A couple of weeks ago, I went to Transportation Camp New England, a transportation unconference. Basically, the idea is you get a whole lot of smart people into the same place and let them lead the workshops, round tables, breakout sessions, etc. Leave lots of time between the sessions for exchanging ideas, challenging conventional wisdom, and otherwise generating the kind of valuable interaction that breeds innovation.
One of the sessions that I attended had to do with transit governance, and how to design effective systems for high-quality, reliable, efficient service. The discussion was good, if a bit meandering, and there were several interesting take-aways. For me, though, the part focusing on funding stuck the most.
What is Transit Governance, and Why Should I Care?
To start with, let me admit that transit governance is not exciting. It ranks up there with procedural votes in the senate, or the US Tax Code. But governance is really important. At its core, governance structure outlines who has authority to decide how money gets spent, and that’s something we all care about.
For example, transit governance is going to impact whether the Green Line Extension gets built or shelved. It’s going to determine if South Coast Rail is ever going to move forward. Closer to home, it will decide if the State Street BRT project in Springfield gets implemented, or ends up just being another report collecting dust.
Governance dictates who has the final word on project, or a particular service, or whether you can even appeal a decision if your pet project or service is cut. Governance dictates who builds the project list to begin with.
There are a lot of governance arrangements used around the country, and the Eno Foundation produced a series of case studies about transit governance called Getting to the Route of It: The Role of Governance in Regional Transit. The report compares the MBTA quite favorably to other transit governance systems around the country. This is for a couple of reasons:
- The MBTA is a unified system, in contrast to the San Francisco Bay Area for example, which has 27 distinct transit providers in the region.
- Because of the economic and political importance of Boston, the state has a vested interest in keeping the MBTA solvent and operational.
Anyway, this is an interesting report and I encourage anyone interested in this topic to read through it.
How Massachusetts Transit is Funded
Getting back to the Transportation Camp session on transit governance, the main issue that stood out for me was the discussion on funding. Over half of all MBTA operating revenue comes from the state, and the numbers aren’t that different for the other regional transit authorities (like PVTA).
We discussed at length the challenges of relying so much on state funding. The biggest problem is that it disconnects who pays and who benefits. In economics, there is the principle of user pays/user benefits. This means that people who use a service should pay for that service, either directly through user fees (think electric bill) or indirectly through taxes (think municipal taxes for garbage collection).
However, the MBTA is given 20% of statewide sales taxes through the system called “Forward Funding.” This means that sales tax revenue from Pittsfield is subsidizing transit service in Cambridge. This is one of many reasons why the politics of funding the MBTA have been so fraught. The people who are paying for the service aren’t the ones benefiting (at least directly*).
A much smaller share of revenue comes from local assessments, which are paid by member communities based on a formula (I’m not sure what the formula is, but I think it’s a combination of population, ridership, route miles, and probably other factors as well). It should be noted that state-originated funding comprises 55-60% of MBTA revenue, while local assessments are just 8%.
Regional transit authorities (RTAs), such as the Pioneer Valley Transit Authority, have more or less the same financial arrangement as the MBTA, though less of their funding comes from the state. Some RTAs also use federal funding for operations, typically for paratransit. Here is the FY13 PVTA budget breakdown as a comparison:
The MBTA and RTAs do differ in how their oversight boards are constituted. While the MBTA has a governor-appointed oversight board, RTA boards are composed of elected officials from the member communities. On the one hand, that probably makes RTAs more responsive to the needs and concerns of their constituents; on the other hand, it means that the governing entity (municipalities) has little control over the bulk of their funding (from the state).
Connecting Money to Decisions
A key point that came out of the discussion at Transportation Camp was the funding sources should be connected to the governing body. And, furthermore, that the governing body should be representative of the people benefiting from the service. The Massachusetts model of transit funding, with so much support from and/or control by the state, doesn’t quite hit the mark.
To provide a contrast, transit agencies in Oregon are funded through a regional payroll tax. This adheres more closely to the user pays/user benefits principle, by creating a regional revenue source for a service that benefits the region. There was a lot of speculating on whether the MBTA could transition to a funding model more like that – phase out some state funding and replace it with regional funding, like a small payroll tax or a regional sales tax, for example.
Given that the MBTA and RTAs only recently went through transportation reform in 2009 which bound them more closely to MassDOT, I find it unlikely that any transit governance devolution is coming soon. But if we have another winter like 2014, or some other major transit failure, it is entirely possible that the state may want to rethink how it supports transit. Such an effort would be tedious, boring, and, of course, crucially important.
*There is a lot of argument about this point. Those who support Forward Funding argue that the economic engine of Massachusetts is Boston, and so people around the state benefit from the city having functional transportation. I’ll let people continue to argue about it, and just make the point that this funding mechanism severely complicates the politics of “fully funding” the MBTA.