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.
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.
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.
While Senate Republicans are waiting for a call from Gov. Paterson in an effort to save the MTA, no one is too optimistic that any sort of acceptable plan will pass the Senate before next Wednesday. So with just six days left until the MTA Board is set to vote on its Doomsday budget proposal, word of the transit authority’s proposed new fare structure has hit the press.
The news is, of course, not very promising. A single fare will go up 25 percent to $2.50, and 30-day Unlimited Ride cards, while still a good deal, would pass the century mark. Shockingly, MTA Board members are calling this fare hike “the lesser of two evils.” Daily News transit beat reporter Pete Donohue has the story:
The price of a single subway or bus ride will soar from $2 to $2.50 under a menu of new fares the MTA is expected to adopt next week.
The Metropolitan Transportation Authority is on the verge of raising fares for millions of daily subway, bus and commuter train riders that would go into effect if the state doesn’t come through with a rescue plan. The MTA board’s finance committee is expected to approve the new fares Monday, followed by a full board vote Wednesday. Hikes are needed for the authority to have a required balanced budget and would take effect June 1, officials have said.
Under the proposal most board members appear to favor, the price of a monthly MetroCard would rise by $22 to $103. A weekly unlimited-ride MetroCard would jump by $6 to $31. The board is leaning against another set of proposed hikes that would jack up the $2 base fare to $3 and eliminate the 15% bonus on cash-based MetroCards valued at $7 or more.
“It really is the lesser of two evils,” MTA board member Allen Cappelli said. “Nobody wants to make these changes.”
NY1 had a few more details on the proposed fare schedule. Riders who stick with the pay-per-ride model will still earn a 15 percent bonus for all purchases over $7. That discount brings the actual cost of a pay-per-ride card down to $2.17.
Basically, these numbers are the same as those from November. At the time, the MTA hinted that fares could cover only half of the projected deficit. The other half will come from massive service cuts and personnel reductions. The details of those plans have yet to be announced.
With a $2.50 base fare, transit is slowly getting more and more expensive in New York City. Twenty years ago, a token cost $1.00. Ten years ago, the base fare sat at $1.50. Fares are now far out pacing inflation. Meanwhile, the East River bridges remain unnecessarily free.
One day, someone with the political will and power to do so will save the MTA. It doesn’t like that day will be any time this year though, and across the city, straphangers will have to soon budget for a $103 monthly MetroCard.
New York’s leaders roundly rejected the Senate Democrat’s idea for the MTA. (Click the image for a much larger and very readable version of this chart.)
In the end, the Senate Democrats came up with an idea yesterday that was exactly as reported. In an effort to close what they viewed as a $1.128 billion budget gap — a number about $700 million off from reality — the Senate Democrats propose no tolls and no service cuts but a four percent fare hike and a payroll tax of $0.25 per $100. The Senators would also request a full audit of the MTA and administrative trimming.
Even its proponents admit that this plan would be hust a stop gap measure. Meanwhile, New York’s leaders came out swinging, and no one liked this idea. It doesn’t provide a long-term solution to the MTA’s financial woes, and unlike the Ravitch plan, the Splan does not fund the MTA’s ambitious capital plan. It is, in the grand tradition of state assistance to the MTA, a token gesture designed to postpone, and not fix, a real problem. While the Four Amigos can claim a victory over tolls, the rest of us are losers.
Early in the day, Mayor Bloomberg was highly critical of this effort. With New York political commentators wondering just how little control Majority Leader Malcolm Smith has over his own party members, Bloomberg slammd Albany. “We need a plan that solves the problem, not something that’s going to get us to next year,” the mayor said.
Bloomberg also took the opportunity to bash the Senate system: “There’s a tradition, sadly, in the Senate which I’ve never agreed with that you do all your party, and the other party doesn’t really get counted. And that’s not democracy. I think we’d all be better off if we had changed some of that, but that’s the tradition up there. So it’s going to have to be the Democratic senators to come together with the Democratic Assembly people and a Democratic governor and solve this problem.”
That system, though, might be changing. Reports from Albany suggest that Gov. David Paterson, upset with a splintered and obstructionist Democratic party, may be willing to court Republicans. The Times reported on this potentially bipartisan development:
Mr. Paterson chided the Democratic majority in the Senate for choosing what he described as a short-term solution that left big holes in future budgets at the authority. His strong stance suggested that the debate over how to prevent sharp fare increases and service cuts could drag late into the budget season…
The governor was asked if there were any way the Senate plan could be adopted and provide a solution for the authority’s problems. He answered bluntly, “No.”
The governor suggested he may seek Republican support to break the impasse, saying he is willing to sit down with leaders from both parties in the Senate to discuss the issue. So far, however, Republicans have refused to back any version of the rescue plan.
On a more practical level, as everyone from Sheldon Silver to Regional Plan Association officials called this plan “Irresponsible,” “Disappointing,” “Stopgap” and “Slapdash”, transit advocates challenged the Senate math. MTA Chair Dale Hemmerdinger said that the Senators did not “do their homework.” The fare hike with this half-baked plan could be closer to 15-20 percent than the projected four percent.
