Home Subway History When the MTA had a surplus

When the MTA had a surplus

by Benjamin Kabak

As the first week of 2009 dawns, we’ll soon be hearing a lot about more about the MTA’s finances. The authority has public hearings on the Doomsday budget set for this month, and at some point, the state legislature will begin to deal with a Ravitch-inspired bailout plan.

But in the meantime, let’s hop into the Wayback Machine. We’ll visit a time when the MTA had money and decided to spend all on us! Those were the days, eh?

The time is 2005, and the MTA has determined that they will enjoy a $928-million budget surplus for that fiscal year. That number would in fact eventually reach $1.04 billion. As The Times explained at the time, the surplus “stemmed from the unusually high real estate taxes and low interest rates.” We now know all too well what happens when unusually high real estate taxes turn into unusually low real estate taxes, but we’ll get to that later.

In an effort to give something back to the riders, the MTA in October announces a plan for discount holiday fares. Immediately, this move is decried as “a marketing gimmick” by city experts. This move will cost the MTA $100 million of their surplus with the rest going to reducing some unfunded pension liability, enhancing subway security and expanding service.

Experts were skeptical. “Why is the M.T.A. engaging in feel-good, short-term gimmicks rather than convincing riders and business leaders that it has sensible, long-term plans for a balanced operating budget and a fully funded capital budget?” James A. Parrott, chief economist at the Fiscal Policy Institute, said to Sewell Chan.

Some city officials wondered about the rational behind the move. “Whom does this actually benefit?” Preston Niblack of the city’s Independent Budget Office said to The Times. “It does not really solve any structural issues. It’s great from a public relations point of view, but it does not address long-term needs.” It never does.

In the end, the MTA Board approved the plan but not without dissent. Some board members feared the discount offerings would lead the public to believe the MTA had full coffers at a time when internal documents were predicting a $900-million deficit for as soon as 2009. (They clearly underestimated.)

In the end, the program earned mixed reviews, and transit advocates maintained that the money should have been reinvested in the system and used to shore up the MTA’s shaky future financial picture. Even in 2006, hindsight was 20/20.

Now, three years removed from the days of discount fares, the MTA has gone from a surplus to a deficit of a size larger than the one predicted in 2005. If the agency knew that their finances were going to head south, why didn’t they urge a Ravitch Commission-type investigation sooner? For years, we’ve know that real estate tax revenue is no way to fund a transit system, and now we’re paying the press.

At some point, the MTA’s finances will improve, and the agency may once again be saddled with the “problem” of a surplus. But for now, we can just look back on 2005 as a moment in time when transit funding seemed secure, and the riders got a discount, misguided as it may have been.

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rhywun January 5, 2009 - 8:29 am

At some point, the MTA’s finances will improve, and the agency may once again be saddled with the “problem” of a deficit.

I guess you mean “surplus”, but yeah, then we can go back to covering up our ears and going “LA LA LA LA!”

A Taste for Vintage Watches, Cigars and Diet Coke - City Room Blog - NYTimes.com January 5, 2009 - 12:55 pm

[…] a ride on the Wayback Machine, when the M.T.A.’s budget surplus meant more breaks and incentives for passengers, like discount holiday fares. [2nd Ave […]

Mr. Eric January 5, 2009 - 4:27 pm

This was the year the MTA had this 1.04 BILLION dollar surplus and refused to negotiate a fair contract with it’s own employees. Pretty pathetic.

Benjamin Kabak January 5, 2009 - 4:28 pm

And how long did that surplus last? I’m very sympathetic to unions and the plight of workers, but you have to put those economics in perspective.

Mr. Eric January 5, 2009 - 5:49 pm

They had a surplus of no less than 600 million for 6 straight years. This is the first year without the surplus in 7 or 8 years.

Marc Shepherd January 6, 2009 - 9:02 am

That sounds like patent nonsense.

Larry Littlefield January 6, 2009 - 9:40 am

(They had a surplus of no less than 600 million for 6 straight years. This is the first year without the surplus in 7 or 8 years.)

Sounds like $3.6 billion in the bank. But it isn’t. Because if they have a $600 million surplus one year, they roll it over, and if they break even the next year, they claim that same $600 million as an additional surplus. Then they keep doing that, counting the same $600 million over and over, until one year they spend $600 million more than they earn. They call that a balanced budget. And then there is no money.

The city does the same thing.

The Christmas discount was symbolically stupid, but not a lot of money. The problem is all the decisions like it — take the way-back machine to 1995, and you see the start of the problem.

How about ALL the metrocard discounts? Some were clearly justified, but the MTA clearly was unable to cut fares so much relative to inflation and what the workers earned. What it actually did was defer fares. We will not pay not only today’s fares, but yesterdays. Taxes too.

Mr. Eric January 6, 2009 - 1:02 pm

That’s not what the MTA does. They spend every penny of the surplus before the end of the claender year.

Marc Shepherd January 6, 2009 - 5:50 pm

If they spend it, then by definition it’s not surplus.

Niccolo Machiavelli January 6, 2009 - 10:44 am

Hey Larry, how far back did Mark Shaw go anyway? Was Virgil the Chairman in 1995? When did they do fare-box based bonding?


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