MTA officials gathered today for a pivotal board meeting today in which the preliminary budget went under the microscope. In short, the MTA plans to cut costs and workers while raising the fares and requesting more government money to cover a crushing $900-million deficit. Fare hikes are inevitable.
City Room succinctly sums up why the MTA is requesting not one but two fares hikes by January 2011:
In presenting its preliminary budget for the 2009 fiscal year on Wednesday morning, the authority made no attempt to conceal what it considers to be its worst fiscal situation since the economic downturn that followed 9/11. When fares last went up, in March, the authority’s plan was not to have another fare increase until January 2010, with future increases every two years thereafter. Now that entire schedule has been moved forward — by six months for the initial increase and by a year for the projected future increases….
The authority’s leaders said the fare and toll increases are necessary by the confluence of soaring energy prices and a plunge in revenue from real-estate transactions, which are a prime source of the authority’s revenue. The authority is struggling to pay the interest on billions of dollars in debts that have accumulated since the 1980s, but exploded since 2000, to pay for expensive equipment upgrades; debt service alone is expected to consume one-fifth of all authority spending by 2012.
That’s really all there is to it. The MTA is saddled with crushing debt brought about by the need, 25 years ago, to restore the system to a state of good repair and by a marked decrease over that time of contributions on a city and state level. As was the case earlier this year and late last year, these fare increases will happen unless the city and state find a hundreds of millions of dollars to send to the MTA.
True, the MTA could cut capital projects. True, they could drastically reduce service. But the capital budget is separate from this operations deficit, and a lot of the federal money the MTA is using to fund its capital program is earmarked specifically for those projects. Those funds can’t be shifted to cover debt payments. And we don’t even want to touch the issue of service reductions.
The MTA, as I’ve sad over and over again, sits on a precipice right now. It could fall back into a state of bad repair so prevalent in the 1970s, and the New York economy would suffer because of it. It could — with the help of a lot of money — grow and emerge from this slump. Later tonight, I’ll have some thoughts on the state of the MTA’s fares, but for now, we are left facing something of a dead end. An unwilling legislature won’t come up with the funds for the MTA. So the transit authority is left with one recourse: fare hikes. And that’s the state of things.