Next fare hikes to fund pension costs, says MTABy
Whether we like it or not — and who would actually like it? — the MTA is going to raise its fares by around 7.5 percent in 2013 and by the same amount again in 2015. These planned hikes were instituted as part of the authority’s attempts at combating inflation and the downward drag on average fares brought about by unlimited ride cards as well as a need to straighten out its finances. What we’re not getting, one MTA official told the City Council yesterday, is more service along with our fare hikes.
In fact, as Hilary Ring, the authority’s director of government affairs told James Vacca’s Transportation Committee, the hundreds of millions generated by the fare hikes will likely go toward the MTA’s ever-increasing health care and pension benefits. It will not, as Ted Mann of The Wall Street Journal reported, “be sufficient to allow for new improvements in the system or to restore some of the bus and subway routes eliminated during the budget crunch of 2010.” Said Ring, “Essentially the fare increase and the toll increase is almost dollar-for-dollar being eaten up by our increase in pension and retiree health care costs.”
As Capital New York’s Dan Rosenblum noted, the MTA expects to see $900 million in revenue from the fare hike while it will be on the hook for over $800 million in increased pension and health care costs. And those figures are in advance of whatever contract the TWU eventually signs covering 2012-2014. The amounts could be greater.
Of course, city politicians were none too pleased with these statements. “It’s hard for me to believe that we’re going to have that type of an increase and we’re going to have no restoration and no improvements in services,” Vacca said. “I refuse to accept that those of us who call ourselves strap-hangers have to accept paying more and getting less.”
The Journal had more on the fallout from Ring’s statements:
Jim Gannon, a spokesman for TWU, characterized the testimony as “a cheap shot,” saying the MTA was trying to blame its financial struggles solely on labor.
Gene Russianoff of the Straphangers Campaign noted that the MTA’s debt-service costs will also rise sharply along the same timeline. “MTA’s spin is to make their work force responsible for the fare increase….Who’s responsible for the pressure on fares and operations—the work force or the borrowing? I think the answer is you probably could make a good case for either,” he said. Debt-service costs for the MTA are projected to top $3.1 billion annually by 2018, said Mr. Russianoff, who said tolls on the East River bridges are an inevitable if controversial solution to the authority’s funding woes.
Mr. Vacca said he will urge the MTA to avoid the 2013 fare hikes if possible. He said he would stress that a rising economic tide—and a possible boom in ridership if gasoline prices continue to rise—could mean more revenue, in the form of fares and an uptick in the tax revenues dedicated to the MTA.
The city plans to contribute $786 million in operating costs to the MTA for 2013 as the authority plans for a budget in excess of $13 billion. It is, in other words, one giant mess.
So what exactly is going on here? On the one hand, Ring isn’t incorrect when he lights the MTA’s increasing pension and health care obligations. The authority is turning into a retirement fund for its legions of employees at the expense of its mission to provide transportation services. The agency can barely consider improving transportation access because of a never-ending increase in its employee obligations.
On the other hand, these obligations are hardly the only costs the MTA must absorb over the next few years. Debt service will continue to remain a steady presence on the MTA’s ledge, and while the revenue generating by increased ridership for the Second Ave. Subway, the 7 line extension and East Side Access will help pay down some of that debt, it too will act as a drain on the MTA’s budget.
Ultimately, then, we’re left in a familiar position: The MTA’s expenditures pie is growing in leaps and bounds, and none of that money is going toward improving service for those who have to shoulder the service cuts. Somehow, we the riders always come out behind.