Big Dig's red ink engulfs state

Now, three years after the official dedication of the Central Artery/Third Harbor Tunnel, the state is reeling under a legacy of debt left by the massive project. In all, the project will cost an additional $7 billion in interest, bringing the total to a staggering $22 billion, according to a Globe review of hundreds of pages of state documents. It will not be paid off until 2038.

Contrary to the popular belief that this was a project heavily subsidized by the federal government, 73 percent of construction costs were paid by Massachusetts drivers and taxpayers. To meet that obligation, the state's annual payments will be nearly as much over the next several years, $600 million or more, as they were in the heaviest construction period.

Big Dig payments have already sucked maintenance and repair money away from deteriorating roads and bridges across the state, forcing the state to float more highway bonds and to go even deeper into the hole.

Among other signs of financial trouble: The state is paying almost 80 percent of its highway workers with borrowed money; the crushing costs of debt have pushed the Massachusetts Turnpike Authority, which manages the Big Dig, to the brink of insolvency; and Massachusetts spends a higher percentage of its highway budget on debt than any other state.

The scope of the debt has not previously been calculated, much less publicly disclosed, by the state's political leaders, including Governor Deval Patrick and his senior transportation officials. The Globe confirmed its calculations in interviews with the state's financial analysts.

"The Big Dig saddled us with costs we can't afford," said Bernard Cohen, secretary of transportation. "We are grappling with that legacy now. There are no easy answers."

The debt is a big part of why Massachusetts had the highest tax-supported debt per capita in the United States last year. Most of the Big Dig borrowing occurred when cost overruns on the tunnel network skyrocketed in the late 1990s and state officials scrambled to keep the partially completed project afloat.

The impact of the debt can be seen in some frustrating and alarming ways.

During the last three years, Massachusetts spent the most of any state, by far, 38 percent of its highway budget, on debt payments, according to Globe analysis of federal data. The median is less than 6 percent nationally.

The state has also been forced to meet payroll demands for 1,400 Massachusetts Highway Department workers with borrowed money because it does not have enough cash to pay them. That means that painters and clerical workers paid around $18 an hour cost the state $28.80 an hour. The 80 percent of the workforce being paid with borrowed money compares to 14 percent before the Big Dig work began.

Across the state, commuters are suffering daily for the massive shortfalls that have led to closings and stalled projects.

In Boston, Red Line trains on the Longfellow Bridge are forced to a crawl, trucks are prohibited, and the volume of passenger cars is restricted. On the South Shore, the Fore River Bridge between Quincy and Weymouth is awaiting replacement while motorists squeeze over a temporary span. And in Southeastern Massachusetts, Fall River motorists are frustrated with the pace of work on replacing the Brightman Street Bridge.

"It's a mess," said Fall River resident Muriel Pomprowicz.

Other such signs of neglect include a fleet of rusty trucks, some of them 12 years old, that are still on the road.

From the start, the Big Dig was supposed to be paid for jointly by the federal and state governments. When the project was unveiled in the early 1980s, Massachusetts residents were told by transportation officials that the federal government would pick up 90 percent of the cost. Based on cost and borrowing estimates made at that time, state residents were expected to spend around $345 million, interest payments on debt included.

But the federal government ruled that the project was not eligible for that level of federal support. As costs mounted over the next two decades, it was the state's responsibility to make up the difference. Ultimately, the federal government paid just 27 percent of the construction costs, or about $4 billion.

As a result, the Globe analysis of state and federal data shows, state taxpayers and toll-payers are responsible for a staggering $18 billion of the total $22 billion in construction and debt costs.

The Massachusetts Turnpike Authority, which was brought in to oversee the Big Dig construction in 1996 as part of a financial rescue plan, borrowed $1.8 billion, but will have to pay back almost $5 billion, including interest. Its borrowing was so expensive because it was financed over 40 years, twice as long as the vast majority of government debt, with no principal due for the first 10 years.

It is now unable to keep up with its share of the state's debt payments and is in desperate need of a bailout. Alan LeBovidge, the turnpike's new executive director, estimates a yawning deficit next year in the authority's operating budget, $70 to $100 million.

"There is a funding gap," said LeBovidge. "It's a large number, and I don't have a magic wand."

The authority's annual payments on its Big Dig debt are $115 million now. Those payments will level off at $145 million annually by 2020 and continue for another 18 years. The capital budget for construction, paving, and inspection for the Big Dig and the 137-mile Massachusetts Turnpike, meanwhile, has been slashed to $22 million, about 19 percent of the debt expense.

The Turnpike Authority raised tolls last year, but will need to raise them again and again to stay afloat. It may even add tolls on the approaches to its downtown tunnels to alleviate the load on commuters from the western suburbs.

"It's outrageous that toll-payers wind up footing the bill when others get a free ride," said Mary Z. Connaughton, a Turnpike Authority board member.

Quantifying the amount of money that was diverted to the Big Dig from statewide road and bridge repair and construction programs is difficult. A Globe analysis of data maintained by the Federal Highway Administration shows spending for state roads and bridges lagged behind other states. If Massachusetts had kept pace, it would have spent an additional $851 million.

"The Big Dig drained funding away," Cohen said. "I can't tell you exactly how much, but it's been in the billions of dollars."

There are two sources of state highway funds: state borrowing and reimbursement to the state on federal gasoline taxes collected in Massachusetts. The Big Dig, which makes up 7.5 miles of an 11,000-mile system, gobbled up about 40 percent of those funds during the last 17 years, data show.

Since planning for the Big Dig began, the state gas tax was raised only once, in 1991, to help pay for the Big Dig. That two-cent-per-gallon increase contributed a modest amount to the project.

"The state didn't want to pay the cost as we went along, so now it is time to pay the piper," said Alan Altshuler, former state transportation secretary. "It's quite a bind, and there is no obvious way out. It's something the politicians have to figure out."

So far, the answer adopted by Governor Deval Patrick and his administration is a familiar one: Borrow more money to meet current transportation needs. The administration has gained legislative approval for $5 billion in new borrowing for transportation projects and is asking for $4 billion more in a plan to get the state's 3,000 bridges into top condition over the next eight years.

Asked why the state doesn't raise taxes to help pay for its burgeoning costs, Cohen said no such course was necessary.

"We can afford these borrowings within the income stream we have today," Cohen said. "Raising taxes is not on the table."

Since taking office, Patrick has proposed merging the Turnpike Authority with other transportation agencies to increase efficiency and save money. He also has begun to reduce the number of workers being paid with borrowed money.

There have been high-level discussions about adding tolls on Interstate 93, as well, though Cohen insists only as a last resort.

"What is on the table is reform and reorganization to show people we are serious about sound policy," he said. "We need to turn things around before we ask people to dig in deeper in pocket."

Cohen said eliminating consulting contracts, reducing senior staff, and curtailing overtime at the turnpike have contributed to $14 million in savings in the last year.

But more is needed, said Michael Widmer, president of the Massachusetts Taxpayers Foundation. It simply avoids the nasty reality by borrowing deeper and longer into future, he said.

"They are not addressing the situation, they are just shifting billions of dollars of debt to future generations," Widmer said.

"Nobody wants to be the one to increase taxes," he said. "But without taxes, it means the next generation will face a deep hole."

Sean Murphy can be reached at smurphy@globe.com.