MTA Economics

As Albany dallies, so grows the deficit.

In a presentation to the MTA Board’s Finance Committee this afternoon, agency CFO Gary Dellaverson said that the MTA deficit has grown by $621 million this year. Even if the State Senate Transportation Committee passed a “conversation starter” funding plan bill to target the earlier $1.2 billion deficit, the agency will still be hundreds of millions of dollars in the red.

I had the opportunity this morning to watch, via webcast, some of Dellaverson’s presentation. What was notable about it was how utterly open it was. Anyone could have watched it; anyone could have walked into the MTA HQ to attend; and Dellaverson held nothing back. He talked about methodology and numbers; he talked about why the MTA projections last year were off and what external forces are causing the deficit to grow in hundred-million-dollar leaps and bounds. How anyone could claim that the MTA needs more transparency in that regard just shows me that the people saying that — our elected officials allegedly representing us in Albany — are just not paying attention.

Anyone, I digress. The real news here is a whopping $1.8 billion budget for 2009 with more bad news for 2010. That year, the MTA says their budget deficit will increase by $1 billion over original projections. The Senate is going to have to institute bridge tolls sooner rather than later. It’s just reality at this point.

During Monday’s presentation, MTA officials pinpointed three sources of the decline:

• Real estate taxes: Down $336 million
• Fare/toll revenue: Down $221 million
• State dedicated taxes: Down $113 million

There was simply no way to soften the impact of this news. “The budget that was passed in December assumed large decreases in revenue, but we now know that the reality is even worse,” Elliot G. Sander, MTA executive director and CEO, said. “With this re-forecast in hand we have begun identifying ways to fill the new gap, but there are no easy solutions.”

“Today’s re-forecast is further proof that the MTA desperately needs stable revenue sources that don’t plummet during economic downturns,” MTA Chair H. Dale Hemmerdinger said. “This is terrible news for the MTA, our customers and the regional economy, and the MTA Board will do everything in our power to protect the transit network. Without assistance from Albany, however, it will be extremely painful for everyone who relies on MTA services.”

The MTA is nearing its financial endgame. As the Senate prepares to vote next week on the latest MTA funding proposal, the transit authority is moving ahead under the reasonable assumption that the plan will not pass and that the Doomsday budget will have to go into effect.

Yesterday, the agency unveiled details surrounding the grace period for stockpiled Metrocards. Today, we discuss a different issue — a hiring freeze. In anticipation of the looming financial crisis, the MTA has implemented an agency-wide hiring freeze. While no one has been fired yet, no new employees will be brought on, and positions left empty through attrition and retirement will remain empty.

“The executive director and CEO has instructed each of the agency presidents to have a hard hiring freeze, which means unless it’s an absolute emergency, no slot should be filled,” MTA Spokesman Jeremy Soffin said to NY1’s Bobby Cuza.

The decision was announced to the MTA’s agency presidents in a memo by CEO and Executive Director Elliot Sander. The Post got its hands on that memo, and it is a memo familiar to many in today’s economy. In addition to a hiring freeze, the MTA is limiting all other kinds of employment-related activities. Take a look:

“A hiring freeze is effective immediately — Only offers that have already been made can remain in place.”

“Overtime — Additional overtime is not permissible unless it can be proved that it is required to meet scheduled service.”

“Purchases — If you have to even think about it, don’t do it.”

“Professional/Contractual Services — Please consider using existing staff wherever possible to replace professional and contractual services which cannot otherwise be delayed or deferred.”

“Excess Employees — Please carefully re-examine the levels of excess employees and also any reimbursable employees that are not currently matched with a reimbursable project.”

These specific directives are related to what Sander called a need to “do everything possible to conserve cash.” Things, folks, are not looking up for the MTA.

I know many advocates for transit in New York City believe employment to be the Achilles’ Heel of this giant bureaucratic mess. Countless studies have trumpeted the shocking number of redundant and inefficient workers in all ranks of the MTA, and as the agency is gearing up to cut staff, those protesting the service cuts would rather see personnel ranks slashed significantly first.

