Medford that may cost as much as $3 billion.
The projected costs of extending the trolley line ballooned earlier this year, which may have stemmed from the way the contract was set up, according to consultants hired by the MBTA Fiscal and Management Control Board. In essence, the state enabled the contractor group, White Skanska Kiewit, to take advantage of it, did not cap indirect costs, did not allow the state to check the books on the contractor’s costs and allowed the contractor to hone in on the maximum allowable price, according to the consultant, Terry Yeager, managing director of Berkeley Research Group.
Earlier in the day, Brian Shortsleeve, the T’s chief administrator, outlined steps that the transit agency may take to reduce a projected $242 million budget deficit, including leaving vacated jobs unfilled and offering early retirement incentives to workers. He said layoffs aren’t being contemplated.
Other cost-cutting options may include limiting some services, such as late-night weekend subway and trolley runs and reforms for The Ride, a paratransit service. On the revenue side, discussions have included the possibility of fare increases, real estate sales and parking fee hikes.
Senate President Stanley Rosenberg cautioned that any planned fare hikes above 5 percent may require legislative approval. The T’s control board is exploring the possibility of raising fares next year, working under an interpretation of a 2013 law that would allow for as much as a 10 percent increase. But senators involved in writing the law say it was meant to place the cap at a total of 5 percent for each two-year period, an interpretation that Rosenberg supported.
Senior citizens have already begun protesting any service cuts or fare hikes to the service many rely on for basic travel needs.
Gov. Charlie Baker cautioned that any move by the MBTA to cut costs through an early retirement program would require a careful look at the impact of such a plan on the agency’s pension system, one the governor described as “cloaked in secrecy.”
“If they pursue a proposal like that, they need to understand not just what the short-term savings are, but what the hit to their retirement system is, which is again cloaked in secrecy and one of those areas where it’s been very hard to figure out what the true liability, or not, associated with the T’s pension system is, and that’s a huge question mark with respect to anything you do on early retirement,” Baker said.
Baker, House Speaker Robert DeLeo and Rosenberg all said they looked forward to reviewing the full slate of options floated Monday by the MBTA Fiscal Management and Control Board, including early retirement incentives and the elimination of unfilled positions. MBTA employees were not allowed to take part in an early retirement program offered to executive branch employees earlier this year to deal with a state budget shortfall.
“We put a strong management control board in place so that they could come up with the best possible solutions. We’ve got to give them the running room to do their job,” Rosenberg said, standing with Baker and DeLeo after the three met for almost two hours Monday.
DeLeo said MBTA’s financial problems are “not an easy thing to fix fiscally.” “I’m looking forward to all the recommendations,” he said.
Though Baker said he hasn’t yet reviewed the full presentation, he appreciates the “hugely transparent process” the board is going through as it considers everything from job cuts to fare hikes.
“I do think that the transparency they’ve brought to this conversation is a huge improvement over historical practices with respect to the way the T operates and I think that’s a really good thing,” Baker said.
In early December, transportation officials will begin determining how and whether to move forward on the Green Line project that Transportation Secretary Stephanie Pollack said is “ripe for being a high-ridership project” with real estate development expected to be spurred along the corridor from East Cambridge through Somerville and out to Medford.
In August, the state announced that an offer submitted by White Skanska Kiewit for construction of the first three stations had led officials to adjust upwards its cost-estimate by $1 billion, to $3 billion from $2 billion, with the additional cost all falling on the agency and throwing the project into jeopardy.
“I still believe that if we can’t do this project there’s no other project that we can do,” said Rafael Mares, vice president and director of Healthy Communities and Environmental Justice at the Conservation Law Foundation – a group that successfully sued the state to commit to the Green Line Extension as a clean air component of the Big Dig. “This is in one of the most densely populated areas of the country. We’re looking at a light rail project – we’re not building a tunnel here. It’s in an existing right-of-way; it’s legally required; and we’re getting almost a billion dollars in federal subsidy.”
While the Massachusetts Department of Transportation hired separate groups to oversee the project – including independent cost estimator Stanton Constructability Services – about 10 people, or the equivalent of four full-time employees, were tasked with oversight from within MassDOT, according to David Mohler, director of planning at the department.
The cost estimator “wasn’t terribly well connected” with the others developing project costs, said Yeager, who said that as White Skanska Kiewit sought a price within 110 percent of the independent cost estimate, the estimator would move its cost up.
“It strikes me as sort of illogical,” said Steve Poftak, a member of the control board and the MassDOT board. Referring to the estimate, he asked, “Why is it moving?”
“I can’t wrap my mind around it either,” Yeager replied.