In late February, as the MTA Board was approaching its date for enacting the Doomsday budget and funding efforts out of the State Senate had yet to collapse, I noted that the MTA deficit may wind up higher than $1.2 billion. At the time, the MTA’s year-to-date tax revenues were well below expected, and the deficit figures I tossed around were in the $1.8 to $2 billion range. The situation, in other words, could get worse before it gets better if Albany fails to find a permanent solution to the MTA’s funding woes.
Today, that scenario became one step closer to a reality. According to new financial documents released Monday, the MTA is now expecting to wind up with revenues at least $200 million less than expected. The agency may have to resort to more fare hikes and service cuts to balance its budget. William Neuman of The Times has more:
In the latest forecast, released Monday in materials for a coming bond sale, the authority said the state had informed the authority that it should expect a shortfall as large as $200 million in revenue this year from a basket of taxes dedicated to mass transit, including portions of the sales tax and a tax on corporate profits.
That is more than double what the authority projected in February when it tried to gauge how its tax revenues would be affected if the decline in the region’s economy became much worse. At that time it estimated that if the economy hit bottom, its dedicated state tax receipts could be down by as much as $82 million.
Making the picture even bleaker, the projected shortfall in dedicated taxes is in addition to a previously disclosed drop in revenue from taxes on real estate transfers and mortgages. For just the first three months of the year, those taxes were $123 million below the levels written into the authority’s budget.
In February, the MTA predicted at least a $651 million increase to the deficit, bringing the total to $1.8 billion on the year. That was before the state unveiled this bad news. Now, the deficit could reach the $2 billion mark before 2009 is out.
As I explored on Friday, this crushing debt is due to some very bad political decisions made during the Pataki Administration. In the mid-1990s, then-Gov. Pataki opted to pay for the MTA Capital Construction budget on credit, and now, the debt payments are due.
The news though for the agency keeps getting worse, and at some point, Albany will be forced to act. Whether that point arrives before the MTA is sitting on the brink of bankruptcy remains to be seen. Either way, what happens over the next few months will impact the future of New York City for years to come.