The MBTA could be nearing the edge of a financial ‘cliff’ as soon as fiscal year 2024, when the agency has exhausted all of the nearly $2 billion in federal COVID-19 assistance it has received and will face. to a budget variance of more than $230. million, officials said Thursday.
Presenting a multi-year budget projection to board members, MBTA Chief Financial Officer Mary Ann O’Hara said the T would use approximately $316 million in one-time revenue to balance its fiscal 2023 spending plan. and that it would have about $100 million left to spend the following year. . But that leftover won’t be enough to bridge a growing gap between the money the MBTA brings in and the money it spends to run trains, buses and ferries, especially with ridership slow to rebound from the crater. at the start of the pandemic.
“In FY24, even after using about $100 million in FY24, we still have a gap of $236 million,” O’Hara said. “Our fiscal cliff is then in fiscal year ’24.”
MBTA’s finance team expects the pressure to continue to mount in the years to come. Depending on revenue and cost arcs, the T could face a budget gap of between $341 million and $551 million by FY2027, according to O’Hara’s presentation.
Costs are growing faster than revenue at T, in part due to ridership trends fueled by COVID and also by significant investment in safety improvements recommended by an independent panel, a new service on extending the Green Line and the future South Coast Rail, and fuel inflation, says O’Hara. She added that fares and own-source revenue only account for 9% of the money the agency expects to raise in FY22, with the rest coming from grants from local, state and federal governments.
Officials have not outlined any specific plans to raise fares or cut services to address looming funding shortfalls, and legislative leaders have shown minimal interest in rethinking how the state funds transit. During Thursday’s preliminary discussion, O’Hara said the T is “limited in the means to fully resolve our fiscal challenges independently.”
“Service levels, maintenance and security make up 90% of our operating expenses. If we look at the (FY)22 budget, that leaves about $200 million of expenses to analyze,” he said. she declared.
The MBTA already plans to redirect $500 million towards a range of capital projects, including investments in safety, electric bus infrastructure, workforce retention efforts and grant programs. counterpart to meet short-term needs with the support of one-time federal funds.