What would you do to get the T out of its financial mess?

BostonUrbEx said:
I don't understand.

So because Dorchester is poor but has more full buses, you think they'll lose their buses to West Roxbury because they're rich with empty buses?

Doesn't make sense. If anything, West Rox loses buses and Dorchester keeps theirs.
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Unless I'm completely missing the boat, if each community is asked to shoulder the actual cost (or close to the actual cost) of providing all of that service, places like Dorchester are going to have to pay more to keep all of those buses. They wouldn't lose buses to West Roxbury, they just wouldn't be able to afford all of what they have; meanwhile, the wealthier, more car-dependent areas would opt to trim or eliminate service since no one uses it.
 
What are you all talking about? Dorchester and West Roxbury are in the same city.
 
Shove more costs onto the towns, who will then beg the state for more aid- one might as well just go to the state directly.
 
BostonUrbEx said:
^ This.

So I don't see why the City of Boston would axe Dorchester service more significantly than anywhere else.
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Sorry, I was operating under the idea that assessments would be pushed to a more local/neighborhood level. But even at the city level, the probability that Boston would be able to sustain the network we have today if we were to pay for all of the costs associated with it is likely pretty low. Not to mention, there are only so many insignificant, lightly-used routes in West Roxbury, et. al., to cut before you start eating into the core network.

And that's exactly why the municipal assessments we do have are only one piece of MBTA funding. If you segregate completely by municipality and leave each one to determine how much service it wants to or can fund by itself, the whole network will start to crumble. Each city would make isolated decisions to cut or eliminate services that would reduce network connectivity and negatively impact overall system ridership.
 
Bankruptcy is a terrible idea. First off, the City of Boston is doing fine. And the MBTA declaring bankruptcy would just increase costs in the long term as borrowing costs would go up. All that's needed is more state funding, and it really wouldn't take that much.

I like the idea of increasing assessments and the base of towns that are assessed and/or assessing them in a fairer way. Municipalities have a lot more clout with the state in terms of getting aid, so it would be an indirect way of getting more state funding
 
massmotorist said:
Bankruptcy is a terrible idea. First off, the City of Boston is doing fine. And the MBTA declaring bankruptcy would just increase costs in the long term as borrowing costs would go up. All that's needed is more state funding, and it really wouldn't take that much.
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I never said bankruptcy was a good idea - I said it was the best of several bad ones. (As an aside, I'd argue that the state of Boston infrastructure outside of the T, the ever-creeping-upward tolls on the Pike which has become something of a load-bearing revenue source and the amount of money we've sunken into the Big Dig are all great indicators that the city of Boston is not, in fact, doing fine.)

Would the cost of borrowing money go up in the long term? Yes it would.
Would the organization in charge of Boston's subway network have nothing in common with the pre-bankruptcy MBTA other than the name? Yes it would.
And is that necessary? It just might be.

Declaring bankruptcy lets us shift or discharge a lot of the MBTA's existing debt. Like as not, any unfortunate lending deals the MBTA is currently locked into all get wiped off the board, and whatever Big Dig mitigation debt doesn't get discharged is probably shifted back onto the the Commonwealth.

Bankruptcy is also the most direct way to toss the MBTA's existing operating charter - you know, the one that says the MBTA can't serve anybody outside of its operating district and also fails to set its operating district as 'the Commonwealth of Massachusetts.' That charter needs to be discarded and rewritten for that reason alone.

Sending the MBTA more state aid is great, and I'm all for that, and I'd like to see that, but that can also be handled in bankruptcy and the ensuing reorganization. More state aid on its own treats the symptoms without solving the problem - and I'm sorry, but I don't see any way to solve the problem without some kind of drastic measure. And to be frank, bankruptcy is the best possible drastic measure we can take.
 
Right now, the MBTA has a credit rating of Aa1; I would have to imagine a post-bankruptcy MBTA would be substantially worse, unless literally all the debt was taken over by the state or by the reformed agency.

Changing the MBTA's district has been done before, so I'm not sure why it would suddenly require bankruptcy to change it again.
 
novitiate said:
Right now, the MBTA has a credit rating of Aa1; I would have to imagine a post-bankruptcy MBTA would be substantially worse, unless literally all the debt was taken over by the state or by the reformed agency.

Changing the MBTA's district has been done before, so I'm not sure why it would suddenly require bankruptcy to change it again.
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Changing the MBTA's district, at present, requires that the new inclusions vote to be serviced by the MBTA. That's how you end up with things like the South Coast Task Force - promising everybody everything to get that vote of approval.

Declaring bankruptcy would let us throw out the charter, write a new one that says 'The MBTA serves the entirety of Massachusetts' and there would be no vote of approval required by the many towns, small and large, not served by the MBTA. (That would also open the door to consolidating the existing regional services such as SRTA, MVRTA, and GATRA under the MBTA.)

