Op-Ed from State Representative Denise Provost
Many people were shocked last week to read media reports that the state proposes scaling back the Green Line extension. Most of us in Somerville were feeling fairly confident about our hard-won commitment to build this long overdue project. It wasn't just the Green Line, either. The state, through its Executive office of Transportation (EOT) also proposes to cut Somerville (and Medford) from the Urban Ring project, and to delay construction of the Community Path.
Although EOT says that it is still "committed" to building the Green Line extension to Route 16, its official plans call for a scaled-back project, and is conditioned on federal grant funding. Other communities have seen their projects cut, both transit and highway. What could have happened? Were these grim headlines just another sign of the world wide economic collapse?
The answer is that transportation funding in Massachusetts has been in a long, slow collapse of its own, that long predates the current crisis in the wider economy. It's a story that goes back for decades. For the sake of simplicity, I'll start telling this tale from the beginning of a recent chapter.
2007: The Sad State of Transportation Finance in Massachusetts
In January 2007, Massachusetts greeted a new Democratic Governor into office. Many had high hopes for fundamental changes in state policies and priorities. Those concerned about the state's transportation system looked for action on the new administration's theme of "fixing what was broken" in our Commonwealth.
The Governor had inherited a transportation system which was, by 2007, in a sorry state. Most investment in public transit had gone for years into expanding commuter rail service, at great expense, to a relatively low number of riders. The soaring cost of the Central Artery Tunnel project (CA/T or "Big Dig") absorbed most available federal highway funding; the state covered its growing share of Big Dig costs by issuing debt in the form of bonds.
The state did have a strategy for repaying principal and interest (the latter is called "debt service") on the billions it was borrowing. Part of its plan was to use future federal grants as a revenue stream - a kind of collateral - to repay this debt. As Secretary of Administration and Finance for Governor Paul Cellucci, Charlie Baker - now a Republican candidate for governor - promised to forego $1.5 billion in federal transportation funds which Massachusetts had not yet received, an obligation of about $150 million a year until 2015 [http://www.boston.com/news/local/massachusetts/articles/2009/07/17/bakers_role_in_big_dig_financing_may_test_for_his_campaign/]
Another state tactic for avoiding Big Dig costs was to transfer this debt to the Massachusetts Turnpike Authority (MTA) and to the MBTA. In refinancing its CA/T debt, the MTA in 2001 entered into an unfortunate "credit default swap" agreement with the firm UBS. The collapse of that deal reduced the Turnpike Authority's bonds almost to "junk bond" status, putting the Authority into precarious financial condition.
The MBTA, by the start of FY 2007, was bearing $8.1 billion in debt, $2.9 billion in interest alone. Much of this amount was Central Artery debt transferred by the state to the MBTA. The MBTA's debt service costs for 2009 consequently reached $436 million, requiring MBTA to spend a higher proportion of its operating budget for debt service than does any other transit authority in the nation http://www.boston.com/news/local/massachusetts/articles/2009/07/17/bakers_role_in_big_dig_financing_may_test_for_his_campaign/.
Complicating the picture, the Governor had made a campaign promise to bring a new rail line to New Bedford and Fall River. He had also taken a position against increasing the gasoline tax. The administration clearly had challenges ahead.