Mar
24

The sins of the Pataki Administration

By

“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.



Categories : MTA Economics

8 Responses to “The sins of the Pataki Administration”

  1. Aaron Burke says:

    If they ditch unneeded projects like the LIRR connection to Grand Central Station then we can have the 2nd Avenue Subway, which we need, and a balanced MTA budget in one swoop.

    Aaron

    • Chris says:

      Aaron, it doesn’t work that way. Those projects are in the MTA’s Capital Budget, not their operating budget. Even if all work stopped on the East Side Access project today, we’d still be faced with higher fares.

      • Rhywun says:

        Nevertheless Aaron makes a valid point that could be the subject of another article: the politics behind which projects get built and which don’t. It seems to me that the capital budget is not being spent very wisely when projects like ESA which provide a minuscule benefit to a small number of people get approved.

    • Parker says:

      Really? I guess you dont commute from LI to the east side. Its horrible

    • Marc Shepherd says:

      I wish people would look up the publicly accessible numbers before they make such statements.

      The LIRR connection was just 12.6% of the last capital program ($2.672B of $21.145B). There were $10.88B worth of bonds issued to fund that program (the remainder came from other sources), so the LIRR project is only a small part of the deficit. In addition, that project is being heavily funded by federal money. If you cancel the project, then the funding goes away too.

      In addition, you seem to be saying that the LIRR funds should have been diverted to the SAS. Whatever the merits of that idea, it doesn’t solve the budget crisis. It just re-allocates the deficit to a different set of priorities.

  2. Richard Green says:

    “How did the MTA get here?” Chuck Scarborough asked me last night during my appearance on his new cable-only 7 p.m.”

    Just to let everyone know Chuck Scarborough’s show is available on NBC’s news channel on FREE BROADCAST TV digital channel 4.2! People just don’t understand that with digital TV there are a lot of free stations over the air that are now available.

Trackbacks/Pingbacks

  1. [...] on the Network, with the MTA set to vote on drastic fare hikes and service reductions tomorrow, Second Avenue Sagas looks back at how the agency, and the region, finds itself on the brink of transit doomsday. Still, [...]

  2. [...] new approach to explaining the Metropolitan Transportation Authority budget crisis: blame Gov. George E. Pataki’s administration. [2nd Avenue [...]

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>