In the end, though, this is just another reminder about the pressures we should be applying to our State Senators. If Albany doesn’t come through — if this latest proposal, flawed as it is, fails — this memo from Sander will represent just the tip of an iceberg destined to sink transit in New York City.

While Gov. David Paterson called the latest Senate plan for the MTA “worth considering” and Senate Majority Leader Malcolm Smith claims he has the votes to pass it, the fate of this new funding plan is far from clear. Already today, I’ve delved into the taxi surcharge problem. That appears to be just one of many hurdles this new bill faces.

First up is internal dissent among the state Democrats. According to The Times, four Senate Dems will not support a payroll tax. The new plan calls for a payroll tax for all 12 MTA counties, but the tax will be lower in the outlying counties. This makes no sense on its surface because it actually costs more to the MTA to serve those areas further away from the New York City core, but whatever. If it wins votes, it wins votes

The problem is that it’s not winning votes. “I remain opposed to the imposition and use of a payroll tax,” Craig M. Johnson, Democratic senator from Nassau County, said. He — along with fellow Democrats Brian Foley (Suffolk County), Andrea Stewart-Cousins (Westchester) and Suzi Oppenheimer (Westchester) — remains opposed to any and all tax plans.

With these four Democrats in opposition, Malcolm Smith would have to pick up four members of the state G.O.P. Senate contingent. As we learned last night, though, right now Republicans are opposed to the tax plan as well with maybe one — Frank Padavan of Queens — open to supporting this funding plan. Maybe.

Today, Republicans voiced anew their opposition to the plan and raised some valid concerns that transcend ideological lines. “It’s an insult to upstate and downstate,” Martin Golden, Brooklyn Republican, said. “We’re going to put $200 million in taxes on the backs of the cabdrivers and the people who live in the City of New York.”

Martin’s point is echoed in a brief piece by NY1. This new plan has all sorts of mismatched priorities. Basically, the cab fare increase, a hyperlocal way of raising revenue, would go to upstate projects and districts that have never seen a yellow taxi. Meanwhile, New York City dwellers and drivers would get a reprieve from shouldering much of the burden because the licensing registration fee increases would apply to everyone across the board in all MTA counties. Those living outside of the city where car ownership rates are higher would be funding the subway system.

In an ideal world, the MTA funding plan would require money collected in New York City to be reinvested in New York City; money collected upstate to be funneled back upstate; and money collected in Westchester and Long Island to go toward transit and infrastructure there. This new plan accomplishes none of those goals and doesn’t seem to have the support it needs to pass the Senate. How utterly disappointing and how utterly typical.

As transit advocates and State Senators have a chance to digest the latest MTA funding plan, two questions have continued to pop up: Does this latest plan have a chance to pass the Senate? Does it accomplish what it needs to accomplish?

Unfortunately for transit advocates, these two questions often lead to different answers. We want to see a solid commitment to mass transit; we want to see measures to return the streets to pedestrians and transit; we want to discourage the car-owning minority in New York City from unnecessary driving.

In answer to the question of support among advocates, Ben Fried at Streetsblog comes down firmly on the side of no. He outlines his five reasons why this plan doesn’t do what it should:

1. Raising tolls on MTA crossings while keeping East and Harlem River bridges free gives car commuters and truckers even more incentive to detour across city streets to the free crossings. Neighborhoods like Downtown Brooklyn, Long Island City, Williamsburg and the Lower East Side that are already pulverized by traffic will see things get worse.
2. Raising fees on car ownership through higher registration and licensing fees does nothing to discourage car use, and may actually encourage people to drive more in order to get more bang for their buck. Using tolls or congestion fees to price driving would have the opposite effect.
3. Raising the cost of car sharing, rentals and taxis makes it tougher to live without a car. And, like higher ownership fees, increasing these one-time charges encourages renters to maximize their driving. Congestion pricing or tolls are far superior.
4. Unlike private motorists taxi drivers faced with higher fees will increase their driving. Why? Since passengers will choose to ride less, given the higher fare, cabbies will have to drive more to recoup the flat fee they pay to operate a taxi.
5. Using cab fees to pay for highway and bridge projects outside of the city transfers wealth from the dense, environmentally sustainable city to the car-dependent suburbs. If anything, taxes on cabs should fund the city bridges and streets used by those cabs.

