New York's Transit Financing Discussion Begins; Some Things to Watch

The state corporate surcharge, like other taxes dedicated to MTA operations, has garnered far less revenue than previously predicted.

The state corporate surcharge, like other taxes dedicated to the MTA, has garnered less revenue than predicted. (The red line represents the state's FY2008 budget projection from spring of this year; the green line is an updated projection from October.)

As predicted, MTA officials had nothing but bad news at this morning’s special finance committee meeting.

Agency officials said the MTA’s deficit had grown by about $575 million since July of this year, to a whopping $1.5 billion starting January 1, 2009. Carryover revenue of about $300 million means the actual deficit will be around $1.2 billion, or about $300 million more than expected.

That $300 million represents the deficit the agency will face even after a planned 8% fare and toll increase next year, internal cost cutting measures, and some additional external support. The deficit is the result of the struggling economy and lower than predicted revenues from taxes and state and city aid. MTA CEO Elliot Sander rightfully noted that the solution to the deficit would be “very painful with our limited tools,” meaning draconian fare increases and service cuts.

The agency did not address how the downturn would impact the MTA’s 2010 operating budget or its next capital program, both of which will require a significant influx of funds.

The next MTA board meeting is on November 20, the Ravitch Commission report on how to fix the MTA’s financial woes is expected to be released on December 5, and a state executive budget will be released on December 16. In other words, this is the beginning of a public discussion about funding our transit system.

Some things to watch out for over the next few months:

New and different tolls – East River bridge tolls and congestion pricing will reportedly be included in the Ravitch Commission’s recommendations for funding MTA operations. Additionally, a variable tolling structure at existing MTA toll facilities could help raise revenue and encourage more people to drive during less busy times of day. Toll and fare increases have traditionally tracked one another, but that could change, especially if variable tolling was implemented.

Slashes to Long Island Bus service — the MTA has already planned on cutting its allocation to Long Island Bus by $4 million. It’s likely that the news over the next few months will be even worse for the agency, and its riders.

A federal infrastructure stimulus package – there is increasing talk in Washington of pumping money into infrastructure projects to help stimulate the economy. Such a measure could help ready-to-go projects like subway and bus purchases or the Second Avenue Subway and East Side Access.

Capital projects vs. system repair – During the 1990s, an expansion of London’s Jubilee subway line progressed even as existing service and maintenance suffered. Without adequate support, the MTA could have to make tough choices about how to balance capital projects and routine maintenance and repair. (Relatedly, the 2010-2014 MTA capital program may have a greater emphasis on bus rapid transit rather than rail, thanks to BRT’s affordability and potential for phased implementation.)

“Maximizing assets”/privatization – A state panel on “maximizing assets” has been exploring long-term leases of state assets, including transportation infrastructure, to private entities. Gov. Paterson told the NY Times that, although such leases are often criticized as one-shot infusions of capital that are not sound fiscal policy, “we’re in a one-shot period” because of “the sheer volume of the deficit.”

Scrutiny of the MTA’s credibility – Can the MTA be trusted? Long-time transit watchdogs like the Straphangers Campaign’s Gene Russianoff believe that this is the worst fiscal crisis the MTA has faced since the 1980s. The NYC Independent Budget Office released a report identifying stagnant government aid as a contributor to the agency’s fiscal crisis. But public sentiment will likely run against the agency, which has had a hard time escaping the bad press from broken promises and accounting controversies which were largely committed under prior leadership. MTA efforts, like devising more honest performance measures and advertising its projects are a start, but probably won’t result in an overnight reversal of public perception.

A strong and unified voice for transit investment – Coalitions like the Empire State Transportation Alliance, Campaign for New York’s Future, and the Long Island Transit Coalition (Tri-State is a member of all three, and coordinates the latter) represent diverse interests that are well organized. Expect to hear more from them as the transportation funding conversation continues.

Image: From MTA presentation at special finance committee meeting today.

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