Without state help, MBTA will have to cut service, raise fares next year, too, regional planning group says

The Metropolitan Area Planning Council says payments on more than $5 billion in debt ensure the T will continue to lurch from one financial crisis to another, hurting riders and the regional economy for years to come, unless the legislature steps in to help do something about that debt.



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    MAPC on MBTA debt0 bytes


    I was just at the Lynn public hearing

    Some of the testimony from folks who rely on the T as a real lifeline was really emotional. Buses would be cut in either proposal that go by hospitals. Employees would lose jobs (and businesses, employees..).

    Near 90,000 people in Lynn would spend less money in Boston, let alone the reverse scenario.. The Newbury-Rockport line brings a lot of workers and spenders in and out of Boston...and the T would lose revenue as those with the means drive and congest the streets. Oh, and then there's the weekend tourists in the Summer..

    The North Shore's infrastructure (primarily lower Essex County) is designed around trains and buses, not cars. Just try driving here.

    What infrastructure?

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    I don't find Lynn and Salem particularly convenient to get to by transit *or* car.

    Do you ride some other Commuter Rail that runs more than once per hour off peak, or some other bus that doesn't take 78 minutes to go 15 miles?

    Maybe it would be convenient to use transit if they replaced the big, slow, fuel-guzzling, labor intensive Commuter Rail trains with single-car self-propelled trains that ran every 15 minutes or less.

    This is one of those things

    This is one of those things that seems obvious when you think about it, but not until you think about it.

    So the question is, how do we get our legislators' attention and which body of got gov't would be most effective?

    Why doesn't the MBTA

    just default on some or all of its debt? Why is everyone so eager to see taxpayers bail out this irresponsible agency?

    You seem to be confused

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    The problematic debt in question is largely due to the Big Dig, and the unwillingness of the Commonwealth to pay for it through gas taxes, tolls, or any means at all besides shuffling it around like a hot potato. The taxpayers of Massachusetts need to accept their responsibility of paying for the Big Dig already, instead of trying to hide it on the MBTA's books.

    Defaulting would destroy MassDOT's credit rating and just make the problem worse in the end.

    The other half of the problem is that the "forward funding" legislation of 2000 is fundamentally broken -- its projections turned out to be almost entirely wrong. So the MBTA has been forced into an impossible budget situation every year since then. They've been doing workarounds until now, but they've run out of ways to keep it going.

    why so eager?

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    Because it's how many people get around who don't have cars for whatever reason (health, poverty, whatever). Because it's how a lot of people choose to get to work or to get around in general, which helps make driving bearable for a lot of other folks who choose not or cannot use public transit to get work. Because it's a critical component to the economic and social well being of the entire Commonwealth (not just Greater Boston).

    And as far as the first question, because a lot of our State's economic well-being and reputation are wrapped up in our bond ratings (as Matthew pointed out) and we'd be defaulting on ourselves in many cases as the debt is wrapped up in 401Ks, bonds and other "financial instruments" that more than just "Wall Street Fat Cats" rely on.

    I'm of the mind that the MBTA has already done a lot to squeeze out efficiencies from the system, but someone in Lynn tonight mentioned a figure of something like 350 employees making over $100K a year, which I have no clue if that's true, but if it is it does make one pause... It's still not enough to fill the budget gap for this coming year, let alone fix the long-term revenue problems at the MBTA and at MassDOT in general.

    Transportation infrastructure is one of the most basic public goods that we create and maintain in our "commons" and why we have a government in the first place. This might be the right time to push back on the Brylcreemed legacy of Saint Reagan, smack Grover Norquist in the nuts and start a conversation about whether we really want a service-government where the taxpayers pay for just what they want/need or a "more perfect union" where we recognize the commitments we have to one another to keep this society functioning like something NOT out of Mad Max flick. ("Well, ain't we a pair...Raggedyman?")

    In the end it's not the agency that has been so irresponsible (at least in the past couple of years) but the goddamned Legislature that has exhibited a lack of huevos to take on this task. That is quite irresponsible.

    If the state were to default

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    If the state were to default on any of its debt the ability of the government to borrow money ever again would be highly limited and increasingly costly. The money has been spent and is owed and needs to be repaid.

