MBTA Budget & Capital Performance

The ongoing COVID-19 pandemic has continued to have significant impacts on the MBTA in FY22, primarily through significant declines in MBTA ridership and associated revenue losses. Fare revenue typically funds 40 percent of operating costs across the authority. In FY22, this fare recovery ratio was just 19 percent, which is almost twice what it was in FY21 but subsidies and other revenue sources supported the remaining 81 percent of costs to run service and operate the system. To mitigate the lost fare revenue in FY21 and FY22, the MBTA received over $842 million in one-time federal relief funding between the CARES Act and CRRSAA in FY21.

Operating Budget

The fare recovery ratio is the revenue received from fares and passes divided by total operational expenses, excluding expenses due to debt. This measures how much of the cost of providing transit services is paid directly by MBTA riders. The FY22 fare recovery ratio was 19 percent, a noticeable increase from 10.2 percent in FY21 but still significantly lower than 33.5 percent in FY20 and 42.7 percent in FY19 before the pandemic.

Total expenses (not including capital spending) encompass wages and benefits for employees, materials and services involved in providing transit service, contracted transit services like commuter rail and the RIDE, other operating expenses, and debt service. Total expenses grew 2.3 percent from FY21 to $2.21 billion in FY22, while operating expenses grew 5.5 percent. Total expenses in the FY23 budget are $2.55 billion, an increase of 8 percent above the FY22 budget baseline.

Total revenues encompass fare revenues from transit riders, other operating revenues such as from advertisements and parking, state and local assistance including sales tax revenue, and other non-operating revenues. Total revenues grew 14.4 percent from FY21 to $3.02 billion in FY22, due to a combination of non-operating sources, additional state and federal assistance, and operating revenues (fares and other operating revenues), which increased by 92.8 percent as ridership began to recover. Total revenue sources in the FY23 budget are $2.3 billion, a 17 percent decrease from the FY22 budget, which had incorporated a one-time federal revenue and fare revenue awarded due to the COVID-19 pandemic.

The closing balance for the operating budget is defined as total expenses subtracted from total revenues. The closing balance in FY22 was $816 million, which was achieved with the assistance of $842M in one-time federal relief funding.

Capital Projects

Capital Investment Plan (CIP)

The MBTA Capital Investment Plan (CIP) is a rolling five-year investment program to improve and modernize assets, meet strategic priorities and performance goals, and expand service. The annually updated CIP includes over 500 capital projects working to improve reliability, safety, and accessibility for riders. More information on the current CIP and historical updates by fiscal year can be found on the MBTA website.

CIP spend largely funds projects in two broad categories: projects focused on reliability and modernization, and projects focused on expansion of the MBTA system or MBTA service. Major capital projects currently include the Green Line Extension, the Red Line Transformation and Orange Line Transformation programs, South Coast Rail, and Fare Transformation. Total spend in FY22 decreased by $320 million over FY21, with a total of $1.61 billion spent on capital improvement projects. Of the total, $1.11 billion was spent on reliability and modernization projects, with $493 million spent on expansion. Total capital spent was 61 percent of the FY22 programmed amount.

Projects Completed On/Under Budget

This measure tracks the percent of capital projects completed on or under budget. In FY22, 100 percent of all construction contracts were completed on or under their approved budget, an increase from 94 percent over FY21. Cost increases occur for a variety of reasons, including unforeseen conditions, errors or omissions in design, and scope added to projects when determined to be advantageous. The MBTA’s Capital Programs departments closely track cost performance on projects and are implementing an electronic project management system to improve efficiencies and transparency. Capital Programs maintains a Lessons Learned database and conducts risk workshops prior to bid as cost control measures. The MBTA is also investing in the Capital Programs QA/QC program to improve design quality.

Projects Completed On/Under Time

This measure tracks the percent of capital projects that were completed on or under their approved contract duration. In FY22, 75 percent of completed construction contracts were finished by their approved delivery date, an increase from 57 percent in FY21. 25 percent of projects were completed within 120 days over their approved duration. Projects are delayed for many reasons, but delays are largely caused by unanticipated field conditions and scope added to projects when determined to be advantageous. To reduce delays, the MBTA identifies and accounts for construction risks early in the development of contract duration, exploring opportunities to complete enabling or early works ahead of construction projects, and working with design and contracting partners to improve the overall timeliness of the capital program. The MBTA is also implementing a program of exclusive construction access to track and station infrastructure intended to decrease the cost and duration of its construction projects.

Average Elapsed Time Between Advertising and Notice to Proceed (NTP)

When the MBTA advertised a contract to advance a capital project in FY22, it selected a contractor and approved work to begin within 113 days on average, a decrease of 13 days compared to FY21 and longer than the target of 90 days. The MBTA is working with the engineering community to ensure better quality of its bidding documents and contractors, to maintain bid schedules and reduce procurement timelines. In addition, the MBTA is streamlining internal processes and procedures to ensure timelier processing of documentation for contract execution of its Capital Projects.