Cash-strapped T warns of fare increases, service cuts by July

But the need to raise fares is pressing and unavoidable, Davis said.

The T is burdened by debt from past expansion and from investments in maintenance - even as it struggles to find money to pay for $4.5 billion in additional repairs and replacements needed to keep the aging system in working order. The T’s debt payments are poised to hit $450 million next year and exceed $500 million by 2016, eclipsing yearly fare collections.

Compounding the problem, the T’s other sources of income, including payments from local communities and a piece of the state sales tax, have not kept pace with rapidly rising expenses such as energy, health insurance, and The Ride, a federally mandated door-to-door service for people with disabilities. That creates an annual deficit that the T has struggled to close in recent years with a flurry of cuts and complex, one-time maneuvers - refinancing debt to spread out payments; thinning staffing levels, including switching from two operators to one on some subway lines; and selling long-term parking revenue to investors.

Running out of such options, the T projects an operating deficit of $161 million for the coming year and $202 million the year after, all but forcing fare increases and service cuts, officials said. “But I think it’s clear that $161 million is probably not going to be able to be closed through additional efficiencies or reform,’’ Davis told the T board’s finance committee.

Charles Planck, the T’s senior director for strategic initiatives, said planners from the MBTA and the region’s Central Transportation Planning Staff will begin meeting with the T’s Rider Oversight Committee in coming weeks to develop three potential packages of fare increases and service cuts by November.