    All these crooked politicians were really happy to let the Big Dig go way over budget and allow cronies at various contractors to siphon off large sums of money. Now that all that garbage has to be paid for, and the hurting taxpayer is going to be getting the bill for it, the same politicians are delaying the inevitable public outrage and ejection from office as long as possible.

    A better question

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    Why is everyone so eager to pretend that they don't get any indirect value out of certain government services that don't give them a direct benefit?

    Oh, that's right. Shortsightedness, greed, and selfishness.

    T fare will eventually have to be $6.25/subway ride

    I told you guys back in the beginning: the weak dollar would lead to a several-times rise in fuel prices, and eventually prices for everything else, such as health insurance. Eventually salaries, when the private economy is competitive enough to draw away public employees. At that point the T fare will have to rise to meet the pay for the workers.

    Given that the gold price is at least 5 times what it was in 2000, we would have to expect that the price of T fares would rise 5x just to keep pace.

    I hate to sound like a crazy, but this really is the best explanation. There is no way you are going to tax 5x out of the millionaires or cut /5 the services or get /5 out of the T workers.

    I have written to Capuano about this but no response, of course. There is nothing the locals can do about it, there has to be federal action to deal with the dollar weakening.

    If you want to keep the current T service, either you get the gold price back down to $350, which will crash out all the parts of the US economy which have adjusted to the new value of the dollar, or you keep the gold price where it is, and allow the rest of the economy to catch up as fast as possible, so our salaries will be able to support a $6.25 T ride.

    There is no other way!

    Sorry, you do sound 'like a crazy'

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    The price of gold is really irrelevant to modern economies. That's why we abandoned the gold standard. It's just a metal commodity, and it happens to be going through a bubble right now. If we were still on the gold standard right now, we'd be in the grips of a deflationary spiral and facing the worst Depression of all time.

    That is, if we had somehow even gotten to this point.

    Why are you afraid?

    I would like the T to survive but I'll be ok if it goes away. I know a lot of people who won't.

    If you like the current money system it's incumbent on you to tell the T riders why they should just accept fare increases and cutbacks in service.

    I'm offering a way out here, if you would just take it. Why are you so afraid?

    Why are you asking me?

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    You're the one talking about 5x fare increases and the price of gold.

    That's lunatic talk. There's no reason for fares to increase any more than a 2% in a normal year. It has nothing to do with "the current monetary system" either. This is purely a political issue -- the legislature doesn't want to pay for the Big Dig, so they are pushing part of the cost onto transit riders.

    You have a strange obsession with gold. Perhaps you should learn how economics actually works, instead of what some tin-foil hat-wearing nutcase told you.

    3 times gas prices, why not 3 times fare prices

    $3, $4, $5 gas would have been lunatic talk too. But it happened. How can the T run on the same revenue when its costs are going up so fast? It's impossible.

    As for the gold, I've seen it happen before junior. At one time I threw around words like nutcase too. Those were big words to eat.

    $3 - $4 gas is about right

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    Inflation-adjusted (real) gas prices in the 90s reached $2 at times in today's dollars. In fact, gas prices seemed to stay artificially low during that decade. Starting in 2000, the real price of gas began to shoot up until it reached a peak in 2008, which everyone remembers. As Kaz pointed out, a lot of this was due to rampant speculation. By 2008 the real price of gas had reached the same peak as in the 70s oil crisis. But we weren't driving gas guzzlers anymore, so people got along better than back then. And while the prices dropped for a time, they have been heading back up again lately. This is likely another bubble.

    But I don't think we're going to see a return to 90s-era real gas prices, ever again. There's a lot more demand in the world for gasoline, and it's increasing every day. So $3/gal isn't crazy at all. Reaching $4/gal is probably a bubble, for now, but it won't be crazy in the not-too-distant future.

    The MBTA's fuel costs have exceeded expectations, this is certainly true. It's one of the broken parts of the "forward funding" legislation: the predictions of energy costs turned out to be completely off. This is discussed in the MBTA's handouts and documents on their website, BTW.

