For the MTA, a financial picture still cloudyBy
According to New York State Comptroller Thomas DiNapoli, the MTA’s finances are, temporarily, in good shape. Or perhaps they’re not. In a report released on Tuesday evening but not yet available on the Comptroller’s website, DiNapoli noted that the MTA has aggressively cut costs while reining in spending over the past few years. He warned of an increase in debt service payments and noted how looming fare hikes will outpace inflation. In other words, there’s nothing new here.
I haven’t yet seen the Comptroller’s report because I’m not on his press distribution list and, in a move that screams “lack of transparency,” his website hasn’t been updated as of nearly midnight on Wednesday morning, but I don’t need to see it to understand. Press reports make it abundantly clear that DiNapoli has, once again, examined a series of documents made publicly available by the MTA and is essentially paraphrasing them. Instead, let us look at the words of Carol Kellerman, the president of the Citizens Budget Commission.
In a piece late last week in Crain’s, Kellerman questioned the MTA’s approach to its looming budget crisis. Highlighting the MTA’s decision to push back the fare hikes by a whopping 60 days, Kellerman wondered if the authority was sacrificing short-term good will for long-term fiscal health. Here is Kellerman’s take:
Although some might get mixed signals from these developments, nobody should doubt that the MTA is in serious financial trouble. Everyone—commuters, MTA employees, city and suburban residents, and elected officials—must face reality and contribute in some way to a long-term solution to the MTA’s fiscal problems. And periodic, predictable fare increases along with continued belt-tightening, including a trimmed service schedule, are unavoidable elements of a sensible solution.
The “surplus” announced for 2012 is based on an accounting approach that focuses only on immediate cash needs. By this calculation, the MTA has a surplus this year because its projected cash receipts are modestly ahead of projections made at the start of the year. But current-year obligations to be paid after Dec. 31 and the need to keep up with capital repair and replacement needs, known as depreciation, are left out.
Using the more appropriate accounting principles followed in the MTA’s audited financial statements, the agency has an estimated deficit of $2.7 billion in the current year and faces even larger deficits in the next four years. Indeed, it has had a surplus only once in the past 20 years (in 1996, after a large fare increase). Deficits exceeded $2.5 billion annually from 2008 to 2011, sums that are equal to at least 16% of annual expenses, and they continue to be large despite enactment in 2009 of the now-threatened payroll tax.
The MTA needs the revenue from the planned 2013 and 2015 fare hikes; delaying them, as announced, from January to March will worsen the 2013 deficit by $67 million and the 2015 deficit by $69 million, for a combined loss of $136 million. While we all may welcome service restorations, the $29.5 million going for this purpose should be better justified. The 2010 service cuts were selected based on analysis of ridership patterns and services that were little used. Overall bus ridership has not been growing enough to warrant major service restorations; instead, adjustments can be made to deploy buses in accord with shifting usage patterns.
We know this story inside and out. The MTA has taken on so much debt over the past decade and has committed so much of its finite pie to pension obligations that the payments will soon come due. Without labor reform, increased state commitments and higher fares, the agency will suffocate under the weight of debt service payments. Kellerman’s answer isn’t sufficient enough.
I don’t believe the MTA should look to cut services until every other avenue of potential revenue has been exhausted. Even though the MTA often resembles a pension organization, its ostensible mission is to supply transit service. That means meeting demand while increasing options. The MTA should run services to replace other modes of transit, and often that means running routes that aren’t profitable. Cutting services simply leads to disgruntled commuters, more congestion and a less productive city. Maintain service, but bleed dollars out of every other potential revenue stream.
Ultimately, though, Kellerman’s conclusion serves as the unifying theme. She writes “It’s only natural to complain about taxes, fare hikes and service cuts, but the alternatives can be far worse. The economically devastating consequences of a deteriorating transit system loom if all New Yorkers do not acknowledge our collective responsibility for the system on which our jobs and family incomes depend.” That cannot be said often enough.