MTA unveils plans to cover a $1.4 billion gap

It’s official; baring a government bailout, in 2009, the MTA is going to implement extreme service cuts and raise fares by 23 percent in order to cover a deficit now estimated at $1.4 billion. Additionally, to keep pace with projections, the authority is planning for a 2011 fare hike of at least another five percent.

William Neuman and Sewell Chan were at the MTA Board Meeting this morning and covered the news for The Times’ CityRoom blog. They reported:

The deficit-closing plan, outlined by [MTA CEO and Executive Director] Lee Sander at a meeting of the authority’s board in Midtown, would involve eliminating 2,700 jobs, saving $261 million next year, and “significant cuts that will affect every part of our operation and cannot be sugar-coated.”

For New York City Transit, the biggest component of the authority, the deficit-closing plan would eliminate the W and Z subway lines; eliminate service on the M line to Bay Parkway in Brooklyn; shorten the route of the G line, which will permanently stop at Court Square in Long Island City, Queens, instead of 71st and Continental Avenues in Forest Hills, Queens; lower the frequency of most letter-line trains to every 10 minutes from every eight minutes on weekends; lower the frequency of all trains to every 30 minutes from every 20 minutes from 2 to 5 a.m.; eliminate overnight bus service on 25 routes; and eliminate the X27 and X28 express-bus lines.

Mr. Sander said the route alterations “will result in extra transfers, longer travel times, longer wait times and longer walking time.” Trains would be more crowded. Subway cars would be cleaned less frequently. Station booths would be closed. Bus service would be cut back on weekends and at nights. The express-bus fare would rise to $7.50 from $5. The cost of the Access-a-Ride paratransit service for disabled riders would rise.

The Long Island Rail Road would cut 173 positions, cancel and combine some train lines, reduce service on weekends and off-peak hours and cut train crews. The Metro-North Railroad would cut 88 positions, shorten trains, increase the loading guidelines, slow down the restoration of Grand Central Terminal and cut cleaning and maintenance at the terminal. Fares would rise by 43 percent on the Long Island Bus.

In delivering the bad news, Sander advocated for the agency as well. “No one on this board — and indeed no one should in this room — should leave here today thinking that this mix of service cuts and increase in fares and tolls are actions that I am eager — or that the staff is eager — to implement,” he said. “Nothing could be further from the truth. Even in a period of austerity, we cannot afford to lose sight of this simple fact: Continuing investment in the M.T.A.’s capital and operating needs should and must remain one of the highest priorities of our elected officials in New York City and Albany.”

Meanwhile, this plan as presented outlines the shocking ways in which our government just isn’t contributing to transit. According to MTA documents, fare revenue would cover over 80 percent of operating costs for New York City Transit’s subway system. This level of rider contribution is nearly unprecedented among the world’s public or semi-public subway systems.

Sander also stressed the ways in which the MTA must invest in its future as well. While the capital program is funded through a separate budget, the MTA cannot risk halting expansion and modernization plans. “If we don’t have a capital program, we’re definitely on the road back to where we were in the 1970s,” the MTA head warned.

After the jump, the extensive press release from the MTA, detailing the budget cuts. Things are going to get nasty and ugly before they get better.

Before any gap-closing measures are implemented or prior-year carryover is included, the MTA’s budget deficits are projected to reach $1.441 billion in 2009, $2.394 billion in 2010, $2.647 billion in 2011, and $2.972 billion in 2012. The budget gaps are to be filled through actions from the MTA itself, its employees, governmental partners and customers:

• MTA Internal Actions Proposed in July: The gap closing actions anticipated in July are continued. These include 6% non-service related cost reductions over four years, continuing the 1.5% annual reduction begun last year. In addition to belt tightening, a series of administrative reductions in hiring, travel and food, and telecommunications are being implemented in 2008 and 2009 at all of the agencies.
• Labor: The plan assumes that MTA employees will make a modest contribution to the plan through negotiation of new contracts. In addition, the plan expects efficiency measures, notably the Business Service Center, which will consolidate back office operations for all MTA agencies. This will require downsizing the workforce and this plan, as previous plans, provides funds to cover the expected cost of downsizing, but anticipates annual savings to begin in 2012. Savings are also assumed from other reorganization initiatives.
• Cash actions: MTA will take an inter-agency loan of $135 million to reduce the gap in both 2009 and 2010, which it will pay back in 2011 and 2012. The plan also identifies funds that had been allocated from the 2006 surplus but not yet committed that will be transferred back to the operating budget in 2008 to be used for future gap-closing. Projects that would have used these funds will instead be included in the next capital program.
• Government partners: The plan proposes legislative changes to federal mandates for commuter railroad employees that, beginning in late 2009, are projected to save $15 million, then roughly $62 million annually without affecting employee benefits. The plan also continues to propose asking the State to eliminate tax loopholes affecting real estate transactions, which is expected to generate $50 million annually beginning in 2009. However, the plan no longer anticipates the $600 million in new State and City contributions beginning in 2010 or reimbursement for school fares and senior discounts, which had been expected to generate $104 million annually beginning in 2009. Nor does it assume that the City and the MTA share paratransit costs, which would have provided $113 million in 2009 and more thereafter or the restoration of the fall off in State tax aid.
• Additional actions for budget balance: To make up the remaining deficit, each agency identified actions to reduce their budgets by an additional 4.7%. Each agency identified additional administrative cuts that could be taken over and above the normal, recurring 1.5% reduction program proposed in July (as discussed above). For the additional reductions, each agency was required to meet an independent target of no less than 5% of its managerial expenses. The proposed service reductions were guided by two principles: first, reductions should not compromise safety, security or reliability; and second, to target cuts to services where an alternative exists for customers to reach their destination. The proposed reductions, which are described in more detail in the budget documents, are summarized below.*
• MTA customers: Finally, the plan proposes a fare and toll increase designed to yield a 23% increase in fare/toll revenue in June 2009. The revised fare structure has not been determined, but will be developed and discussed in the coming months. The plan also assumes alternate year fare and toll increases starting in 2011 to keep pace with the growth in consumer prices.
  • In addition, customers who use paratransit services and express buses, two services with extremely low fare recovery ratios, will see additional increases. Paratransit fares will increase to twice the regular Transit base fare, as allowable by law and consistent with other bus agencies, and express bus fares will increase from $5.00 to $7.50.
  • The plan also increases Long Island Bus fares by 20% over and above the general proposed fare increase in the absence of additional support from Nassau County.

As a result of these and other gap closing actions, the MTA expects to carry a modest cash balance of $65 million into 2010, with deficits still projected for 2010 ($266 million), 2011 ($454 million) and 2012 ($608 million). Without these measures, budget gaps are expected to grow to nearly $3 billion in 2012.

*Specific agency budget reductions include:

NYC Transit: Savings of $167 Million in 08/09, $280 million annually 2010-12

• 7.5% reduction in managerial, professional and clerical positions
  • On top of 1.5% cuts taken prior to service reductions.
• Subway reductions:
  • Route modifications – shorten G, operate N via Manhattan Bridge late nights, eliminate W and extend Q to Astoria, operate M to Broad rush hours, eliminate Z, add J local service.
  • Increased headways and loading guidelines during non-rush hours – headways increase from 8 to 10 minutes on ADEFGJMNQR on Saturdays and the ADEFGNQR on Sundays; headways increase from 20 to 30 minutes from 2 a.m. to 5 a.m.
  • Reduced station booth and station customer assistant staffing; elimination of enhanced station area track cleaning program.
• Bus reductions:
  • Reduce or eliminate low ridership services, especially during weekends or late night, and services that largely duplicate subway service.

Metro-North Railroad: $35 million annual reduction

• Administrative cuts in management, clerical and other areas
• Increase loading guidelines and reduced service to both East and West of Hudson
• Maintenance reductions
• Reduce car and station cleaning

Long Island Rail Road: $36 million savings in ’09 and $53 million annually 2010-12

• Reduce administrative positions
• Reduce ticket offices, sellers and windows
• Reduce train crew staffing
• Service reductions on special service trains and select weekend and off-peak trains
• Extend select maintenance cycles

Long Island Bus: $5 million of savings in 2009 and $6 million annually thereafter

• Reduce managerial headcount up to 10%
• Reduce/eliminate service on low ridership routes
• Savings associated with CNG and service contracts
• Increase employee health and welfare contributions

Bridges and Tunnels: $17 million savings in 2009, $59 million over the plan period

• Administrative savings
• Close some manual/cash lanes during low-traffic periods
• Reduce facility security and truck weight enforcement personnel
• Reschedule some bridge painting projects to align with structural work in the next capital program
• Eliminate the Cross Bay Bridge Rebate Program, reduce frequency of E-Z Pass paper statements, and tighten E-Z Pass controls

MTA Headquarters: $9 million annual savings

• Reductions in managerial headcount, service contracts and purchases of goods and services.