“How did the MTA get here?” Chuck Scarborough asked me last night during my appearance on his new cable-only 7 p.m. Nightly News show. With the MTA Finance Committee voting Monday to recommend the Doomsday budget to the Board at Wednesday’s meeting, that’s the question on everyone’s mind.

In a way, the answer is quite complex. Through years of reduced contributions at the city and state level combined with a crashing real estate market and an increase in labor, fuel and maintenance costs, the MTA has arrived at the eye of a perfect storm of a budget crisis. In another way though, the last part of this equation is quite simple: By borrowing against the future a decade ago, the Pataki Administration ensured that the MTA would be saddled with debt payments.

Without these debt service payments on its capital campaign, the MTA wouldn’t be turning to a Doomsday proposal. We’d be suffering through the typical fare hike debate but not one on a magnitude of 23 percent.

A few days ago, Newsday’s Dan Janison tackled just this issue. His piece was largely overlooked on Monday, but it deserves some attention for the way in which is dispatches with the complex issue of the MTA’s crushing debt. Take a look:

Nine years ago, in collaboration with state officials, the mighty investment company Bear Stearns played a special role in shaping the course on which the region’s transit system now finds itself. Not only did this financial titan advise the Metropolitan Transportation Authority on a five-year, $17-billion capital program, but more notably its executives personally sold the plan to state lawmakers – helping generate commissions for the firm while temporarily funding mass transit.

From today’s perspective, of course, the deal represents fiscal risk and folly. Bear’s collapse a year ago signaled other global financial failures to come, and the debts carried by the state-run MTA drive its latest threat of massive fare hikes and sharp service cuts.

Watchdogs suggested that the Pataki administration and its sparring partners in the State Legislature were mortgaging the future. Policy makers, they believed, figured they’d derail from that track when they came to it.

Yesterday, State Sen. Brian Foley’s office cited data showing how MTA debt service payments of $609 million in 1996 have spiked to a forecast $1.5 billion in 2009. That works out to an estimated $125 million a month, said Ibrahim Khan, spokesman for Foley (D-Blue Point).

That, in a nutshell, is why Gov. David Paterson convened the Ravitch Commission. Well aware of the MTA’s tortured financial history, Paterson wanted a plan that would pare down the MTA’s current debt while providing a steady stream of income on hand for the system’s much-needed expansion. No longer would the MTA build on credit today that would create debt crises a decade from now.

For now, though, that plan isn’t meant to be, and the MTA will head one step closer to a financial abyss. During the Finance Committee session on Monday, MTA CFO Gary Dellaverson noted that projected tax revenues were down 70 percent year-to-date beyond the MTA’s pessimistic forecast. This fare hike/service cut situation will get better before it gets worse, and if Albany doesn’t act, the New York sons and daughters, straphangers all of us, will be left paying for the sins of our Pataki father.

Categories : MTA Economics
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  • Fare Hike Feedback: SAS on NBC · As the public digests the news that the MTA Finance Committee has approved recommending the Doomsday budget to the MTA Board, I’ll be on TV providing some reaction. Andrew Siff of WNBC interviewed me for a segment that will run during the 30-minute newscast at either 5 p.m. or 6 p.m. on Channel 4 in New York. I’ll also be a guest on Chuck Scarborough’s cable-only 7 p.m. news broadcast. Check here for channel information for the Nightly News broadcast.

    As long-time readers of this site could guess, I’m not too happy about the news. The MTA Board has been forced into a corner, and the politicians in Albany are simply spewing excuses. If we’ve known about this impending problem for a year, well, so has Albany. It’s time for the politicians to stop playing games with transit. New York needs its transit funding, and the MTA is now on borrowed time. · (10)
  • Paterson: Just raise the fares · While the MTA Finance Committee just voted to recommend a Doomsday budget with a 2.50 base fare, a $103 30-Day Unlimited Ride card and massive service cuts to the MTA Board on Wednesday, Gov. David Paterson has thrown in the towel for now. In a rather politically dangerous move, he urged the MTA to raise fares today. Facing inaction in Albany and a very stubborn State Senate, Paterson won’t blame anyone but recognizes the reality facing the MTA. The authority is required by law to balance its budget, and Paterson knows it. “I don’t think that the agency should delay any action,” he said earlier today. And so it goes. · (15)

The MTA Finance Committee is currently meeting to debate and vote on the fate of the Doomsday budget. I’ll be liveblogging the event for you.

