The MBTA has made immense strides in upgrading the system’s aging infrastructure and restoring trust among riders in recent years. But a new report argues that, if lawmakers don’t find new revenue sources soon, that progress could be lost — and the T could find itself in the middle of a financial catastrophe.
Experts are ringing the alarm bell on a “fiscal cliff” that is once again on its way. Last week, the agency released new figures warning of a $560 million deficit for the fiscal year that begins in July, and a $732 million shortfall for the following year.
State leaders laid out plans last year to rely on federal grants and revenues from the still-new “millionaires tax” to fill the MBTA’s budget gap. But transit experts put out a new analysis Wednesday arguing that’s no longer a sound plan.
By summer 2027 — the start of fiscal year 2028 — that money will not be enough to make up what’s needed, their analysis found. Officials need to start planning now for that several hundred million dollar budget gap, experts and advocates argue, to make sure that the T isn’t forced to cut service.
A coalition of transportation advocates and policy experts is calling on state leadership to take drastic actions — ranging from raising vehicle registration fees and highway tolls to introducing congestion pricing in downtown Boston — to prevent “draconian” service cuts.
In Wednesday’s report, the nonprofit advocacy group Transportation for Massachusetts and the think tank Mass Budget and Policy Center found that currently available funding sources for transportation are “insufficient.”
“Even if there is enough Fair Share to bail them out right now, that is not likely to be sustainable in the next two years,” said Reggie Ramos, Transportation for Massachusetts’ executive director. “If we rely mainly on Fair Share ... fiscal year 2028, we will be seeing an MBTA that will have a deficit that is so big that there is nothing left to overcome it.”
The Fair Share amendment — a three-year-old 4% surtax on annual income exceeding $1 million, also known as the millionaires tax — has proved crucial in preventing the MBTA from falling off of a “fiscal cliff.” Its billions in annual revenues are earmarked exclusively for transportation and education in the commonwealth.
Last year, as the T faced an $800 million budget shortfall, Gov. Maura Healey appointed a panel of experts tasked with finding budget solutions for the ailing transit agency. The task force recommended that Massachusetts use Fair Share funds — which had exceeded projections — and pursue more support from the federal government in order to bail out the T and prevent service cuts and layoffs.
Those recommendations ultimately led to the passage of a supplemental state budget that stabilized the MBTA’s budget woes for the current fiscal year and more than doubled funding for the state’s regional transit authorities.
At the time, transportation advocates praised the governor’s office and legislators for preventing a financial catastrophe at the T but publicly worried that using Fair Share funds was just a short-term fix.
“Fair Share has performed better than expected,” Ramos said. “This narrative that Fair Share is enough — is enough to bail out the T, is enough for a statewide transportation network that we all deserve — is, at this point, unrealistic.”
According to the report’s authors, state leaders now urgently need to consider alternative revenue sources. They argue that the excess Fair Share spending available during the last budget cycle was remarkably high due to a backlog of taxes collected in the first two years of Fair Share’s implementation, and that over the next two years excess funds will level off. That means Fair Share may not be a reliable means of bailing out the T in coming years.
On top of that, the report cautions that federal funding is likely to be a problem — not a solution — for Massachusetts with President Donald Trump in the White House. Its authors point to the Trump administration’s decision to cancel major transportation grants, including $327 million to reconstruct a portion of the Mass Turnpike and $20 million earmarked for improvements to three major roadways in Roxbury.
“With a cloudy federal landscape, we need to control our own destiny in planning for our transportation future,” said Dwaign Tyndal, executive director of the Boston-based nonprofit Alternatives for Community and Environment. “Fair Share gets us partway there, but people across the commonwealth who count on getting to school, doctor’s appointments and seeing family need our leaders to put a plan in place to meet our challenges ahead.”
The report identifies a suite of new revenue streams that could fill the gap, including raising highway tolls, introducing new tolling locations and implementing a congestion pricing program similar to the one introduced in New York City last year. Local studies have found that, depending on how much the state chose to charge, imposing fees on drivers could generate tens to hundreds of millions of dollars in new revenue each year.
State officials and Boston leaders have toyed with the idea of implementing a similar measure around downtown Boston, with Boston’s City Council even holding a hearing on the idea in 2024. Several bills have also been introduced on Beacon Hill to study or implement congestion pricing. But so far, the proposals have failed to gain traction. Gov. Charlie Baker vetoed a measure to study the idea in 2021, and recent polls have found that a majority of Massachusetts residents oppose the idea.
In addition to congestion pricing and toll increases, the report puts forward some less politically thorny funding solutions, such as increasing vehicle registration fees and taxes, which together could raise up to $570 million annually. It also identifies several bills in the state Legislature that could raise hundreds of millions of dollars in transportation funding, including a bill to increase single ride fees on Uber and Lyft and adding new fees to delivery apps like DoorDash and Uber Eats.
Ramos argues that the time to act on these measures is now, because the MBTA is once again predicting significant budget shortfalls for the coming years.
If state leaders fail to find new sources of revenue for the T and other transportation initiatives across the commonwealth, Ramos said, residents face the very real prospect of dramatic cuts to public transit, including “a significant reduction in buses and a significant reduction in train service,” That, she argues, “would be catastrophic for the economy of the state.”
Still, Ramos is hopeful that a “doom spiral” at the MBTA and the state’s other transit agencies can be prevented. “The answers are right in front of us,” she said.
“It’s not a question of a lack of solutions,” Ramos said. “It is a question of political will.”
