Earlier this morning, the MTA released its $11 billion proposed budget for 2010, and although the agency plans to raise fares to match inflation in both 2011 and 2013, the document contains nary a mention of service cuts or fare hikes next year. During the MTA Board meeting, Jay Walder explained how the agency would engage in a significant overhaul to improve operations efficiency and why the agency is setting aside $85 million in reserve.
Despite the good news on fare hikes and service cuts, Walder cautioned that the authority is not yet on a sound financial footing. “From a narrow context, we see increased stability and are grateful that we can present a balanced budget without impacting our customers,” the new MTA Chair and CEO said. “But the MTA remains in a very fragile position with a number of risks on the horizon. This fiscal reality demands that we permanently overhaul the way the MTA does business. The bottom line is that there is no more money for us in Albany, and we will learn to do more with the funding we have.”
Walder will soon chair a working group designed to explore MTA efficiently. It will examine the ways the agency can “fundamentally change its business model to operate more cost effectively, improve performance and provide better value to taxpayers and customers,” according to an agency press release.
For those interested, the budget documents can be found here on the MTA’s website. The two piece go in depth into a budgeting process that requires the MTA to pass a balanced budget by the end of December. For now, the biggest piece of news is the $85 million reserve the MTA has in place to cover cost overruns.
The money for this reserve, according to MTA CFO Gary Dellaversoncame from three sources. Although real estate taxes were lower than anticipated, ridership figures, as I noted earlier today, have been higher than exepcted this year. Furthermore, summer belt-tightening measures have led to lower-than-expected spending.
To that end, the $85 million reserve will play an important role in avoiding a budget crunch next year on two fronts. First, the state and city are faced with significant fiscal problems and are threatening to cut contributions to the MTA further than they already have. Second, if the MTA loses its appeal of the TWU arbitration award, labor costs will eat up almost the entirety of this reserve.
I’ll have more on this proposed budget later tonight after I have some time to read through the materials. For now, though, Straphangers can breath a sigh of relief. For the first time since 2007, the MTA believes it will not have to raise fares.