As to the MBTA's credit rating - I'm frankly surprised that it's that high. I would've expected it to be lower.
 
Commuting Boston Student said:
(As an aside, I'd argue that the state of Boston infrastructure outside of the T, the ever-creeping-upward tolls on the Pike which has become something of a load-bearing revenue source and the amount of money we've sunken into the Big Dig are all great indicators that the city of Boston is not, in fact, doing fine.)
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These are all State not City issues.

Declaring bankruptcy lets us shift or discharge a lot of the MBTA's existing debt. Like as not, any unfortunate lending deals the MBTA is currently locked into all get wiped off the board, and whatever Big Dig mitigation debt doesn't get discharged is probably shifted back onto the the Commonwealth.
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I think you're misunderstanding bankruptcy law. In Ch 7 the MBTA's debts would be eliminated and the MBTA would be liquidated (presumably that means privatization).
But municipalities in bankruptcy don't liquidate, they reorganize (Ch. 9 for muni's I think). So a bankruptcy trustee would come in and approve a plan for reorganization. This undoubtedly includes:
1. Drastically reduced service.
2. Extremely high fares.
3. Probably rewritten employee contracts and perhaps reduced pension liabilities.
4. Possibly reduced outstanding debt (if the MBTA can convince the trustee that it needs reduced debt to continue to operate).

So you hammer service (bad), reform union contracts (good) and maybe reduce outstanding debt. And for this your future lending costs skyrocket.
 
I'm a software engineer, not a bankruptcy lawyer. I may well be conflating various types of bankruptcy - bankruptcy law isn't exactly straightforward and simple.

Privatization (and any other 'free-market solutions,' as coined by Mark from Arlington) are included under the list of bad ideas I considered as being worse than bankruptcy. I'm approaching this from the angle that all of the following is true:
  • Reorganization on some level is necessary - the MBTA will never be completely free of its problems without reorganization.
  • No matter what you do, fares are going up again.
  • Municipalities that go bankrupt can be reorganized in such a way that preserves all existing service.
  • The MBTA needs to be a state-run, state-wide public service.
I think if you can force the state to re-assume the Big Dig mitigation debt, or have it discharged entirely, then there's enough leeway in the existing MBTA finances to be able to get out of Chapter 9 with another fare hike (bad) but no more service slashing (good), and as you said, Chapter 9 gives a receiver special power to adjust contracts as necessary and the MBTA charter can probably be rewritten as well.

I'm not saying bankruptcy is a magic pain-free solution to fix the mess we've gotten ourselves in. In fact, bankruptcy would probably cause maximum pain, but it would do so all at once - letting us get out of the 'painful' part of solving our problems and into the 'happy times' that much faster.
 
I'm not saying bankruptcy is a magic pain-free solution to fix the mess we've gotten ourselves in. In fact, bankruptcy would probably cause maximum pain, but it would do so all at once - letting us get out of the 'painful' part of solving our problems and into the 'happy times' that much faster.
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I wonder if the best solution might not be threatening bankruptcy. If the MBTA starts talking about bankruptcy as a real option, that could get the unions back to the table and prompt the state to take some of the debt.
 
AmericanFolkLegend said:
I wonder if the best solution might not be threatening bankruptcy. If the MBTA starts talking about bankruptcy as a real option, that could get the unions back to the table and prompt the state to take some of the debt.
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That... might actually work, actually.

I'd certainly prefer to see the MBTA hinting that they'll press the bankruptcy button if it comes to that, rather than see them hinting about a second round of fare hikes / service cuts.

It'd probably inspire all the momentum that was pressing against the T for 'fare hikes, round 1' to press against the state instead. Instead of "No Hikes, No Cuts" it could be "No Bankruptcy!"

...yeah, I'd definitely be down with this.
 
People are confused.

Chapter 7 would involve literally selling the MBTA's assets to the highest bidder and ceasing all operations entirely. Not "privatizing".

Chapter 11 would allow the MBTA to continue as a going concern while discharging debts. But I doubt a bankruptcy court would look highly on the idea of discharging debts of a public authority simply because the legislature refuses to appropriate more money. You can apply for bankruptcy and a judge can say "no, I reject your bankruptcy petition." And bankruptcy does not remove statutory civil service protections nor does it force the removal of management. Only in extreme cases of mismanagement would a judge order the removal of management and the appointment of a trustee. Even Enron didn't get a bankruptcy trustee. The MBTA doesn't remotely rise to that level.

And only the board could order this. It's not going to happen, if it did a judge would shut it down, and if it wasn't shut down it wouldn't accomplish what you'd want.
 
Right, but Enron was a private company. The MBTA is, unless something changed when I wasn't looking, a fully public municipal agency. It's not a "public-private partnership," and therefore wouldn't go bankrupt in the same way as a broke business or an Enron would. (The MBCR, which IS "public-private," is distinct from the MBTA enough that one going bankrupt shouldn't necessarily effect the other beyond 'who owns this contract / who is the MBCR contracted to?')

