Once upon a time, in 1991, the MTA’s annual budget clocked in at $2.9 billion. In today’s dollars, that’s approximately $7.6 billion. Yet, for 2010, the MTA’s budget is a whopping $11.9 billion. It is outpacing inflation by nearly 57 percent. No wonder the MTA is going broke.
Just a few years ago, in 2005, the MTA’s operating budget sat at $7.6 billion. That figure was just $800 million over the inflation-adjusted 1991 budget, and it seemed more in line with an expanding transit network that had to hire a few more employees and institute more service to meet demand. What has happened since the mid-2000s, with its origins in the 1990s, goes a long way toward exploring the root cause of the MTA’s current budget.
The problem started with the duel blow of the Pataki and Guiliani Administrations. In 1994, the city cut back massively on MTA appropriations, starving the agency of $100 million or 15 percent of total city subsidies. In 1995, the Pataki Administration cut when the state reapportioned approximately $86 million in taxes that should have gone to the authority. It would be just the beginning.
Over the next 15 years, the city and state systematically withdrew funding for the MTA. Student transit subsidies were cut, and capital funding agreements rescinded. As Fox 5 reported last night, “In 1990, 26 percent of MTA capital projects were paid with state and city funds. By 2004, it was only 2 percent.”
Yet, throughout the years, the MTA continued to build and expand. They continued to pursue a badly-needed State of Good Repair program and began plans to build the Second Ave. Subway, the 7 line extension and the East Side Access project. While some of the big-ticket items are fully funded by the city, in the case of the 7 line, others — including portions of the Second Ave. Subway and many of the MTA’s capital purchases — have been funded through bond issues, and bond issues lead to debt.
The numbers are stark. A 2005 report by the Fiscal Policy Institute highlights the MTA’s debt problem. The 1987-1991 five-year capital plan relied on debt funding to cover 25 percent of the costs. Each successive five-year plan came to depend more and more heavily on debt, and by the time the state approved the 2000-2004 plan, 61 percent of the MTA’s projects were being paid for out of debt. Today, the bill is due.
In the MTA’s overall budget of $11.9 billion for 2010, debt service payments constitute $1.9 billion. Sixteen percent of the MTA’s budget is going toward funding for projects that were built nearly ten years ago. That far outstripes overtime, pensions and health care, and it is the third highest line-item expenditure after payroll obligations and other non-labor expenses.
So what is there to do? We can sit here and blame the state for reducing its capital commitments from a high of 20 percent in the 1982-1986 five-year plan to a low of 0 percent in the 2000-2004 plan. We can finger the city too as its contributions plummeted from 15 percent of the overall bill to 2 percent. But we can’t change the past, and while it’s easy to scapegoat labor costs, those haven’t risen nearly as dramatically as the MTA’s debt obligations have.
Maybe then the MTA needs to reconsider its capital plan. The state’s capital review board recently rejected the MTA’s next five-year plan because it had a funding gap of nearly $10 billion, and the Authority simply cannot afford to take on even more debt. Adequate funding for mass transit in New York City is a must, but that funding must be responsible and thorough. No longer can we saddle the MTA with crippling levels of debt.