Categories : Doomsday Budget
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At 11:45 a.m., the MTA’s Finance Committee will meet to approve recommendations for a fare hike and service cuts in an effort to close a budget gap in excess of $1.2 billion. While Richard Ravitch had proposed a plan that, through East River bridge tolls and an equitable payroll tax, would minimized the hike and cuts, a bitterly divided Senate could reach an agreement, and while Sheldon Silver’s Assembly was prepared to pass a modified Ravitch Plan, the Senate has tabled any MTA rescue package for now.

As this drama has unfolded over the past few weeks, Gov. David Paterson has taken up a lot of airtime urging Senate Majority Leader Malcolm Smith to get his caucus in line. The Democrats, who hold a 32-30 majority in the Senate, have been bitterly divided on the issue with many objecting to the tolls. On Friday, Paterson changed his stance a bit and based the State Republicans for doing exactly what he wants the Democrats to do: holding rank. The Republicans refuse to support the Ravitch Plan because it includes a payroll tax, and while it would be far worse to let mass transit in the city fail, the New York GOP is closing ranks on ideological grounds.

Pete Donohue and Glenn Blain talked about Paterson’s ire in the Daily News this weekend:

Paterson rapped Senate Republicans for taking a partisan stance against a revenue-raising plan, crafted by former MTA Chairman Richard Ravitch and featuring tolls on the East and Harlem River bridges. “I’ve been talking to them about this for the last four months,” Paterson said, referring to the GOP. “And I think that if 30 members of a party all vote the same way – what we used to call that when I was in the Senate was a party vote.”

There are 32 Democrats in the Senate and 30 Republicans. Several Dems oppose tolls, so the Ravitch rescue needs the support of at least some Republicans. Paterson said the package would not only avert whopping fare hikes and service cuts, but fund the MTA’s capital construction and maintenance program.

The program is a significant source of jobs in several upstate districts where there are subway and bus assembly plants, and other businesses with MTA contracts. “I don’t see any reason why they wouldn’t be voting for it because it has a direct economic, imperative affect on their districts,” Paterson said.

While Republicans denied to the Daily News reporters Paterson’s statements, the sentiments ring true. If even a handful of New York Metropolitan Area GOP Senators were willing to support the Ravitch Plan, not only would the MTA stave off a 23 percent fare hike and massive service cuts, but the entire state would benefit from sage investment in transit infrastructure.

Alas. It is not likely to be. New York politics remains stuck in a heavily bipartisan world where compromise between parties is unlikely and even sanity among a solitary party, as the Democrats have shown lately, is not to be expected.

Later this morning, the first of many days of reckoning will arrive. Just remember that the politicians — and not the MTA heads — are the ones responsible for this mess.

Categories : Doomsday Budget
Comments (9)

Spurred on by a question I posed to the Second Ave. Sagas Twitter followers last night, I want to open up a poll on SAS. The question and answers are self-explanatory, and with the MTA’s Doomsday budget deadline on the horizon, I’m curious to see the responses. The weekend service advisories follow.

If the State Senate fails to act and the MTA Board must enact a Doomsday budget, which of the following would you prefer?
View Results

* * *

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, 2 trains run in two sections (due to a track chip-out at President Street):

  • Between 241st Street and Crown Heights-Utica Avenue and
  • Between Franklin Avenue and Brooklyn College-Flatbush Avenue

Customers must transfer to the shuttle train at Franklin Avenue for stations along Nostrand Avenue to Flatbush Avenue. Note: In the early morning hours between 12:30 a.m. and 5 a.m., trains run every 30 minutes between Franklin and Flatbush Avenues.

