Although the Massachusetts Bay Transportation Authority has the highest debt burden of any U.S. transit agency, transportation systems across the nation still suffer from debt that officials called unavoidable.
The MBTA has an overall debt of $5.2 billion, which rises to $8.3 billion with interest payments, the highest debt burden in the U.S., said MBTA spokesman Joe Pesaturo in an email.
“No transit system in the world turns a profit,” Pesaturo said. “Every transit system is subsidized, in one way or another, with public funding.”
A significant portion of the debt originated from public transportation projects the state committed to build as part of the Big Dig, Pesaturo said. The rest came from other capital projects and maintenance.
Pesaturo said debt service expenses for the MBTA have grown from $306.8 million in 2000 to $448.2 million in 2012.
“Approximately 30 cents of every dollar in revenue goes to pay principal and interest costs,” he said.
While Pesaturo said the MBTA and the Massachusetts Department of Transportation are working on a proposal for a long-term transportation finance plan, the debt problem is not unique to the MBTA.
“The economic downturn exacerbated the T’s financial situation and limited its means for relief,” Pesaturo said. “In this the T is not alone. The largest U.S. transit agencies are experiencing financial challenges, and the majority have raised fares since 2007.”
Aaron Donovan, media liaison of New York’s Metropolitan Transport Authority, said the MTA’s current outstanding debt is $32 billion.
“Our debt is manageable,” Donovan said. “Our debt service is currently projected to rise in the coming years, stabilize and then gradually decline.”
He said the MTA spends about $2.3 billion per year servicing that debt. This equates to about 18 percent of the annual operating budget, which is $13 billion a year.
Although these figures are much larger than that of the MBTA, the debt burden is not as heavy.
“The MTA is a larger organization than the MBTA, with higher expenses and debt, but also higher revenues and state support,” Donovan said.
He said as a whole, the MTA carries about 8.5 million riders a day.
Comparatively, the MBTA services an average of 1.3 million riders every weekday, according to its website.
Donovan said debt has been used as an instrument to finance previous and current capital rebuilding efforts and to rehabilitate the infrastructure that the MTA maintains. This includes tracks, signals, switches, stations and maintenance facilities.
The Southeastern Pennsylvania Transportation Authority has an overall debt of $547 million with an annual debt payment of $51 million, said SEPTA Press Officer Andrew Busch. The system is expected to pay that amount for the next several years.
“That is, by pretty much all standards, considered to be a relatively low debt ratio, not only for SEPTA, but by standards of the transit industry and just government entities as a whole,” Busch said. “We are very comfortable with our debt ratio.”
SEPTA has an average weekday ridership across all rail systems of 830 million riders, according to its website.
Busch said SEPTA takes on debt for various improvements, but rarely so.
“When we take out it’s generally for new vehicle purchases, new trains or vehicles. There may be occasionally an improvement project that we might take some debt on, if that’s the best way to finance it,” Busch said. “We are very conservative in terms of our finances in general and [in] keeping that debt number low.”
He said revenues are built through fares, which make up about 40 percent of the budget. The rest comes through government subsidies.
While the MBTA faces constant criticism for its lingering debt, Busch said it is a challenge for transit agencies to keep budgets balanced.
“It is pretty much standard around the transit industry that you’re operating at a significant deficit,” Busch said.
He said it is not possible to generate enough profit through passenger fare revenue alone to keep the transit system running.
“It would get to a point where the fares wouldn’t be affordable for most riders,” Busch said. “So that’s a challenge that everybody who’s operating transit around the country faces.”
Busch said under these operating circumstances, it is be unlikely that transit systems would operate for profit.
“You have to keep fares affordable for those people and provide a massive amount of service,” Busch said.
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