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MBTA forges plan to reduce deficit

Sale of revenue at parking lots is among ideas

By Eric Moskowitz
Globe Staff / February 23, 2011

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Facing a projected deficit of more than $130 million for the coming year, MBTA leaders outlined a plan yesterday to balance the budget without raising fares or cutting service.

Included is a proposal to sell parking revenue at most MBTA lots to investors in exchange for up-front cash to pay off debt, as well as a deal to lease the 1,275-space parking garage below North Station and TD Garden, which combined would generate or save $80 million for the year.

T leaders also plan to keep staffing below 6,000 employees, the lowest in at least a decade, and boost ridership by 3 percent or more, as well as to lean heavily on new advertising.

The authority plans not only more billboards, but ads on the CharlieCard and on the MBTA website.

And it wants to do away with the first article in the Customer Bill of Rights, a Constitution-type scroll framed in a carved display case at T headquarters. In lieu of that right — which entitles people to a complimentary fare whenever a train, bus, or trolley is delayed 30 minutes or more — the T would invest in long-awaited countdown signs at Red, Orange, and Blue Line platforms, telling subway riders how many minutes remain until the next train.

“I really want the customers to know that we’re going to eliminate the program in [order to] make what I think is a substantial improvement in the subway system,’’ said Richard A. Davey, general manager for the Massachusetts Bay Transportation Authority.

The package of new revenue and budget cuts that Davey and the T proposed would still leave a projected $33 million gap for fiscal 2012, which starts July 1. To make up the difference, they suggested again refinancing some of the T’s debt, more than $8 billion in long-term principal and interest payments, to save in the short term. In the process, the T could balance its 2012 budget while adding just $1 million to long-term costs, said Jonathan R. Davis, deputy general manager and chief financial officer.

The final decision lies with the five-member board that oversees the MBTA and the state Department of Transportation and that which is scheduled to pass the final budget by April 15.

Members who sit on the board’s finance subcommittee asked MBTA staff yesterday to prepare alternatives that show what cuts would follow — how many fewer buses would run, for example, or how expensive fares would get — if the T avoided refinancing debt to make up the $33 million difference.

“I’d like to know and be able to evaluate what the pain level is if we went after that $30 million,’’ said John R. Jenkins, , the Natick resident and insurance agency owner who chairs the board.

Earlier, Davis projected the coming year’s deficit at $127 million, but that grew to more than $135 million after calculating extra contributions to pension funds that the T is required to make to offset market losses.

The T’s proposal includes a number of small savings or revenue ideas that add up, including $4.8 million by eliminating more overtime requests, $2.2 million by restructuring station and equipment cleaning contracts, $1.1 million by switching buses to a low-sulfur diesel fuel, and about $5 million in new advertising.

But the biggest chunk would squeeze millions more from parking lots and garages. Last month the MBTA proposed securitizing revenue from most of its parking areas, in other words, selling to investors the long-term income associated with nearly 50,000 parking spaces, in exchange for a lump sum today. That might mean $300 million in one-time cash, which the T could use to pay off debt.

That, along with refinancing, could help reduce next year’s scheduled debt payments from about $450 million to $400 million.

That reduced debt figure accounts for about one-fourth of the T’s nearly $1.7 billion projected budget. About $550 million would be covered by fares and advertising; communities served by the T kick in more than $150 million, while a chunk of the state sales tax and additional legislative help accounts for more than $1 billion.

Davey has said the parking plan would let the T retain control of prices for commuters at the lots involved. Separately, the T wants to lease the North Station garage for $45 million a year. Davey said he supports that plan, even if it might drive prices higher, because the garage is used not by MBTA commuters but by motorists driving to TD Garden events or with business around North Station.

The T estimates that eliminating the Bill of Rights refund could save $600,000 annually. Since 2008, the T has approved an average of 69,546 yearly claims, the vast majority of them filed by riders of commuter rail, which provides roughly 10 percent of the MBTA’s 1.3 million daily trips.

The money instead could pay for Red, Orange, and Blue Line countdown signs, benefiting about 40 percent of the system’s riders, some of them commuter rail customers who are making the last leg of a commute to work or the first leg of a trip home, Davey said.

In other business, the board discussed an audit released last month by outgoing Auditor A. Joseph DeNucci’s office that criticized as too generous the T’s contract with the Massachusetts Bay Commuter Railroad Co., the private consortium that is paid more than $250 million a year to operate commuter rail.

Board member Ferdinand Alvaro Jr., a corporate lawyer from Marblehead, said he wants the T to consider ending privatization of commuter rail when the contract expires in mid- 2013.

“It seems to me that we’ve kind of got the worst of both worlds here,’’ Alvaro said. “We’ve outsourced something which we arguably could have done ourselves and wound up spending a lot more money than if we’d done it ourselves.’’

Davey said afterward that MBTA and Department of Transportation leaders are considering it “as part of our due-diligence to think about the next generation contract for commuter rail.’’

Eric Moskowitz can be reached at emoskowitz@globe.com.