At this point, this whole thing is one giant mess. The MTA board meets in seven days to assess the agency’s short-term future, and the Senate has offered up no opinion on the Ravitch plan, the best of the long-term plans. Malcolm Smith can’t keep his caucus in line, and both the mayor and governor are ready to engage in open partisan warfare against a splintered caucus while transit in the city struggles to stay afloat.
Maybe it would be best for the MTA to fail. At least then constituents could vote out their Senators in favor of people willing to assess the numbers and take a real chance on a plan to save the city. That’s probably just a dream though.
With the New York State Senate poised to enact a plan that will have the MTA at its doorstep again in a few months, Gov. David Paterson is denying yesterday’s Post story alleging a proposed slush fund in exchange for MTA votes. “I’m not making any trades with legislators. I think the issue is serious and is important on its own value,” Paterson said to Alexander Hamilton’s former paper. So it looks like this half-cooked Senate plan it will be.
When all permanent measures fail, take the temporary road. That’s the lesson the State Senate is prepared to unleash upon the Metropolitan Transportation Authority, according to sources in Albany.
Faced with a March 25 deadline, irrational hatred of East River bridge tolls, an Assembly on board with Richard Ravitch and the need to do something quickly, the State Senate is prepared to unveil a temporary fix that will solve the MTA’s budget problems for this year.
According to NY1, the plan is a stop-gap measure: Tolls are out, any support for the MTA’s capital plan is out and a 25 percent fare hike is out. In will be a payroll tax, a four percent fare hike and a few other measures. While Richard Ravitch, the architect behind an equitable tax-toll-fare hike plan that would have saved the MTA, warned Albany against temporary fixes, the State Senate has all but officially rejected tolls and is going its own way.
Nicholas Confessore and William Neuman, writing an elegy to the East River bridge tolls in The Times, called the latest plan a “a scaled-back, short-term alternative to bail out the authority.” Reports the duo:
The Senate proposal, which was presented privately to Democratic Senators on Monday afternoon, would include a 4 percent fare increase, half of what Mr. Ravitch had proposed. It would also impose a tax of 25 cents on every $100 of payroll on employers within the 12 counties served by the authority. That would be significantly less than the 34 cents that Mr. Ravitch had proposed.
“The immediate impact would be, all service cuts are restored, fare increases would be cut in half, and there would be no tolls,” said one of the two people briefed on the plan.
Democratic staff members reviewed some of the authority’s finances in recent days and concluded that a scaled-back plan would suffice in the short term. But the Senate proposal would require the transportation authority to submit to a deeper forensic auditing, a step lawmakers from both parties have demanded as a condition of laying out more taxpayer money for the authority, long dogged by waste and corruption.
Senate staff members have not finished calculating precisely how much revenue their plan would generate. But it would clearly be far less than Mr. Ravitch’s plan, requiring lawmakers to return to the issue again within months. But one of the two people who were briefed said that since the authority’s capital spending plan was already financed through the end of this year, Senate Democrats believed there was time to return later to find a more comprehensive solution.
If this is what Carl Kruger earlier on Monday called “comprehensive and so outside the box that everybody should want to partner with it,” it’s clearly time for some new New York state leadership.
This is really just a punt by the State Senate. They’re enacting the least offensive measures of the Ravitch Plan while pushing off the MTA’s impending Doomsday by a few more months. Richard Ravitch knows what he’s talking about, and Sheldon Silvery, the Assembly speaker prepared to support tolls, recognizes now what the Senate will have to again tackle in a few months. The MTA’s long-term fix lies with the East River tolls just as it rested on the Triborough Bridge revenue a few decades ago.
If this is actually the plan to emerge from the Senate, I guess transit supporters should be happy. After all, if the MTA doesn’t have to cut back service while raising fares just four percent, New York has been saved from a transit doomsday. The MTA, though, is left with no clear vision for a future at a time when it should be laying the financial groundwork for more of the Second Ave. subway and more capital projects.
In six months or so, the Senate will have to revisit this issue. Maybe by then Malcolm Smith can corral the missing toll votes. The battle might be over, the war in a truce, but this whole story — a Ravitch-inspired fix that will require sacrifices from everyone — isn’t over yet.
As the MTA’s self-imposed Doomsday rapidly approaches, New York Gov. David Paterson is resorting to a tried and true political method of buying time and votes for the MTA. According to The Post, Paterson is attempting to buy MTA votes with a $279 million slush fund for Senators. It’s government pork at its finest.
Fredric U. Dicker writes:
Gov. Paterson plans to tap into a little-noticed, $279 million slush fund to “buy” the votes of state Senate Democrats who are resisting his bridge-toll plan and pared-down budget, The Post has been told.
The slush fund is buried in Paterson’s $121 billion proposed “bare bones” state budget and is made up of reappropriated pork-barrel “member item” money left over from past years.
Much of the slush money was appropriated for projects backed by Senate Republicans, who narrowly lost their majority to the Democrats in the November election. That money could now be shifted to Democrat-favored pork.
