Apr
28

With deficit growing, a second hike likely for 2009

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As Albany bickered over an MTA funding plan, the agency yesterday announce a $621-million increase in its deficit for 2009 and a $1 billion increase for 2010. Based on the response out of Albany, you’d never know how bad that news really is.

In a nutshell, the story is simple. Because ridership and tax revenues are both lower than projected, the MTA’s substantial budge deficit will grow by nearly 50 percent this year. While neither Malcolm Smith nor Sheldon Silver has realized it, this increase basically negates any Albany-produced funding package. Even if the State Senate and Assembly can come to terms — even if they pass something that brings some money into the MTA’s coffers — it will be enough to cover a $1.2 billion gap and not a $1.8 billion gap.

So then, what does this mean for New Yorkers reliant on transit? Well, at this point, the MTA will have little choice but to start cutting service. The cutbacks may not be as drastic as once feared, but a $600 million gap is pretty substantial itself.

The worse news though comes in the fare box department. Since the MTA is so reliant right now on fare box revenue, the agency said on Monday that it may have to raise fares twice in 2009. With no Senate action, the fares will go up by nearly 25 percent at the end of May, and for the first time in MTA history, the fares could go up a second time this calendar year and a third time in 2010.

Pete Donohue reports a potential eight percent increase on tap as the second fare hike of the year. I would expect that to arrive by October or November when the MTA has a clearer picture of how much money it needs to balance its books before the end of the year. I also wouldn’t be surprised if the eventual second fare hike ended up at over eight percent.

Times are bleak indeed for transit in New York.



Categories : Fare Hikes

19 Responses to “With deficit growing, a second hike likely for 2009”

  1. Scott E says:

    And for those who didn’t catch the news, here’s another black eye (and hit in the wallet) for the MTA. It looks like a massive ongoing security project is failing, and the contractor is putting the blame entirely on the transit agency. Of course, a lawsuit is involved.
    See the NY Post article here

  2. Fairness says:

    The MTA is constantly wasting money with contractors, this is nothing new. They try to save money by contracting the work instead of using inhouse workers they already pay, but in the long run it usually always costs them more than it would have.

  3. peter knox says:

    What other transit system in the country is trying to expand when it can’t even maintain the system it has? Why don’t we use the money we can’t afford to waste on expansion and direct it to improving the conditions and quality of service of the system we have right now? Why raise fares and taxes to fund projects that the MTA won’t be able to maintain if they are ever completed? INSANITY.

    • Marc Shepherd says:

      There are several arguments against your idea, which remains exceedingly unwise no matter how many times you state it.

      First, the cost of the major expansion projects is only a small percentage of the current problem. If those projects were stopped tomorrow, the MTA would still have a huge funding gap. So the problem needs to be solved anyway.

      Second, these projects receive a significant amount of funding from dedicated sources (such as Federal contributions) that cannot be used for any other purpose. If the projects go away, the funding does too.

      Third, every intelligent analysis I have ever seen confirms that the MTA network is saturated, and needs to develop additional capacity. If they are cancelled now, the MTA will look like even bigger fools when the economy rebounds (as it surely will), and no relief is on the horizon.

      • Joe G says:

        Marc – I agree and disagree.

        The cost of major projects was about 25-35% of the 2005-2009 Capital plan, about $4.5B. And we know the next 5 year plan the cost of those projects is at least the same, maybe more. (and we also know that doesnt cover all of the projects – for example its only Phase 1 of SAS). So let’s say $10B. As far as I can tell no more than one third of that is Fed money – so lets say non fed money is $6-7B. Alot of that was covered through the 2005 Bond Act. Best I can tell $1b annual interest expenses.

        So I would not say it’s a small part of the problem. Also – and I have said this before – Fed money cannot be used for operations but applications for exemptions to the DOT can be made. There are ways to move these monies to operations, it takes work but it can be done – and these are extraordinary times.

        Finally, I have in the past and continue to take the position that more efficient expansion could be planned. BRT for example, instead of some of the new subway lines. There is a reason the SAS has been doomed for 70 yrs – its hard, expensive work to do. Not that it’s not necessarily, but if you could build an alternative for a fraction of the cost, that will carry 50-75% of the riders, and be running 18-24 months from start -isnt that worthwhile? it’s not sexy (the groundbreaking pics are nowhere near as fun), but to me one problem is the lack of imagination and efficiency here.

