And like a teenager offered a deal like this, the MBTA is also independent. Although the MBTA budget is reviewed and approved by both the Board of Directors and the Advisory Board, the state exercises no control over the budgeting process. The state simply appropriates money in the current fiscal year to cover past expenses without so much as a hint that the MBTA might wish to exercise a little more discipline in the future. The state currently raises the money to fund MBTA operating expenses by giving a cash advance from the Treasury or by issuing short-term notes. These notes carry higher interest charges than general obligation bonds.
Backward funding has, predictably, become a budgetary embarrassment.
While this would end the practice of routinely picking up the MBTA tab retroactively, it would deny the state any authority over MBTA use of the dedicated revenue stream. The state would relinquish any right to oversee the expenditure of hundreds of millions of taxpayer dollars. The downside for the MBTA is that sales tax receipts are subject to cyclical ups and downs. Since the MBTA is obliged to pay any debt obligation before meeting operating expenses, it might have to slow the growth of its operating expenses should an economic downturn occur. This is, however, a poor form of fiscal discipline.