The sins of the Pataki AdministrationBy
“How did the MTA get here?” Chuck Scarborough asked me last night during my appearance on his new cable-only 7 p.m. Nightly News show. With the MTA Finance Committee voting Monday to recommend the Doomsday budget to the Board at Wednesday’s meeting, that’s the question on everyone’s mind.
In a way, the answer is quite complex. Through years of reduced contributions at the city and state level combined with a crashing real estate market and an increase in labor, fuel and maintenance costs, the MTA has arrived at the eye of a perfect storm of a budget crisis. In another way though, the last part of this equation is quite simple: By borrowing against the future a decade ago, the Pataki Administration ensured that the MTA would be saddled with debt payments.
Without these debt service payments on its capital campaign, the MTA wouldn’t be turning to a Doomsday proposal. We’d be suffering through the typical fare hike debate but not one on a magnitude of 23 percent.
A few days ago, Newsday’s Dan Janison tackled just this issue. His piece was largely overlooked on Monday, but it deserves some attention for the way in which is dispatches with the complex issue of the MTA’s crushing debt. Take a look:
Nine years ago, in collaboration with state officials, the mighty investment company Bear Stearns played a special role in shaping the course on which the region’s transit system now finds itself. Not only did this financial titan advise the Metropolitan Transportation Authority on a five-year, $17-billion capital program, but more notably its executives personally sold the plan to state lawmakers – helping generate commissions for the firm while temporarily funding mass transit.
From today’s perspective, of course, the deal represents fiscal risk and folly. Bear’s collapse a year ago signaled other global financial failures to come, and the debts carried by the state-run MTA drive its latest threat of massive fare hikes and sharp service cuts.
Watchdogs suggested that the Pataki administration and its sparring partners in the State Legislature were mortgaging the future. Policy makers, they believed, figured they’d derail from that track when they came to it.
Yesterday, State Sen. Brian Foley’s office cited data showing how MTA debt service payments of $609 million in 1996 have spiked to a forecast $1.5 billion in 2009. That works out to an estimated $125 million a month, said Ibrahim Khan, spokesman for Foley (D-Blue Point).
That, in a nutshell, is why Gov. David Paterson convened the Ravitch Commission. Well aware of the MTA’s tortured financial history, Paterson wanted a plan that would pare down the MTA’s current debt while providing a steady stream of income on hand for the system’s much-needed expansion. No longer would the MTA build on credit today that would create debt crises a decade from now.
For now, though, that plan isn’t meant to be, and the MTA will head one step closer to a financial abyss. During the Finance Committee session on Monday, MTA CFO Gary Dellaverson noted that projected tax revenues were down 70 percent year-to-date beyond the MTA’s pessimistic forecast. This fare hike/service cut situation will get better before it gets worse, and if Albany doesn’t act, the New York sons and daughters, straphangers all of us, will be left paying for the sins of our Pataki father.