I would fully expect bankruptcy of the MBTA to happen the same way bankrutpcy of a city (see: Central Falls, RI) happens, i.e., Receivership.

It'd be a very painful solution, to be sure - but "maximum pain" would happen all in one go as opposed to several less painful (but still messy) drawn out legal battles to fix everything piecemeal.

And, as AmericanFolkLegend suggested, it could well be the case that simply putting bankruptcy on the table will cause a lot more negotiating in good faith without having to actually play the bankruptcy card.
 
Massachusetts law doesn't allow Chapter 9 bankruptcies even for municipalities, never mind statewide authorities.
 
massmotorist said:
Massachusetts law doesn't allow Chapter 9 bankruptcies even for municipalities, never mind statewide authorities.
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Like I've been saying, I'm not a bankruptcy lawyer, but I'm fairly certain that the (Federal) Bankruptcy Code trumps Massachusetts State Law and any laws put in place to disallow Chapter 9 are therefore not enforceable.

The very first thing that happens in a Chapter 9 proceeding is determining whether or not the bankruptcy can proceed under Chapter 9 to begin with anyway, so add this to the list of things that are going to get hashed out in court if/when the MBTA declares bankruptcy.
 
So... going by the main point. Does the recent exchange mean bankruptcy be a reasonable card against the unions and changing the frame? Or will anyone mentioning it will just get called out as an in-actionable bluff in the negotiation because the courts will not allow the filing.
 
Commuting Boston Student said:
Like I've been saying, I'm not a bankruptcy lawyer, but I'm fairly certain that the (Federal) Bankruptcy Code trumps Massachusetts State Law and any laws put in place to disallow Chapter 9 are therefore not enforceable.

The very first thing that happens in a Chapter 9 proceeding is determining whether or not the bankruptcy can proceed under Chapter 9 to begin with anyway, so add this to the list of things that are going to get hashed out in court if/when the MBTA declares bankruptcy.
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That's exactly the problem with Chapter 9: Feds make the call on whether it's necessary. And since the Legislature has taken no action whatsoever to debug the T's finances, a filing is very likely going to get turned down with instructions for the state to take its best shot at solving its own problems beforehand. It's pretty much pointless to talk about it as long as the Big Dig debt is crushing them, because that's one legislative fiat that can take place instantly and make $100M vanish from each debt installment. Whether the agency is capable of making up the remaining difference is another matter, but the Legislature is being willfully negligent by not even taking up the primary stressor.

And even if they do move the Big Dig debt off the books, I'm pretty sure the Feds would want the state and the agency taking their best shot with internally available means at reforming what it can with the labor deals, centralizing control of nonessential or redundant internal and personnel ops at the EOT level, straightening out runaway project and contractor waste, and busting up internal fiefdoms and institutional brainrot. They've undertaken none of that. Can't just claim to the Feds that they've cut service, raised fares, made everybody pinky-swear to maybe try to attempt to not waste more money...and then "we're all out of ideas." So nothing really changes here with what they're tasked with doing: make a serious, thorough statewide level at agency reform. More than likely doing that should be enough to clear out a path for recovery. But the hurdles to that are exactly what we know they are: zero political will to anything.


BTW, also have to see what state laws regarding Ch. 9 are and whether they place any additional restrictions on filings. MA is one of 26 states that either prohibit municipal bankruptcy filings in lieu of a full state administrative takeover of the town or make the municipality meet a whole variety of internal conditions before filing. California and Alabama, which have had the largest number of municipal bankruptcies, aren't among those 26 restricted states...that definitely skews the numbers up. Rhode Island is one of the restricted states, so Central Falls got its Chapter 9 filing blocked in favor of receivership and a state-appointed administrator.

I don't know how this affects agencies, especially statewide agencies. But there's likely to be a similar state-by-state net of varying laws. I noticed that the majority of the Chapter 9'ed filings for school and utility districts were in municipality-unrestricted states, and that the only transit agency that filed (Las Vegas Monorail...which was denied) was in a restricted state. Although I'm not sure if that's applicable because LV Monorail Co. is a weird one registered as a non-profit private corporation...and that was the Feds' beef for spiking the filing as inapplicable.

Uncharted territory.
 
Chapter 7 would involve literally selling the MBTA's assets to the highest bidder and ceasing all operations entirely. Not "privatizing".
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Your first sentence perfectly describes what privatizing the MBTA would look like. The MBTA sells rolling stock, track rights, station rights, air rights, etc. in chunks to the highest bidder. Then the MBTA closes shop.
If GM files for Ch 7 tomorrow, the company ceases to exist, but the dealerships, factories, etc. probably continue to operate for a different company, under different brands.
 
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