Showing posts with label LEGACY ADMISSIONS. Show all posts

Monday, August 25, 2025

Without a watchdog, T operating costs spiral

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Is $2.1 billion a good deal? Explaining the bargain to resolve Massachusetts' massive jobless claims mistake

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And your total comes out to… $2.1 billion. That’s how much Massachusetts has to pay back the feds. Gov. Maura Healey’s administration revealed yesterday that they reached a settlement with the outgoing Biden administration last Friday to pay back most — though not all — of the $2.5 billion in federal COVID pandemic funds that the state misspent under Gov. Charlie Baker.

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Without a watchdog, T operating costs spiral

August 24, 2025

By CHARLES CHIEPPO AND ANDREW MIKULA

Since its collapse into the snows of February 2015, the MBTA has ramped up capital spending on much-needed maintenance and repairs to move the agency closer to a state of good repair.

The capital investment was long overdue. But since the Fiscal and Management Control Board established in 2015 to oversee MBTA finances was dissolved six years later, operating costs have spiraled.  Addressing out-of-control costs will require the reinstatement of an operating budget watchdog like the FMCB.

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In 2018, the MBTA balanced its operating budget without state contract assistance or federal funds. With the onset of the pandemic, MBTA fare revenue fell by $285 million and unlinked passenger trips fell by 37 percent between fiscal 2018 and fiscal 2023. But state operating support increased by $539 million during that time and the T also received about $2 billion in federal COVID relief money.

Nonetheless, the MBTA was looking at a $700 million deficit for this fiscal year before Gov. Healey approved $535 million for the T in June. The money comes in addition to funding the agency receives from state sales tax receipts, assessments on the municipalities it serves, and self-generated revenue such as fares.

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Since fiscal 2021, system operating costs have risen more steeply every year, including by nearly 15 percent between fiscal 2023 and 2024.

The biggest culprit is the bus system. In 2019, the MBTA spent $153 per hour in operating costs to run a bus, compared to $220 at New York’s Metropolitan Transit Authority. By 2023, costs had risen slightly to $263 in New York, but the hourly cost of operating an MBTA bus nearly doubled to $297, exceeding New York’s costs.

An analysis of eight comparable US transit agencies found that MBTA bus operating costs rose by more than 90 percent. The Chicago Transit Authority had the next sharpest increase at less than 40 percent.

One way the T control board succeeded at keeping operating costs under control was through the agency’s three-year exemption from the Commonwealth’s so-called Pacheco Law. That unique statute makes it exceptionally difficult to contract out any service provided by state (or MBTA) employees.

During the exemption, the T contracted out operation of its secure cash counting facility. It reduced costs by 65 percent and the time it takes to deposit funds by 80 percent. Contracting out the operation of warehousing and logistics cut costs and improved inventory accuracy from 57 percent to 80 percent, with 99.8 percent of deliveries completed within 10 hours.

The threat of competition also brought the Carmen, the MBTA’s largest union, to the table to renegotiate their contract, saving an estimated $218 million over a decade. All told, the T estimated the 1o-year savings from actions taken under the Pacheco Law exemption at more than $450 million. This exemption expired before the pandemic and should be restored.

It’s also long past time for the Commonwealth to address the MBTA’s nearly bankrupt pension system. When the T contributed $37.7 million to the retirement fund in fiscal 2007, its funding ratio was over 90 percent. The fiscal 2025 budget called for the MBTA to contribute $207.7 million to a system that is just 56 percent funded.

The fundamental problem is that there are more people collecting benefits than paying in, mostly due to how early MBTA employees can retire. Those hired before December 2012 can retire with a full pension after 23 years of service, regardless of age. Those hired after December 2012 can retire with a full pension at age 55 after 25 years. In addition, T employees receive pensions that are significantly more generous than those of their state government counterparts.

There has been progress at the MBTA of late. Thanks to increased capital funding and the leadership of General Manager Phillip Eng, service is more reliable and subway slow zones have disappeared.

But making T finances more sustainable by bringing them in line with other large urban transit agencies takes more than just capital improvements. It will require legislative leaders and Gov. Healey to reinstate and empower an entity like the Fiscal and Management Control Board to explicitly focus on operating cost control.