It’s unclear if this move will actually help win votes for the MTA. New York State Senators are anything but honest and could just take this money and run. But if it works, Paterson’s about-face on pork spending will just be another move in the long line of political compromise for the sake of the MTA.
Hopefully, this $279 million gamble works. We can’t afford for it not to.
On Friday afternoon, I linked to a Sewell Chan piece on The Times City Room blog about the impending cut backs and fare hikes the MTA may soon have to enact. As the day dragged on, Chan’s piece generated over 180 comments on The Times’ website, but as one of my readers noted, these readers are woefully uninformed about the state of the MTA.
Let’s take a peek at some of the more egregiously ill-informed comments, starting with comment 8:
It’s because there workers demand raises every year since they are part of a union, they are entitled to a raise. That’s what the last hike was about not our budget problem but giving the workers more money.
Didnt they just have a billion dollar surplus?!? What happened to that money?
LIES!!! There is no fiscal crisis in the MTA. The MTA runs 2 sets of books, as proven by State Comptroller Alan Hevesi in 2002. They hide millions of dollars in this second accounting ledger so they can cry “Bankruptcy!” and squeeze millions of more dollars from the state and city budgets.
The MTA has been paying fraudulent LIRR disability cases and inflated overtime/social security benefits. What happened to the surplus a few years back? What happened to the second set of accounting books
My personal favorite, e-mailed to me by fellow transit supporter Chris, at Comment 130:
This is RIDICULOUS!!!!!!! These idiots decide to “invest” the money into dangerous and ultimately pathetically awful securities….actually, more like “get-rich-quick” schemes for the highest levels of our society….you know, those geniuses who know better than us morons…..and now we have to foot the bill? Why cant Peter Kalikow, in all his brilliance take a pay cut, huh? He makes upwards of 400K for what? To bury the MTA in debt and have to impose these hardships on us? They should be dragged out into the streets and each given 100 lashes. Then they can keep their jobs. I bet you it wont happen again after that!
In case anyone has forgotten, Kalikow last served as head of the MTA in 2007. To say that anyone who doesn’t know that hasn’t been paying attention would be a gross understatement.
If there’s any doubt about who is winning the PR game, I think this wraps it up in favor of the anti-congestion pricing, anti-tolling, anti-MTA crowd in the New York State legislature who would rather cut their own arteries than fund transit. People are hung up on six-year-old scandals, on misunderstandings surrounding MTA finances, even on how the tolling plan would work. And of course, some people don’t even know who’s in charge of the MTA.
When the MTA votes to enact its Doomsday budget in ten days, people will again protest the MTA. They’ll call for the heads of Dale Hemmerdinger and Elliot Sander. Again, transit advocates who have failed so far will attempt to educate the public, but the public just isn’t listening. They’ve made up their minds about the MTA, as at the City Room readers show, no amount of facts, truth or logic will convince them otherwise.
The MTA is not efficient, and its history as way too many separate entities has never been more glaringly obvious. A new public benefit corporation built from the bottom up with streamlined operations and inter-agency lines of communication would be far better for the City of New York in 2009. But right now, we’re stuck with what’s there, and whether New Yorkers know and understand it, when Albany fails to act, the state legislature will have won the anti-tolling war, but they will lose the mass transit battle for all New Yorkers.
The numbers in today’s editorial in The Times are telling. In Carl Kruger’s State Senate district — one far away from the densely packed Manhattan — 33,000 of his constituents rely on transit on a daily basis while just 6000 drive. And yet, despite this glaringly obvious disparity — and protests in support of tolls — the Senate will not act on a permanent plan to fund the MTA.
In a board meeting this morning, the MTA Board did not paint a rosy picture of the future. While they could be accused of politicking, the transit agency will face a huge budget deficit if nothing is done to rescue them. Sewell Chan reports on the layoffs, fare hikes and service cuts that will come if Albany continues to stall:
With the State Senate balking on a financial rescue plan that would impose tolls on East River and Harlem River bridges to help close a mounting budget gap, officials at the Metropolitan Transportation Authority warned on Friday that if Albany does not act by March 25, they will have no choice but to order steep fare increases, impose “painful” service cuts, and lay off at least 1,100 employees.
“The situation is dire,” the authority’s chairman, H. Dale Hemmerdinger, said at a special meeting of the authority’s board. He described “25 to 35 percent increases in the cost of getting to work” and “serious and painful cuts in service.”
…The Friday board meeting was in large part held to place pressure on Albany to act.
“The Legislature has not been able to reach an agreement on the Ravitch Commission recommendation or any other solution on the M.T.A.’s fiscal crisis,” Mr. Hemmerdinger said. “It’s too soon to know what will happen, but with the March 25 board meeting rapidly approaching, it’s time for the board to refocus on the tough decisions that will have go be made to keep our budget balanced.”
So that’s that. Hopefully, this political move will help. If not, get ready to wait 20 minutes for your $2.50 ride on a dirty subway car. That is, after all, in the minds of the Senate, far better than tolling the precious East River bridges.