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, uptown 2 and 3 trains run local from 72nd to 96th Streets due to station rehabilitation at 96th Street. Note: Overnight, uptown 3 trains run local from 42nd to 96th Streets.

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, downtown 2 and 3 trains run local from 96th Street to Chambers Street due to station rehabilitation at 96th Street. Note: Overnight, downtown 3 trains run local form 96th to 42nd Streets.

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, Brooklyn-bound 234 trains run express from Atlantic Avenue to Crown Heights-Utica Avenue due to a track chip-out at President Street. A shuttle train will operate between Franklin Avenue and Brooklyn College-Flatbush Avenue.

From 12:01 a.m. to 7 a.m. Saturday, March 21, from 12:01 a.m. to 8 a.m. Sunday, March 22 and from 12:01 a.m. to 5 a.m. Monday, March 23, Brooklyn-bound 4 trains run local from Grand Central-42nd Street to Brooklyn Bridge due to rail installation.

From 11:30 p.m. Friday, March 20 to 5 a.m. Monday, March 23, free shuttle buses replace 5 trains between Dyre Avenue and East 180th Street due to structural and steel track work.

From 4 a.m. Saturday, March 21 to 10 p.m. Sunday, March 22, the last stop for some Bronx-bound 6 trains is 3rd Avenue-138th Street due to track panel installation from Castle Hill Avenue to Parkchester.

From 4 a.m. Saturday, March 21 to 10 p.m. Sunday, March 22, Manhattan-bound 6 trains run express from Pelham Bay Park to Parkchester due to track panel installation from Castle Hill Avenue to Parkchester.

From 11:30 p.m. Friday, March 20 to 5 a.m. Monday, March 23, free shuttle buses replace A trains between Jay Street-Borough Hall and Utica Avenue due to the Jay Street rehabilitation project.

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, there is no C train service. A trains run local between 168th Street and Euclid Avenue with free shuttle buses replacing A trains between Jay Street-Borough Hall and Utica Avenue due to the Jay Street station rehabilitation project.

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, Bronx-bound D trains run local from 59th to 145th Streets due to switch renewal south of 81st Street.

From 11:30 p.m. Friday, March 20 to 5 a.m. Monday, March 23, Manhattan-bound EF trains run local from Forest Hills-71st Avenue to Roosevelt Avenue due to a track chip-out north of Grand Avenue.

From 12:30 a.m. Saturday, March 21 to 5 a.m. March 23, Jamaica-bound EF trains run local from Roosevelt Avenue to Forest Hills -71st Avenue due to a track chip-out north of Grand Avenue.

From 12:01 a.m. Saturday, March 21 to 5 a.m. March 23, downtown F trains skip 23rd and 14th Streets due to conduit and cable work south of 34th Street.

From 8:30 p.m. Friday, March 20 to 5 a.m. Monday, March 23 (until further notice), there are no G trains between Forest Hills-71st Avenue and Court Square. Customers should take the E or R instead.

From 4 a.m. Saturday, March 21 to 10 p.m. Sunday, March 22, N trains skip Prince, 8th, 23rd, and 28th Streets in both directions due to switch renewal at Queensboro Plaza. Customers may take the Q instead.

From 4 a.m. Saturday, March 21 to 10 p.m. Sunday, March 22, there are no N trains between Queensboro Plaza and Lexington Avenue-59th Street due to switch renewal at Queensboro Plaza. Customers may take the 7 instead.

From 5 a.m. to midnight Saturday, March 21 and from 5 a.m. to 10 p.m. Sunday, March 22, there are no N trains between Lexington Avenue-59th Street and Times Square-42nd Street due to switch renewal at Queensboro Plaza. Customers may take the 456Q or R instead.

