Those in charge of the MTA must be really glad Wedneday is over for it was yet another bad time in the long run of bad days for the MTA finances. As we learned late in the afternoon, revised budget projections from the state have opened up a wider gap in the MTA’s budget. Only later in the day did the extent of the cuts come into view.
Basically, the MTA has been fleeced by the state. Promised enough money to avoid either financial ruin or extreme service cuts and/or fare hikes in 2010, the MTA has not been given the millions promised to it. Rather, the State Division of Budget continues to adjust forecasted revenues from the Regional Mobility Tax downward. A statement from the agency yesterday summed up the bad news:
“The MTA anticipates that it may need to reduce the estimated receipts included in its 2010 budget by approximately $350 million (which includes $179 million of 2009 collections whose receipt was previously reforecast for 2010), with revenue loss of up to an additional $200 million a year thereafter. Combined with additional revenue loss previously projected in the Governor’s Executive Budget, the MTA could be faced with up to a $400 million new deficit for 2010.”
And so when we add the new deficit to the old $383 million deficit, we find the MTA looking at a 2010 fiscal hole of $783 million — or nearly eight billion dimes. Got a few to spare?
For its part, the MTA is “closely following” the state’s budget machinations and “remains prepared to take needed actions in order to maintain a balanced budget.” That’s agency-speak for “we’re screwed,” but the MTA, as I see it, has a few avenues it could pursue in order to gain more funding. Many of these approaches are politically unpalatable while others are generally unfeasible or simply not enough. Still, it’s worth an examination of the five proposals that should be on the table.
1. Adopt the Russianoff Plan
As much as I do not yet support moving stimulus funds from the capital budget to the operating budget, this move is clearly the most obvious one to close a budget gap of this magnitude. The only problem is that it falls woefully short of achieving that goal. Even if the MTA moves the $121 million allowed by law over from the stimulus ledger to the operating balance sheet and even if the MTA takes the $50 million PAYGO reserve and reinstates that into the operating budge, the agency would still be $612 million in the red. Plus, the strained capital budget — a necessary part of any future transit system that we will enjoy when the agency’s finances are stronger — would be further drained.
2. More service cuts
Right now, the MTA has a full slate of money-saving service cuts on the table. Although many of these cuts can be viewed as service reorganizations that better meet demand and costs, the MTA is still cutting train frequency and increasing load guidelines. These costs will save some money, but by themselves, the cuts can’t cover the deficit. If the MTA opts only to cut services, the cuts would be dramatic — think no overnight train service — and would cripple New York City. Still, if Albany doesn’t have or can’t find the money, this is truly a Doomsday option that remains on the table.
3. Raise fares
On Tuesday, I analyzed the debate between fare hikes and service cuts as budget-balancing approaches. In the end, 77 percent of those who voted in the poll supported fare hikes as a way to close the budget gap. For the MTA to cover this new gap, the agency would have to institute the already-planned service cuts and a fare hike that nets another $400 million revenue. To do so by fares would lead to a fare hike of around 10 percent across the board. Despite the MTA’s desires to avoid a hike, it seems almost inevitable.
4. Congestion Fee/East River Bridge Tolls
While one of these proposals could be passed without the other, I lump them into one item because they are, in effect, the same thing. Charging drivers who exact a cost on the city when they use unnecessarily free bridges would result in a guaranteed source of revenue for the MTA. Charging drivers who exact a cost on the city when they contribute to congestion and pollution would result in more funding for the MTA. The real problem here is that no New York politician seems willing to take the bull by the horns even though the majority of New Yorkers have, at times, voice support for either or both of these proposals. They too seem inevitable but not quite as soon as a fare hike does.
5. Market-Rate On-Street Parking
Last July, I ran some numbers and explored why New York should be charging its residents hundreds of dollars for the privilege of on-street parking. As real estate rates remain among the highest in the nation, the city gives away valuable space to cars for free. If the city instituted a residential parking permit program with tiered fees based upon proximity to transit and guaranteed those revenues to the MTA, the transit authority would be able to close a significant portion of its budget gap. Again, though, this proposal is politically unlikely.
So in the end, we’re left with the same options under consideration for the better part of the last two years. Even though more equitable funding solutions exist, when the dust settles, my money is on a combination of fare hikes and service cuts. The auto drivers — a small percentage of New York City’s commuters — will enjoy their free rides as the MTA limps toward financial ruin.