$9 billion debt part of dire MBTA financial problems

BOSTON — The Senate committee on bonding heard from transportation officials on Thursday during a fact finding hearing on the dire condition of the state’s largest public transportation agency facing more than $9 billion in debt as it continues to recover from its worst month in memory.

Repeated severe snowstorms battered the MBTA physically, causing suspensions and delays in service.

Transportation Secretary Stephanie Pollack and future Interim MBTA General Manager Frank DePaola were on hand for an overwhelmingly civil interrogation by state senators on the system’s finances and its future plans.

Pollack outlined a dire picture of the MBTA’s finances and current operating problems, noting that the system is one of the most indebted public transportation agencies in the country with total debts, including interest, amounting to over $9 billion. The agency is trying to understand where all its debt came from and what it was spent on, said Pollack.

“So at this point we’re still trying to understand what the debt has been used for to date and what implications does it have,” said Pollack.

When state Sen. Thomas McGee asked Pollack about the possibility of moving the debt off the MBTA’s books and onto the commonwealth, Pollack said that there’s still a lot of questions that need to be answered.

“We don’t know the answer to whether it makes sense to pay down that debt, does it make sense to refinance it, should we be paying annual debt service? All that’s on the table. Right now we’re just trying to figure out what all this debt was spent on,” said Pollack.

Approximately 22 percent of the MBTA’s budget is dedicated to debt service according to Pollack. The two largest chunks came as a result of the 2000 budgeting shift known as forward funding and from projects required by the Big Dig.

“While this is a large and problematic part of the operating budget, it is actually an amount that is declining as the MBTA’s operating budget because at this point the T issues less in new debt each year that it pays off through its debt service program,” said Pollack.

While the MBTA issues about $200 million in new debt each year for upkeep of current assets, the majority of expansion projects are increasingly funded by MassDOT and the federal government, not the transit agency.

Still, Pollack said that the biggest problem facing the MBTA right now is that nobody is really sure what all its problems are.

“I am convinced and I know the governor shares my view: one of the impediments to really making progress to solving the problems of the T is there is not a consensus on what the problems are,” said Pollack.

Pollack addressed the commission created by Gov. Charlie Baker and said that its “rapid diagnostic” of the MBTA will review its finances as well as its maintenance, culture, and expansion issues.

Pollack as well as DePaola declined to say whether or not they support the issuance of refunds for T riders. Both said that refunds would dramatically affect the MBTA’s finances.

by Garrett Quinn, MassLive

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