Fare Hike Averted

Turns out the T doesn’t need a fare hike this year after all!  Last month the T announced that it would increase fares again — subway fares would break a 28-year inflation-adjusted record to set an all-time high of $2 per ride.  Around the same time, I noted that the last two occasions when fares broached the inflation-adjusted $1.75 mark, strange things happened.  Fare increases implemented in 1954 and 1981 that took prices over the inflation-adjusted $1.75 mark were rescinded the next year.  Those were the only two years in more than a century of transit in Boston that nominal subway fares actually receded.

Looks like history is repeating … or at least rhyming.  Gov. Patrick directed that the proposed 2009 hike is off the table, for now.  Hopefully major service cuts also were averted.  If the consensus economic view is correct that inflation will remain subdued for some time — and assuming the inflation-adjusted fare of $1.75 remains the third-rail of subway pricing — that proposed hike won’t be finding its way to riders anytime soon.

Grabauskas Retrospective; What Now for T?

Say what you will about Dan Grabauskas; he is a political survivor.  The public servant who reformed the Massachusetts Registry of Motor Vehicles resigned under pressure from Governor Patrick and his appointee James Aloisi today, nearly a year short of the end of his five-year term as general manager of the MBTA.  The Democratic governor will have his chance to appoint a successor, but the bitter partisan flavor probably will linger with voters for some time.  The tab for buying Gov. Patrick an extra nine months of direct control of the MBTA: $327,487.  I hope that turns out to be a good investment, but at the moment it’s not so clear that Messrs. Patrick and Aloisi gave taxpayers a good deal.

In 2005, Grabauskas took the job of general manager with a clear vision.  The T would treat riders like customers; the system would be reliable, clean, courteous, and safe.  But mainly clean.  And accessible; inaccessibility “impacts not only on the disabled, but on parents with children in strollers, as well.” Grabauskas professed to be a neatnik; he was particularly concerned about the condition of elevators and escalators.  He apparently believed that if he made the T a comfortable place to be, riders would flock and revenues would soar.  And, of course, he wanted to control costs.

So four years later, how did he do?

Grabauskas never shrunk from the gaze of his “customers,” for example writing a regular Q+A column in the free daily paper Metro, and appearing more than once on WBUR public radio.  He was determined to keep riders safe; he initiated random, highly visible police screening checkpoints.  He committed to spending hundreds of millions of dollars to make the T more accessible, installing announcement screens and elevated platforms on the Green Line.  He resisted union contract demands and agreed to wage increases only after being overruled by a labor arbitrator.  The T renovated the Charles Street station and installed a new train control system on the Red Line that permitted more frequent service.  And there is the electronic fare system.

The list goes on.  Grabauskas was nothing if not engaged in the goings-on at the T.  Perhaps one can disagree with him on policy matters — for example it might be reasonable to question the wisdom of a having a broke organization with heavy capital needs spend hundreds of millions of dollars in an effort to meet the unique requirements of less than 0.1% of T riders — but the man demonstrated integrity and dedication to his “customers.”

But many things never changed.  Yes, the trains still are slow and late.  Yes, the escalators have at times been scandalously unreliable.  Yes there still are door-openers on the  Red, Green, and Orange Lines.  Yes, Kenmore Station still is under construction nearly five years later.  No, Dan Grabauskas does not commute to work on the T.  Yes, the T still is broke.

No Cell Zone

No Cell Zone

But none of those were the reasons that Governor Patrick and his appointees gave for the reasons they had lost faith in Grabauskas.  The breakdown occurred, they said, because two Green Line drivers in two years apparently had ignored traffic signals for different reasons, and Grabauskas was not in Washington, D. C. when the NTSB released its report on one of the accidents.  And there was a power outage on the Green Line.  That’s it.  Never mind that Grabauskas nearly overmanaged the aftermath of the Government Center Green Line collision by banning cell phones from drivers.  And never mind that he was on an unpaid budget-related furlough at the time the NTSB report was released.  And never mind he is not the T electrician.

No matter; Grabauskas is out, but to Gov. Patrick’s likely chagrin, the former T general manager emerges from the tussle virtually unscathed.  That isn’t true for the Governor and his appointees.  The termination looks like short-term political retribution — at taxpayers’ expense.

Unfortunately, the real loser here looks to be the T.  The authority is leaderless at a critical time where the patchwork of agencies is being reexamined and when the modes of transportation finance are in flux in a way they have not been in memory.  The Governor has made noises time and again that he is a friend to transit.  Now he has an opportunity to go from words to action.

Whose train is that anyway?

Unless you were in seclusion the last few months, you probably heard that all the creative finance from Wall Street went to dust last fall.  What does that have to do with public transit?  Very little one would hope.

Think again.  Several transit agencies participated in a wacky “sale and leaseback” arrangement involving their trains, the banks, and insurance companies including AIG.  The Washington DC Metro, Bay Area Rapid Transit, and Chicago Transit Authority sold their trains to banks, which leased the trains back to the transit authorities.  The deals were guaranteed by insurance companies, most notably AIG, and the agencies all were defaulted when AIG lost its high quality financial rating (and then some) in the fall of 2008.  The upshot: the transit agencies suddenly were obligated pay banks millions of dollars they otherwise would not have had to pay.

As an aside, a bank owning a subway train doesn’t make a whole lot of intutive sense, does it?  Why would a bank want a train?  Well, the answer apparently is that the bank can write off depreciation of the trains on its taxes whereas a transit agency cannot.  Public transit agencies generally don’t pay taxes.  So the banks paid the transit agencies for the privilege of owning the trains as a tax shelter.  Neat, huh.


This Green Line car courtesy of the Wilmington Trust Company

The T avoided the limelight on this, and probably many people simply assumed that the T didn’t participate in sale and leaseback transactions.  Think again.  I stumbled across the plaque to the right on a Green Line train at Government Center.  Maybe there aren’t many bank-owned trains … but there are at least a few.  Now I know where to send my complaint about the faux wood paneling!  To the bank!

There may yet be a happy ending to this catastrophe.  The transit agencies were left out of the original 2008 Wall Street givaway but Christmas/Channuka/Kwanza may yet arrive at the DC Metro and elsewhere if  Congress agrees to step into AIG’s shoes to guaranty the bank deals … and to avoid the banks having to find a repo guy with a tow truck big enough to haul away all of those trains.