Earlier today, the MTA Finance Committee held a special meeting to update the MTA Board on worsening financial projections. According to reports from the meeting, the MTA could be facing a crippling $1.2 billion deficit if the agency cannot find economic relief from the city, the state, a fare hike or measures suggested by the Ravitch committe.
Sewell Chan and William Neuman filed a report on City Room:
The Metropolitan Transportation Authority faces a $1.2 billion budget deficit in 2009 — $300 million more than it had projected in July — that will very likely require new fare and toll increases or service reductions unless it gets new state and city aid or finds new sources of revenue, officials warned on Monday morning.
At a meeting of the finance committee of the authority’s board, the authority’s chief executive, Elliot G. Sander, said the authority faces a dire fiscal situation that could influence riders across the subway, bus and commuter-rail networks. The deficit was caused, he said, by the collapse of revenues from real estate and corporate taxes, which until just a few years ago had given the authority a string of healthy surpluses…
The magnitude of the fiscal challenges confronting the authority was evident in a PowerPoint presentation presented at the meeting and posted to the authority’s Web site. Real estate transaction taxes, which represent an important share of M.T.A. revenue, provided the authority with more than $1.4 billion in 2006 and nearly $1.6 billion in 2007. This year, the authority is on track to collect only $995 million in such taxes — about $50 million less than had been projected in July. And the situation is expected to get even worse. The authority now expects to collect $895 million in real estate taxes next year, and $877 million in 2010.
The PowerPoint presentation is available here, and in the next day or two, an archived video of the committee meeting will be posted on the MTA’s website.
“They will be very, very significant,” Sander said during the hearing. “Whatever that mix that we come up with, in terms of fare and toll increases and service reductions, there’s no question that they would have an impact, significantly, on our customer and on the functioning of that region.”
Right now, the financing mechanism for the MTA is clearly broken, and it’s up to the government to fix it. While the feds are working on a $700 billion bailout plan for the rest of the U.S. economic, it wouldn’t be out of the realm of the ordinary to suggest that less than 0.2 percent of that money be siphoned to ensure a healthy MTA. The New York Metropolitan Area’s transit infrastructure is probably at least that valuable to the national economy on the whole.
Meanwhile, the Ravitch Commission’s recommendations — discussed at length this morning — loom larger now. Somehow, someone will have to pay to fix the MTA. It will come out of taxpayers’ pockets either at the expense of everyone or at the expense of drivers who opt to enjoy the luxury of driving. In all likelihood, the end result will be some combination of both.
But no matter the solution, the government cannot allow the fortunes of the MTA to raise and fall on something as unstable as real estate tax revenues. It’s hard to underestimate the city’s need for a healthy public transit network. I’d hate to see New York learn the hard way a lesson we all should have picked up from the 1970s.