        • rhywun says:

          Not that it’s not necessarily, but if you could build an alternative for a fraction of the cost, that will carry 50-75% of the riders, and be running 18-24 months from start -isnt that worthwhile?

          No, because then a subway will never be built, the easternmost parts of Manhattan will continue to suffer from substandard service, and the area will never reach its potential.

          • AW says:

            why would a BRT right down second avenue – length of the island – not allow those parts to reach their potential?

            • Unless you are running 10 buses every 4-8 minutes, a BRT simply cannot meet a subway line in terms of capacity. That is, in a nutshell, why.

              • AW says:

                the BRT in Bogota transports over 1mm people a day! 1mm!

                But even if it did not – the point is return on investment and time here. If something like a BRT could transport only 50% or 75% of a subway, at 25% of the cost, and be in up in running in 2 yrs vs 7yrs – is it still not worth it????? Really?

                • No one’s arguing with those numbers. But that would require a very substantial investment in BRT, and so far, the city and DOT haven’t been willing to do that.

                  Look: I’d be on board with a full-fledged BRT running down Second Ave. and up First Ave., but none of the BRT proposals that the city is seriously considering include anything that could support 50-75 percent of subway capacity. That’s a pipe dream until someone takes the political bull by the horns.

                  • AW says:

                    Fair enough – I think my point was also that no one has seriously supported (long term funding wise) the MTA’s capital projects either – SAS etc – thus the mess we are in. BRT requires creativity but also requires less $$ – one thing the MTA doesnt have (and hasnt have, and will not have) is loads of money

                  • rhywun says:

                    I would NOT be on board with it because we all know that the east side of Manhattan needs another RAIL line, and in the extremely unlikely event that a BRT were built instead, it is likely that a real subway line would never get built. Better to put into place some of the BRT-lite measures that we’re already experimenting with while we weather out the economy and figure out to pay for what we need.

                    • Andy says:

                      No, we dont all know that the east side needs another rail line, what we need is a cost efficient way to move more people uptown and downtown, one that is affordable and can be implemented in 2 years.

                    • John says:

                      i agree with rhywun we do know that we need another rail line on the east side. remember 70 years ago this area was serviced by three rail lines with express service just 50 years ago it was serviced by two rail lines now its serviced by one. the 2nd avenue elevated was removed with the intention of placing it underground. the city was going to leave the 3rd avenue elevated until the 2nd avenue subway was finished knowing that to demolish it would leave the east side underserviced but special interests saw to it that the 3rd avenue el was demolish before anything near a 2nd ave subway was done. now the east side is even more densely populated so its pretty safe to say the east side needs another rail line. while a BRT is better than nothing, that doesn’t make it a good solution for this specific area.

                • anonymouse says:

                  You could do that on Second Avenue too. Just close the avenue to all traffic but buses, and close all cross streets except the major crosstown ones. Remove the pedestrian crossings too: to walk across the street, you’d either have to walk 5 blocks out of the way, or they’d have to build above or below grade crossings. There’s a good reason that this sort of high capacity infrastructure isn’t built on the surface in Manhattan: it’s just not compatible with the existing city. You might be able to make a plausible argument with a street like Woodhaven Blvd or something, but not Second Avenue.

  4. Matt says:

    Between this and the swine flu, I guess I’ll never have another reason to leave the house.

  5. Marc Shepherd says:

    You could reasonably argue which expansion projects offer the best bang-for-the-buck. I was mainly replying to Peter Knox’s suggestion (not the first time he’s made it) that the system shouldn’t expand at all. Once you accept that expansion is necessary, there is room for debate about what mode of expansion would be most effective.

    One must bear in mind, however, that once shovels are in the ground, there is likely at least a 5-10 year delay if you stop the project so that you can re-think the plan, with no assurance that after another decade of deep analysis that a truly better plan will emerge. At some point, you need to accept that the analysis phase is over with, and build what has been designed.

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  1. [...] leads to one overarching bit of bad news: While I yesterday said that the MTA would have to enact a second fare hike by the fall, amNew York’s Heather Haddon says that the MTA could unveil a second fare hike as [...]

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