    However, $120 million of the $163 million deficit is due to payments on the portion of the Big Dig debt handed over to the MBTA (see: Transportation Finance Commission report, 2007). If the Big Dig debt was moved back to where it belongs, that would reduce the deficit to a more manageable $43 million (estimated).

    Will fares go up over time? Of course. But to $6 right now? That's crazy talk. That would be completely out of line, and would destroy ridership on the system, making for a net loss.

    But do enlighten us all on "what you've seen happen before, junior." I suspect you may have eaten the word 'nutcase' and had it go straight to your brain.

    First, increase the gas tax

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    First, increase the gas tax by your "gold factor". It hasn't been raised since 1991, so by your logic it should go up by at least 5x itself; since it's currently $0.21/gal if ignoring the UST fund tax, let's round it up to a nice even $1/gal. That oughta take care of the Big Dig debt pretty fast. (It'll also raise T fare revenues significantly as people drive less, at least until they can leave Massachusetts.)


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    Who paid for that????

    What about fixing the tunnels on Storrow?

    WE ALL DID - regardless of whether or not we use the road or own a car.

    Until people can get honest about the cost of roadways and where that money comes from, I don't want a single "but gassss is sooooo expensive already yoooo can't add to my cossssts!" comment ever.

    Pure hokem

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    We aren't on a gold standard.

    $0.21 in 2010 would buy you $0.27 of stuff in 2000. It's buying 7/9ths or 78% of what it did in 2000...not 20% or 1/5th.

    Welcome to the Consumer Price Index (aka the inflation tracking index).

    Prices aren't the same as aggregates

    The CPI is a measure of the aggregate. So if they raise gas prices, and that blows up the economy of the northeast and causes housing to crash, but the prices balance out, no inflation. Nice but not the same as prices.

    If you're such a friend of the working man, tell them why they are paying so much for gas and food. Let's hear the solutions rather than just throwing stones.

    Maybe you haven't gotten to my other comment yet

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    I already outlined why the working man is paying so much for gas and food now. It's pure market manipulation through the futures/commodities exchanges.

    How Goldman Sachs created the food crisis (Foreign Policy magazine, April 2011)

    The solution is to stop letting the banks do whatever shell game they want to implement and stop letting them write their own rules with the SEC and Congress. As we've deregulated and deregulated the financial sector, they've pulled stunts like this and the rest of us pay for their enrichment at our expense. You know...like it was 15-20 years ago...ironic that THIS is the actually "conservative" idea.

    Good news!

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    Fortunately, you can insulate yourself from the harsh effects gold prices exert on transportation fares by purchasing my patent-pending gold-price-index-refractory-auxiliary-headgear. Pay no mind to how much it resembles a roll of aluminum foil shaped into a crude beret; wear this sucker around all the time (make sure to keep it pulled down over year eyes and nose!) , and it will protect you and anyone within 15 feet from the constant environmental hazards exerted by fiat currency.

    Unfortunately, the weakening dollar has forced me to quintuple my prices since its initial offering in 2000.


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    The excessive rise in fuel prices has been shown to be a result of allowing investing banks and mutual funds to sink their deep pockets into the futures market (and only *certain* banks are allowed to do so...). Not only that, but there's Congressional testimony that much of that has been used as price fixing to be able to turn the futures and commodities markets into a sure bet by these same banks by using their role as a pretend "middle-man" between consumers and sellers to pump and dump the futures the same way they would do so if they controlled large segments of a particular stock. It has little to do with the dollar's value relative to other currencies.

    In fact, the dollar is still the current standard and as long as that's the case, the rest of the world knows that no matter how "weak" the dollar gets, it'll still be the strongest currency out there. China has devalued its own currency in the past few years for no reason except to keep it *under* the dollar as our economy took a nose dive. Besides a weaker dollar means exports and exports means economic recovery. A weaker dollar is a good thing in a recession.

    Secondly, we're not on the gold standard, so gold's price has NOTHING to do with the T's fare. The fare doesn't have to "keep pace" with gold...that's just pure inanity.

    Finally, we don't need to "tax 5x out of the millionaires" OR "cut 1/5th of the services". Alone, just removing the debt from the MBTA's bottom line and putting it on the state's would double how much the fares at the MBTA accomplish in making their budget work.

