A fragile budget, dependent on the unionBy
A few years ago, the MTA faced a precarious financial situation. Amidst a bad economy with debt payments and pension obligations coming due and healthcare and benefits costs spiking, the agency that powers the transportation backbone of New York City had cut costs, slash services and raise fares to make ends meet. In the intervening years, the MTA has managed to find ways to find savings of nearly $1 billion per year, but as the agency’s long-term budget, unveiled on Thursday, is a bit rosier than it has been, it’s still a budget fraught with problems.
For now, the MTA is cautiously optimistic. As budget documents show, the 2013 Preliminary Budget and July Financial Plan for 2013-2016 contain some good news. With aggressive cost-cutting and a bump in tax revenue, the MTA expects to break even this year and next as its out-year deficits shrink. Still, in the documents presented today, those deficits could still reach $231 million in 2016, and that’s only if all goes according to plan.
“I’m pleased that we will be able to keep the MTA’s budget in balance despite our challenges, but I am concerned about the long-term trend in our expenses,” MTA Chairman Joseph Lhota said. “The MTA’s underlying cost structure is increasing for reasons that are beyond the authority’s control, so we are depending on all stakeholders coming to the table to find ways to address those areas that we can control.”
So what then needs to go according to plan? Who are these stakeholders? First, the MTA believes it must be its own stakeholder. Cost-savings measures will increase to $1.13 billion annually by 2016. Unfortunately, a big part of that equation has led to no raises or wage increases for non-union employees since 2008 (and the subsequent brain drain is a topic for another day). The authority is also relying on the “continued receipt of dedicated taxes as projected,” always a dicey assumption when Albany and its piggy bank raids are involved.
Additionally, the MTA is relying on biennial fare increases in 2013, 2015 and 2017, for starters. With a brighter financial outlook, though, the agency said today it would delay the fare hikes from January to March of each year. Such a move will cost the authority $67 million in 2013 and $69 million in 2015. I’ve questioned the wisdom of such a move, but MTA officials feel it is a positive customer service move.
Finally, we arrive at the key and controversial part of the plan: The MTA will keep its out-year deficits low only through a net-zero increase in labor costs. Without those savings, the deficit in 2014 could top $400 million, and 2016 could dawn with the MTA as much as $530 million in the red. As you might expect, TWU officials, still working on negotiating a contract, were not happy to hear this.
Already claiming that $29 million in service enhancements means the MTA is swimming in enough money to fund significant union raises, TWU officials vowed to fight a net-zero outcome. The MTA is willing to give out salary raises in exchange for work rule reform or higher health care costs, but the TWU just says no no no. “It’s just not happening,” union president John Samuelsen told The Daily News.
And therein lies the great New York City subway rub. The MTA’s budget is a bit less red than it was before the payroll tax, cost cutting and fare hikes came our way, but as the authority looks to put more of a financial burden on its riders, the union seems, publicly at least, unwilling to take any steps toward a reconciliation. Work rules remain absurd; salary requests remain out of line with the fiscal reality of 2012; and the people who will have to pay are the riders. As always it’s a sticky situation that shouldn’t come about.