Boston’s big (transit) dig

(February 26, 2015) Toronto beware: Boston’s public transit breakdown is a good example of what not to do when it comes to transit planning.

Boston’s broken-down transit system provides a good example of what Toronto shouldn’t do when it comes to transit policy. Years of overexpansion has saddled Boston’s public transit agency with large deficits and left it unable to maintain an aging transit system, which winter brought to its knees this year.

At the height of Boston’s transit breakdown this winter, the agency’s 1.3 million daily customers were told that it would take 30 days to get everything working in proper order – assuming there would be no more snow in the interim.

The TTC’s struggles this winter – with its aging streetcar fleet, frequently unable to operate in cold temperatures, and a subway system that has shut down during numerous rush-hour commutes – are a precursor to the disruptions customers will face in the future if Toronto pursues the expansion-at-all-costs transit policy currently under consideration.

Boston’s transit problems began in the early 1990s when the city’s transit agency, MBTA, kicked off a two-decade long expansion plan. Since then, the MBTA has expanded more than any other American city.

The move, however, left the agency unable to maintain its system to a high standard. Since 2000 – when the state of Massachusetts introduced a sales tax to support the MBTA’s budget in the hope that the agency would eventually produce an operating surplus – the transit agency’s deficits have increased and it has had to issue debt to pay for all of its maintenance and modernization programs.

The more than $2.2 billion in debt that the agency has incurred to maintain – just to maintain, not expand – the transit system hasn’t been enough to keep its trains and buses in good working order. Debt payments alone accounted for 24% of the agency’s expenses last year.

The most recent official estimate of the maintenance backlog, as part of the agency’s State of Good Repair policy, is $3 billion, but some estimates say that figure has more than doubled to $6 billion. This winter will likely push that number even higher.

The agency’s inability to keep its current assets in good repair has been obvious for years. In 2009, a commission tasked to review the agency said there was “abundant evidence that the service and safety issues that plague the MBTA are considerably worse than is commonly understood – and are becoming critically worse.”

Figuring out how to eliminate the deficit has proven to be a Herculean task. Dramatically raising fares, which account for just 31% of all revenue, would result in a large decline in ridership – only making matters worse for the agency. Obtaining more money from sales taxes, which account for 42% of the MBTA’s revenue, is not possible, as it’s a fixed percentage of the sales taxes levied across the state. The MBTA’s remaining revenue – around 25% – is derived from other government funding.

In short, the agency’s deficits and inability to maintain its transit system is structural and a long-term problem that has been created by decades of poor decisions.

Why does this matter for the Greater Toronto Area (GTA) and its transit systems? The TTC, in partnership with Metrolinx – the provincial agency in charge of transit planning in the GTA – are planning a $50 billion expansion of the region’s transit infrastructure. Known as the Big Move, the plan would see new subway lines, LRTs and commuter trains across the GTA.

A commission set up by the province to recommend policies on how to pay for that expansion called for a mix of sales taxes (HST), gas taxes and higher corporate taxes – all dedicated to transit expansion.

But like Boston, the TTC – which oversees the oldest parts of the GTA’s transit infrastructure and moves the majority of people across the region – is facing a growing backlog of repairs and upgrades and has admitted that its infrastructure “should have been changed 20 years ago”. Under current funding, the TTC’s estimates its State of Good Repair backlog will grow to more than $600 million over the next decade.

The TTC also has a $2.35 billion backlog of priority capital projects planned for the next decade for which it has no funding. The agency also lists an additional $4.419 billion worth of capital projects that it won’t consider due to funding shortfalls (these projects have been pushed off the books, but include projects like the Yonge-Bloor station capacity improvements.)

The TTC is struggling to maintain its current system, yet is looking to dramatically increase capacity through funds raised from a combination of sales and corporate taxes. Boston’s example demonstrates that such a policy cannot be sustained.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute. Email him bradyyauch@consumerpolicyinstitute.org. or at (416) 964-9223 ext 236.

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