From 12:01 a.m. to 5 a.m., Saturday, March 21 and Sunday, March 22, N trains are rerouted over the Manhattan Bridge between DeKalb Avenue and Canal Street in both directions due to switch renewal at Queensboro Plaza. Customers should take the Q instead.

From 4 a.m. Saturday, March 21 to 10 p.m. March 22, Q trains run local on the R line between Canal Street and DeKalb Avenue in both directions due to switch renewal at Queensboro Plaza.

From 12:01 a.m. Saturday, March 21 to 5 a.m. Monday, March 23, Manhattan-bound Q trains run express from Kings Highway to Prospect Park due to Brighton Line station rehabilitation.

From 5 a.m. to midnight Saturday, March 21 and Sunday, March 22, R trains are extended to the 179th Street F station due to a track chip-out north of Grand Avenue.

Categories : Service Advisories
Comments (10)
  • Senate sticks MTA rescue plan on the backburner · Senate Majority Leader Malcolm Smith is so confident in his belief that the MTA’s self-imposed March 25th deadline is a flexible one that he is prepared to blow right past it. As the Assembly supports a modified Ravitch Plan and the Senate supports its own fatally flawed bailout plan, Smith is turning his attention to the state’s looming budget deadline. The MTA will now take a backseat to the April 1 New York State budget deadline. This all but assures an approval of the Doomsday budget on Wednesday. Fare hikes and service cuts could go into effect as early as June. · (2)
  • City set to cover more 7 extension cost overruns · The 7 line — to so-called subway to nowhere — is set to cost the city of New York $2.1 billion for one additional stop and perhaps the shell of a second. On Monday, the costs are going to go up by a bit when the board approves a $10 million increase in design costs. While the cost of this early work has already tripled to $124 million from its original estimated price tag a few years ago, the MTA is still on the hook for $0, and the Mayor’s Office has built the overruns into its budget for the project. “It’s not out of the ordinary, it’s covered and this will cost the MTA $0,” Andrew Brent, a Bloomberg administration spokesman, said to amNY’s Urbanite blog. Now if only they could solve that problem of the omitted stop at 41st St. and 10th Ave. · (2)

malcolmsmith When New York State Senate Majority Leader Malcolm Smith introduced his version of the MTA rescue package this week, the resulting condemnation was swift and universal. None of the major players — Richard Ravitch, Sheldon Silver, David Paterson, Michael Bloomberg — felt that the Senate’s temporary fix did anything to address the long-term issues plaguing the MTA or the need to fund its capital campaign.

While some critics on Tuesday questioned the numbers behind Smith’s plan, little did anyone realize just how terribly inaccurate and inappropriate his plan would turn out to be. In The Times today, William Neuman goes behind the numbers to reveal that the Senate plan is based on poor assumptions, incorrect calculations and just plain old errors. What’s worse is Smith’s camp trying to blame the MTA for their sloppy mistakes. This is a New York political folly of epic proportions.

Allow me to quote at length from Neuman’s article for full effect:

As an alternative [to Richard Ravitch’s tax-and-toll plan], the [Senate Democrats] propose imposing a smaller payroll tax than the one in Mr. Ravitch’s plan and increasing fare revenues by 4 percent. Mr. Smith says that his plan would provide the authority enough money to operate through next year and buy time for a longer-term solution.

But aides to the governor say that the Senate plan contains at least two basic errors — and a review of the data backs up their critique: the Senate plan overstates the amount of money it would raise over the next two years by more than $700 million. The governor’s office said that to make up for the shortfall, the Senate would have to increase fare revenues by a total of 13 percent.

Marc Shaw, a senior adviser to the governor, said the Senate plan miscalculated the amount of payroll tax that could be collected this year, overstating the amount by about $300 million. The reason is based in the way the state collects taxes and the way the authority does its bookkeeping. The Senate plan assumes that a full year’s worth of tax receipts would pour into the authority’s coffers this year.

