Three days ago, the MTA dropped the news that a second fare hike may become a reality in 2009. Lost in the news on Friday were some alarming reports about the state of the MTA’s capital plan.
In discussing the financial state of the transportation authority, Mayor Bloomberg dropped a bit of a bombshell about the MTA’s construction plans. Pete Donohue repoted on Mayor Mike’s statement:
Mayor Bloomberg warned Friday that straphangers could face another fare hike next year – and said the city is broke and can’t help.
The mayor also said the MTA’s construction plan is in “shambles,” and he slammed state lawmakers for sinking his congestion pricing plan – which would have raised transit money.
“I think there is a very good likelihood that we are going to have to face the issue of a fare increase or something else,” Bloomberg said on his weekly radio show. “The city doesn’t have any money to give. We are out of money.”
We know about the fare hike, but we hadn’t heard about the problems facing the MTA’s construction plans. For a while, rumors have swirled about the state of the progress on the MTA’s big-ticket items. Observers have noted a lack of above-ground work on the Second Ave. subway and the LIRR’s East Side Access project. Now, Bloomberg’s statement confirms our worst fears: The MTA could be facing a construction problem.
Across the city, the spiking cost of work is effective progress on buildings and development. Concrete costs are up; raw material prices have gone through the roof; and the MTA is not immune to these increases. A few weeks ago, the MTA noted that real estate revenues were down by nearly $81 million off of projected levels.
The MTA has long said that these problems won’t impact construction and expansion plans, but something has to give. Either we’re facing a fare hike or the MTA is facing a massive economic problem that could bring reduced service and a construction shut down. While these problems are not unique to New York, we can’t really afford to see the MTA fall into a recession reminiscent of the 1970s.
We’ll either see yet another fare hike or the government — the city, the state, the feds — will have to come through with the bucks. Either way, this tale is far from over.
4 comments
The fact is, the most recent fare hike was far too modest. The reason they’re facing a 2009 hike is that they didn’t raise it enough in 2008. I don’t see any realistic scenario where the state comes through with a bailout anywhere near high enough. The farebox is where it needs to come from.
What exactly are “real estate revenues”? I hear this term all the time in MTA budget articles and don’t understand it. Is it rent from storefronts, concessions, etc that the MTA has leased to private entities? Are they earmaked a percentage of the city’s property taxes? Is it like a neverending home-equity loan or mortgage refinance?
There are various taxes that are earmarked for the MTA, such as mortgage and real estate transfer taxes. The trouble is that these revenues fluctuate with the economic cycle. In bad times, people aren’t buying and selling as much, so the MTA’s revenue stream dries up.
The riding public refuses to believe that the MTA is susceptible to the same economic problems and inflation as the rest oft he world. They don’t properly understand the issues of rising energy, construction, and material costs that are driving up the price of everything. I just wish people would understand the MTA isn’t out to steal all of their money into a black hole but that they’re facing the same problem as people going to the supermarket only to find prices have shot up 20%.