ABOUT THE AUTHORS

Charles Chieppo and Andrew Mikula are senior fellows at Pioneer Institute. Together with Aidan Enright, they authored the recent report “Cost Control Takes the Wheel: Priority Reform Areas for Balancing the MBTA’s Operating Budget.”

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Sunday, August 17, 2025

The Fair Share Amendment is delivering

August 17, 2025

By JIM ROOSEVELT AND ANDREA SILBERT

Since 2022, when Massachusetts voters approved the Fair Share Amendment tax on incomes over $1 million, debate has swirled over the impact of the new levy on the state’s business climate.

There’s universal agreement that investments in transportation and public education, which the new tax funds, are crucial to building a dynamic and prosperous economy. But some speculated that multi-millionaires would flee Massachusetts rather than pay the new tax. Last week’s news that the millionaires tax generated $3 billion over the past year should put those fears to rest.

Prior to its passage, opponents of the Fair Share ballot question predicted it would backfire — failing to generate meaningful revenue to address the state’s transportation and public education needs, and hurting our economic competitiveness along the way.

But nearly three years later, it’s becoming clearer and clearer — the Massachusetts millionaires tax has been a total success, and an incredible benefit for our state’s businesses.

Despite predictions of substantial millionaire flight, the number of millionaires and ultra-wealthy individuals in Massachusetts grew significantly over the first two years the Fair Share Amendment was in place.

The state has experienced revenue gains — $2.46 billion in the first year and nearly $3 billion in the second — that are more than double the state’s initial expectations, and more than even the proponents of the new tax predicted. That’s strong evidence that that multi-millionaires are staying in Massachusetts and paying more in taxes, not fleeing for other states.

And that revenue is making a real difference. Over the past two and a half years, the state Legislature has approved more than $6 billion in Fair Share investments that are helping to deliver two of the most important resources for Massachusetts businesses: a well-educated workforce and a reliable transportation system.

From the cradle to career, investments from the millionaires tax are key to growing and supporting the workforce our businesses depend on.

Thanks to Fair Share funding to expand the number of public pre-K classrooms in cities and towns across the state, thousands of parents can now afford to stay in the workforce after their children are born.

Kids can’t learn if they’re hungry. So Fair Share is funding in-school breakfast and lunch for every child in the state, helping them succeed in school and start off on a path to long-term success. The millionaires tax is supporting school building improvements across the state, enabling more vocational programs to train the next generation of workers in high-demand careers. And it’s delivered significant funding to every school district in the state, ensuring that schools have more of the resources they need to educate our future workforce.

Once students graduate, Fair Share is funding free community college and expanded financial aid for low- and middle-income students at UMass and our other state universities. As a result, public college enrollment has increased for the first time in a decade. That means thousands of additional students who are preparing for good jobs with local employers.

And when our graduates enter the workforce, Fair Share funding is delivering a transportation system they can count on to get to and from work. It’s the key funding mechanism in Gov. Healey’s plan to repair the MBTA after decades of disinvestment, which has resulted in the elimination of subway slow zones, trains that are moving faster, and the hiring of more bus drivers to expand service.

In other parts of the state, the state’s regional transit authorities are using Fair Share funding to expand their service hours, add weekend service, create new bus routes, and make buses free. And hundreds of millions of dollars have gone into repairing roads and bridges across the state, ensuring that drivers can get to work on time.

Now, it’s true that Massachusetts faces a migration problem. But it’s not multi-millionaires who are hiring U-Hauls and leaving the state; it’s low- and middle-income workers who can’t afford the high cost of living in Massachusetts.

By putting more money directly in the pockets of working families with programs like free school meals, college financial aid, and free buses, the Fair Share Amendment is making Massachusetts more affordable for the workers our businesses depend on.

And these investments are having an impact. Between July 2023 and July 2024, Massachusetts saw its largest population increase in 60 years, and the rate of domestic outmigration has significantly slowed. And this year, Massachusetts was ranked the strongest state economy in the US.

Now, Massachusetts faces a new threat: billions of dollars in federal budget cuts that are being made to partially offset the cost of a $4.5 trillion federal tax cut that will overwhelmingly benefit the very rich and large corporations.

As businesses begin to grapple with the effect of these changes on the Massachusetts economy, we’re left with one thought: Thank goodness Massachusetts had the foresight to pass the Fair Share Amendment when we did.