KEEPING on TRACK Our Second Progress Report on Reforming and Funding Transportation Since Passage of the Massachusetts Transportation Finance Act of 2013

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KEEPING on TRACK Our Second Progress Report on Reforming and Funding Transportation Since Passage of the Massachusetts Transportation Finance Act of 2013 KEEPING ON TRACK Our Second Progress Report on Reforming and Funding Transportation Since Passage of the Massachusetts Transportation Finance Act of 2013 Written by Produced by Rafael Mares Kirstie Pecci FEBRUARY 2015 KEEPING ON TRACK Our Second Progress Report on Reforming and Funding Transportation Since Passage of the Massachusetts Transportation Finance Act of 2013 Rafael Mares, Conservation Law Foundation Kirstie Pecci, MASSPIRG Education Fund February 2015 ACKNOWLEDGMentS The authors thank the following MassDOT; Rani Murali, former Intern, individuals for contributing information Transportation for Massachusetts; or perspectives for this report: Jeannette Orsino, Executive Director, Andrew Bagley, Director of Research Massachusetts Association of Regional and Public Affairs, Massachusetts Transit Authorities; Martin Polera, Office Taxpayers Foundation; Paula of Real Estate and Asset Development, Beatty, Deputy Director of Budget, MBTA; Richard Power, Legislative MBTA; Taryn Beverly, Legal Intern, Director, MassDOT; Janice E. Ramsay, Conservation Law Foundation; Matthew Director of Finance Policy and Analysis, Ciborowski, Project Manager, Office MBTA; and Mary E. Runkel, Director of of Transportation Planning, MassDOT; Budget, MBTA. Jonathan Davis, Chief Financial Officer, MBTA; Thom Dugan, former Deputy This report was made possible thanks Chief Financial Officer & Director, to generous support from the Barr Office of Management and Budget, Foundation. MassDOT; Kristina Egan, Director, Transportation for Massachusetts; Adriel © 2015 Transportation for Massachusetts Galvin, Supervisor of Asset Systems Development, MassDOT; Scott Hamwey, The authors bear responsibility for any Manager of Long-Range Planning, factual errors. The views expressed in Office of Transportation Planning, this report are those of the authors and MassDOT; Dana Levenson, Assistant do not reflect the views of our funders Secretary and Chief Financial Officer, or those who provided review. Cover photos: CapeFLYER: User:Pi.1415926535, Wikimedia Commons, used under Creative Commons license; bicyclists: Bart E via flickr.com, used under Creative Commons license; WRTA bus: WRTA; Tobin Bridge: Derek Yu via Wikimedia Commons, used under Creative Commons license. TABLE OF ContentS IntroDUction 1 EXECUtiVE SUMMARY 2 FY14 Projections vs. Actuals 2 Achievements of the Transportation Finance Act to Date 3 On the Horizon 4 OUR PROGRESS IN IMPLEMenting THE NEW LAW 5 Requirements Met 5 Missed Deadlines 6 Upcoming Deadlines 7 THE FINANCIAL State OF OUR TRANSportation SYSTEM 8 Comparison of Actual Revenues and Expenses to Projections for MassDOT 8 Actual Spending Compared to Projections for FY14 11 Comparison of Actual Revenues and Expenses to Projections for the MBTA 13 Upcoming Changes in Revenues and Costs 15 NEW TRANSportation INVESTMentS 18 Transportation Finance Act of 2013 Capital Projects 19 CONCLUSION 26 NoteS 27 IntroDUction IN 2000, the Legislature passed compare the projections underlying legislation known as “Forward the Transportation Finance Act of Funding” with the goal of making 2013 to actual expenses and revenues the Massachusetts Bay Transportation as they come in. This report is the Authority (MBTA) financially self- second in a series of Transportation for sufficient. To do so, Forward Funding Massachusetts (T4MA) progress reports dedicated a portion of the sales tax to that compile the necessary information the MBTA and relied on projections to avoid the mistakes of the past. of increased sales tax revenue. Unfortunately, these projections Keeping on Track provides you with never came true. The sales tax updated information about the underperformed and as a result a financial state of the Commonwealth’s structural operating deficit between transportation system, completed expenses and revenue existed for many statutory requirements, missed years. deadlines, and improvements made through new transportation More than a year ago, the Legislature investments. passed the Transportation Finance Act of 2013 (“the Act”) to begin to address the state transportation system’s funding gap, which has repeatedly been estimated to be over $1 billion The Commonwealth’s previous and per year. Based on its own projections, the legislation aimed to raise an painful experience with receipts falling average of $600 million per year. far short of projections is why we The Commonwealth’s painful experience with actual receipts lagging publish these progress reports on the behind Forward Funding projections strongly points to the need to 2013 Transportation Finance Act. TRANSPORTATION FOR MASSACHUSETTS | FEBRUARY 2015 1 EXECUtiVE SUMMARY Below is a list of the most significant FY14 PROJectionS ways revenue and expense projections differed from revenue that was actually VS. ActUALS collected and spent in FY14: WE NOW HAVE, for the first time, • None of the gambling revenue, data to help us evaluate how close projected at $25 million for FY14, the revenue and spending projections became available due to the delayed match the actual revenue raised implementation of the Gaming Law. for and dollars spent on state While this funding is now expected to transportation. Massachusetts has begin to flow in FY15, this new revenue completed its first fiscal year since source may be lagging behind the passage of the Transportation Finance projection schedule from here on out. Act of 2013. • The motor vehicles sales tax, which Overall, actuals fell $41 million short became the transportation system’s of projections, a small difference for dedicated portion of the sales tax as a budget of over $2 billion. This is as part of the changes implemented expected; the greater financial pinch pursuant to the Act, brought in will be felt in future fiscal years, when $32 million in FY14 more than was the projected funding gap grows and projected. Presumably, this is a result the uncertainties increase. of an unexpected increase in car sales, a national trend since people held off purchasing cars during harder economic times. Additional revenue, although not likely at the same level, Overall, the actual FY14 budget may be sustained in the future. for transportation fell $41 • The employee payroll and benefits of the Massachusetts Department million short of projections. of Transportation (MassDOT) 2 KEEPING ON TRACK were down, while construction example, a new stop on the CapeFLYER and maintenance, and materials, was added in Wareham and the MBTA supplies, and service costs were up. signed a contract for the procurement of Red and Orange Line cars. MassDOT also • Estimates for ice removal costs borne revealed that a new commuter rail station by MassDOT ($44 million for last year) will be built in Allston and Governor are much less than actual costs ($134 Charlie Baker made $100 million in million last year, and an average of additional funding for local roads $80 million a year between FY08 available. In addition, there currently and FY12). Coupled with increased are bids out for the rehabilitation of the costs for road salt starting in FY15, I-91 Viaduct and for 30 diesel multiple this category is a likely candidate units, which are independently powered for continued higher spending than vehicles that run on commuter rail tracks expected in the future. and require no separate locomotive. • In FY14, the MBTA brought in $31 Operational improvements, such as all- million more in fares than originally electronic tolling on the Tobin Bridge, projected, all stemming from an service improvements at regional increase in ridership, prior to any transit authorities (RTAs), MBTA late- fare increase. night service, and new and reinstated weekend commuter rail service have • Wages at the MBTA were up about also been implemented. Many planning 6.8% from projections due to back requirements of the Transportation pay wage accruals as a result of Finance Act of 2013, such as the Project arbitration, costing the transit Selection Advisory Council and the RTA agency an additional $29 million. comprehensive service plans, have been advanced; a few deadlines were missed. User:Pi.1415926535, Wikimedia Commons, used under Creative Commons license. ACHIEVEMentS OF THE TRANSportation FINANCE Act to Date Even without sufficient revenue available for additional capital projects in FY14, MassDOT and the MBTA were able to begin a number of capital improvements. These rely on the new revenue from the Revenue from the Transportation Finance Act enabled the Transportation Finance Act of 2013 that addition of a new stop on the CapeFLYER, the seasonal rail will be available in the coming years. For service between Boston and Cape Cod. TRANSPORTATION FOR MASSACHUSETTS | FEBRUARY 2015 3 we can point to the fact that the The Commonwealth has added a new MBTA signed favorable contracts for commuter rail and paratransit stop on the CapeFLYER, signed a contract services. These contracts provide some significant savings over projections, to get new Red and Orange Line cars, likely allowing the MBTA to meet its own-source targets—the Act’s announced a new transit stop in Allston, requirement to raise revenue through sources the MBTA controls, such as bid out rehabilitation of the Springfield fares—in the foreseeable future. Viaduct, improved regional bus service, Likewise, the MBTA succeeded in procuring Red and Orange Line cars and started installing electronic tolling. at almost $200 million below the original estimates. As designed, (i.e., prior to any reductions in funding the transportation system has recently experienced)
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