    We also wouldn't need to tax millionaires at 5 times the going rate. We could easily implement a marginal tax system or some hybridized two-tier style system at the state level instead of a single flat tax as we do now (one of like 5 states still doing so) and tax at just 1-2% more for anyone's income over $1M while leaving the same rate as everyone else pays now for all income below $1M and probably have enough to fund the MBTA debt, all of the road and bridge work, and enough to rebuild our rainy day fund. States like California and New York that have put these upper bracket taxes (at around 1% more for above $1M) into effect have seen a 15-20% boost to their tax revenue as a result.

    Instead, we increased the regressive sales tax (which hurts the people who can't afford it WAY more than it does those that can) as if that was going to solve the MBTA's budget woes...and now we're stuck again and Beacon Hill seems to be dead silent on what it's going to do about it, letting the MBTA's management be the whipping boy instead.

    Therese Murray Pounds the Idiot Drum

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    She is whining that gas taxes could go up would be unfair as a part of whining that gas could be $4-5 come summer.

    So, in her book, $1 more for the oil companies is okay, but a few pennies or even nickels for our state's infrastructure is JUST SOOOO UNFAIR!!!!!

    Filthy dog!

    Before I put on my

    Before I put on my "gold-price-index-refractory-auxiliary-headgear", just ordered from Eric....

    >Tipping my "gold-price-index-refractory-auxiliary-headgear to Kaz<<

    Thank you, Kaz for an excellent survey of how many of our problems are market driven. This is crony capitalism that affects everyone.

    strong dollar

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    please, do tell, why a strong dollar is a good thing and a weak dollar a bad thing.

    /grabs popcorn

    Exports vs. Imports vs.

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    Exports vs. Imports vs. domestic consumption. Weak dollar makes our stuff cheaper for foreigners to buy (better for exports) and more expensive for Americans to buy foreign goods so that in theory they will buy domestic goods.

    It's a self-balancing mechanism

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    As more people purchase US goods and the US economy strengthens, the cost of acquiring those goods from outside our economy increases, driving the dollar back down.

    Normally there would be a natural ebb and flow to the economy, but China's currency manipulation basically keeps us on the teat since so many of our nifty iDevices and other modern gadgetry come from there.

    Creating new business sectors in the US is one way to dampen the problem, but it's not a permanent fix - the permanent fix is to resolve the trade imbalance and restore natural order.

    stronger dollar is not good

    A stronger dollar is not necessarily good either. In that case, the prices of farm goods and oil will fall first, and Texas and the Midwest will collapse. This happened in the late 90s.

    You want a stable dollar, so we become prosperous on the basis of our work and innovation and achievement, not on the luck of the currency swings.

    You still can!

    You just have to be careful not to enquire too closely what it is you're eating/drinking.

    Last time I was in Saltillo I got a $2 bottle of something purporting to be mezcal. The bottle was real glass, too, so it was all classy.

    Oh God.....

    I have learned my lesson and am very careful not to drink anything "purporting" to be mezcal. And it was a long hard lesson.

    Dumping the cost of the Big

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    Dumping the cost of the Big Dig on the T was a political gift to the people who benefited the most from the project--the drivers. Make them pay the cost of the damned thing once and for all by erecting a couple of temporary toll plazas at Big Dig entrance sites that only use E-Z Pass for payment and are wide enough to allow 50 mph passage, like the do in PA.

    Then, drivers get a choice: Pay the toll and zip through under Boston, or avoid it and get stuck (and probably lost) in the city streets. No EZ-Pass? No passage for you. Tolls must go directly to paying down the Big Dig debt. In fact, there should be a web page that shows the current balance going down every time someone drives through the toll plaza. When the debt is paid off, take down the tolls. Problem solved.

    hmmm..one flaw

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    nice idea, but .... take down the tolls once the debt is paid?
    [Put on my sandals and sexy tunic]
    [Kick yer ass into the Filene's hole.]

    They can't

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    The Federal Highway Administration does not allow for new tolls to be erected on Interstate highways. Roads that had pre-existing tolls before they were declared as Interstates are grandfathered in.

    Far too late to lobby for that now.