Home MTA Economics Avoiding service cuts through stimulus funds or tolls

Avoiding service cuts through stimulus funds or tolls

by Benjamin Kabak

RecoveryLogo As the MTA financial staff is hard at work readying its budget proposal for Monday’s Finance Committee meeting, transit advocates are trying to come to terms with the latest MTA budget deficit. Although politicians are wrongly blaming the MTA, this latest gap is due to problems in Albany, problems the MTA shouldn’t have been facing if more sensible funding solutions had been implemented in the first place.

To that end, two groups — the Straphangers Campaign and Streetsblog — have proposed two different mechanisms for covering the gap. The Straphangers’ suggestion is a stop-gap aimed at filling this year’s hole while the Streetsblog plan is one with which we are familiar. There’s would be a more long-term solution.

First, the Straphangers plan: In an e-mail yesterday to the MTA Board members, Gene Russianoff expressed his concerns about the looming threat of service cuts. Citing “the harm to riders of service cuts in an already overcrowded system; the new blow to the MTA’s credibility if the agency institutes cuts that the riding public (paying a higher fare since June) were told would not happen; and cuts undermining MTA Chairman Jay Walder’s sensible plans to improve bus service,” he urged the MTA to take some of the uncommitted stimulus money at its disposal to cover the current gap. He wrote:

Use $91 million in federal stimulus funds for service in 2010. The money is there. “The Metropolitan Transportation Authority (MTA) received $915 million in stimulus funds. Contracts have been signed for work covering 89 percent of the total,” according to a December 2009 report issued by Gov. Paterson. Federal law permits 10% of the stimulus funds to be spent on operations. Transit systems like the one in St. Louis pressed for this option to maintain service and jobs.

Reprogram for service $50 million in 2010 in “pay-as-you-go” funds. The MTA is planning to spend $50 million in 2010 in operating funds on capital projects. Pay-as-you-go for capital needs is a good goal, but it should not come at the expense of service cuts.

These two sources total $141 million and would be enough to cover all the subway, bus and commuter cuts originally proposed by the MTA earlier this year.

As short-term solutions go, it’s hard to disagree with Russianoff’s plan. I hate to see money used to maintain and expand the system be taken away from that end, but the MTA is legally allowed to use stimulus funds for operating deficits. Right now, avoiding service cuts should be a paramount concern.

For a long-term fix, Streetsblog’s John Kaehny turned his attention to East River Bridge tolls. His warnings are dire:

The net result is that without a new source of funding, the MTA will soon run out of money and options. Let’s take it for granted the MTA will be forced by Albany to engage in desperate new financial sleight-of-hand and “seed corn eating” (capital money going to operating expenses, borrowing against future fare hikes). Let’s further assume the MTA will have to accelerate the fare hikes planned for 2011. If this comes to pass, in about a year the MTA will be out of options and have to cut service so harshly that even Albany will be forced to care.

It will be a political slug fest worth watching. How deep will service have to be cut before the East and Harlem River bridges are tolled? Are tolls dead, or are they actually inevitable?

I’ve long supported tolling the bridges as the most equitable and environmentally friendly approach to MTA funding. The tolls would provide the agency with a dedicated source of revenue and would cut down on driving through areas choked with cars and pollution. I fear the answer to Kaehny’s question. Only when the MTA is on the brink of a financial disaster would New York’s politicians begin to debate bridge tolls. Then, it might be too late to truly save the system.

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Marc Shepherd December 10, 2009 - 1:50 pm

I also favor tolling the East River bridges. It’s a longer-term solution and more environmentally friendly. There is simply no rational reason for drivers to get a free pass across the East River, while bus and subway riders have to pay to do the same. But I fail to see how legislators who were too stupid to see that last time will suddenly grow wiser. Unfortunately, accounting gimmickry and short-term kludges are the most likely solutions.

Adam B. December 10, 2009 - 4:48 pm

What about selling the rights to sponsor stations? Think that would generate enough money if the state senate continues to be run by people with cobwebs in their heads?

AK December 10, 2009 - 5:15 pm

Unfortunately, it would barely be a drop in the bucket, Adam. The Atlantic Yards Station, one of the biggest (and presumably most-advertiser-friendly) in the system, was recently leased to Barclay’s for a mere $200,000/year.


Now this relatively paltry sum doesn’t necessarily mean we shouldn’t commercialize the system more (that’s an argument for another day). But doing so certainly wouldn’t solve the current budget crunch.

Son of Spam December 10, 2009 - 5:59 pm

Do you think it is just an extraordinary coincidence that the amount of eligible stimulus funds available for operations ($91 mil) PLUS the amount of “rainy day” capital money the MTA set aside ($50 mil) almost equals the exact amount that Albany cut from the MTA’s budget this year ($143 mil)?

Dipping their hand into the cookie jar, indeed.

Or am I giving the buffoons up in Albany too much credit here?

Ariel December 10, 2009 - 8:01 pm

If the MTA uses any of its capital funds, including 10% of its stimulus money, to plug the hole in the operating budget, it would mean raising the white flag in this battle against Albany.

I would rather they cut service and force Albany to address this issue with a long term solution. This time calls for bravery. Leveraging this issue as much as they possibly can now can mean a funding solution that will benefit the transit riding public for years to come.

SEAN December 10, 2009 - 9:04 pm

And what did CITI pay the Mets for nameing rights for the new stadium? *silence*

Benjamin Kabak December 10, 2009 - 9:22 pm

I don’t see your point. Stadium naming rights are far more lucrative than subway station naming rights. More publicity by exposure and more branding opportunities.

Eric F. December 11, 2009 - 9:15 am

The last thing you’d want to do is actually raise the fare to reflect true operating costs. So you need to create more and more wealth transfer schemes to sluice money into the MTA from various other sources. I follow you there. But I don’t think you are nearly bold enough. Although tolling the East River Bridges is a good idea, an even better one would be to simply demolish the bridges. This would eliminate maintenance costs for keeping up the bridges and will force people on to the trains. As we all know, trains are what keep the city moving and auto crossings are per se bad, so this solves a ton of problems at a single stroke. Next, we get rid of the airports. Baby steps.

Alon Levy December 11, 2009 - 1:22 pm

Eric, if you want a country where transportation fares reflect true operating costs, go to Hong Kong. There, everything is accounted for: construction costs, operating costs, pollution externalities, space externalities.

If it hadn’t been for road socialism, Syosset would be rural. So stop complaining when transportation socialism goes to other people.

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Niccolo Machiavelli December 11, 2009 - 3:30 pm

I know I frequently cross swords with Alon but herein we agree sociolinguistically. Socialism is a negative word when it comes to the prevailing popular ideology. That it is, regarding transportaion issues, deplyed much more frequently against public mass transit systems than against the prevailing paradigm in the US, automobile hegemony, simply allows the privatist culture to predominate.

Mike Nitabach December 13, 2009 - 1:45 pm

I agree completely about the East River/Harlem River bridges. Why should these automobile transportation services be subsidized at the expense of mass transportation. I also am strongly in favor of congestion pricing coupled with entry tolls for midtown and downtown Manhattan.

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