But Mr. Shaw said that because the tax, like other similar taxes, is collected quarterly (in part this is meant to make it easier for employers), money from the final three months of this year would not reach the authority until January 2010. That means that the authority, which uses what is known as a cash method of accounting, cannot show the final quarter’s tax revenues on this year’s books.

The Senate plan gets that wrong, projecting four quarters of tax receipts this year.

So the Senate — the same Senate that has criticized the MTA for not offering up a full audit — doesn’t even know how the MTA records revenue or how tax collection in New York works? Who are these fools in Albany? If Marc Shaw, an adviser to Paterson and potential heir to Elliot Sander’s CEO-ship, knows this information, so should Malcolm Smith.

The problems, according to Neuman, continue:

Under the Ravitch plan, the authority would use hundreds of millions of dollars from the payroll tax to finance bus costs that had previously been paid for by New York City and the surrounding counties.

The Senate plan eliminates that provision. But in its proposal, it makes a mistake in accounting for those bus costs. Instead of simply removing them from the transportation authority’s balance sheet, it turned them into income. The mistake adds up to $409 million over the two years of the Senate plan.

Initially, Senate officials denied that they had made any mistakes in their calculations. But subsequently they blamed the authority for the errors. “The blatantly ambiguous manner in which they categorized their numbers clouded the picture of their finances,” said Austin Shafran, a spokesman for Mr. Smith. “If the math was wrong,” he said, “it was wrong based on the way they gave us the numbers.”

But Mr. Shafran said that Senate staff members had not checked their numbers with the authority or sought clarification.

Meanwhile, as Neuman notes, Smith has been questioning why the MTA is going to raise its fares 23 percent next week while under the Ravtich plan, the agency would enact just an 8 percent fare increase. Apparently, our State Senate Majority Leader is too daft to realize that under the Ravitch plan, the MTA would also enjoy dedicated revenue streams from taxes and tolls.

This isn’t rocket science. While your average New Yorker may not understand the MTA’s financial troubles, the State Senate is paid to do so. If I can comprehend these difficulties, if David Paterson’s advisers, Richard Ravitch’s team, the MTA Board and Michael Bloomberg can, then so could a bunch of people who have taken it upon themselves to fix the problem. The State Senators, however, would rather grandstand on the issue than bother to check their work against that of the MTA. How utterly sad for the state of New York.

In the end, of course, this gives me no confidence that an MTA rescue package will be approved before Wednesday. The Ravitch Plan is dead, and with it will go decent subway service in New York City for the foreseeable future.

Categories : Doomsday Budget
Comments (4)

Two days ago, Democrats from the State Senate unveiled a universally panned plan to rescue the MTA. Since then, the politicking has trickled to a stop, and as Gov. Paterson and Senate leaders attempt to hammer out a plan, the MTA’s Doomsday clock is ticking closer to 12.

In four days, the MTA’s finance committee will meet to approve a fare hike. In six days, the entire board will vote to approve those hikes and numerous service cuts. Meanwhile, Paterson is lashing out at Senate leaders. Glenn Blain reports:

Gov. Paterson launched a radio offensive against fellow Democrats Thursday, accusing lawmakers of “hijacking” the effort to bail out the MTA and save straphangers.

In a three-station blitz, Paterson said Senate Democrats have been unable or unwilling to make the tough decisions needed to save riders from the crushing fare hikes and service cuts. “This is just a classic example of Albany thinking it can make up its own rules,” Paterson said on WOR’s John Gambling Show…

Paterson ripped the Democratic plan Thursday as incomplete and said it was done largely just to win public favor. “Either you’re going to have to put tolls on the bridges or you’re going to have to increase the fare dramatically,” Paterson said. “You can’t go in a third direction.”

At this late hour, Paterson is right, but it’s of little consolation. Unless the State Senate acts quickly and smartly, straphangers will be left paying more for worse service. That’s no way to treat a transit system.

Categories : Doomsday Budget
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