There’s not much left to add to Fried’s analysis. He hits all the key issues and the complaints that I’ve had with the plan — poorly thought-out licensing fees, encouraging driving — are reflected in Fried’s word.

So then if we’re going to settle for a less-than-stellar pro-transit funding plan, does it have the political support to pass muster in the Senate? The answer is maybe, according to Elizabeth Benjamin.

If the Senate Democrats were hoping to capture support among the city’s Republican senators with their latest MTA bailout plan, the early returns are not promising, the DN’s Glenn Blain reports.

Of the three, only Sen. Frank Padavan of Queens seemed open to supporting the plan. Brooklyn Sen. Martin Golden and Staten Island Sen. Andrew Lanza both said they haven’t yet had the opportunity to review the new plan in detail (as of last night, it existed only in the form of a concept and had not yet been drafted into a bill).

But upon hearing the details as they were presented to reporters by the Senate Democrats’ spokesman Austin Shafran, both Golden and Lanza expressed misgivings about the proposal – especially its reliance on a payroll tax. “I just don’t see how I could vote for that type of a tax increase again into the city of New York after what they’ve already done with the tax increase in this budget,” Golden said Monday night.

That’s not a positive prognosis for the bill really. It doesn’t really line up with what transit advocates want, and it doesn’t seem have to the support it may need. Once again, the State Senate has seemingly failed to deliver, and even if this bill passes, it’s tough to say that it addresses the MTA’s long-term funding needs. Where is the political will when we need it most?

Toward the end of the day on Monday, I reported on stirrings of yet another Senate Democratic funding plan for the MTA. When an aide to Senate Majority Leader Malcolm Smith introduced the plan — yet to be submitted as a bill — to the press today, the early word wasn’t too far off.

Before, we analyze, let’s run down the plan. Elizabeth Benjamin has the details, and I’m borrowing some of this from her.

• Payroll Tax: 34 cents per $100 in the 12-county MTA region. However, the new proposal includes a graduated tax. The counties further away from the City will pay less. Revenue: $1.49 billion
• Taxi Surcharge: $1 taxi drop-off fee. Revenue: $190 million (half for upstate debt service payments)
• Motor Vehicle Registration Fee: $25. Revenue: $130 million
• Auto Rental Surcharge: An increase from six to 11 percent. Revenue: $35 million
• Licensing Fees: 25 percent increase. Revenue: $10.5 million
• MTA Accountability: Required outside audit; merger of the CEO and chairman positions; two members, one each appointed by the Senate and Assembly; online publishing of the budget, capital plan and executive perks.
• Fare Increase: 8 percent.

My first question is an obvious — and admittedly snarky — one: With the exception of the perks, the MTA budget and capital planning documents are already posted online. Has anyone in the Senate ever bothered to visit the MTA website? Anyway, that’s the plan.

The immediate question surrounding this proposal concerns the support of the rest of the Senate. Does the plan have the support of at least 32 members of the Senate? Does the Gang of Four support it? Will any state G.O.P. representatives voice their support of it? Jimmy Vielkind posed these questions and received no answers.

“We did not take a count,” Austin Shafran, a Senate spokesman, said. “What we felt we had to do was to do something that addressed the needs of the M.T.A. We’re confident that we’ll have 32 votes.”

Of course, the Senators were saying the same thing a few weeks ago when Smith was trying to cajole his party into supporting the tax-and-toll plan. We all know how that ended up.

On the Assembly side of the debate, Speaker Sheldon Silver all but guaranteed his chamber’s support for any MTA funding plan that gets through the Senate. “I am willing to support any plan that provides a stable, long term funding stream for mass transit and apportions the burden equitably among everyone who has a stake in the MTA’s future,” Silver said in a statement late Monday. “I have not had an opportunity to fully review the Senate’s plan, but if it can accomplish both of those objectives and command the support of the majority of Senators then it is an alternative we’re prepared to take very seriously.”

Procedurally, the bill will probably be introduced today and will require a three-day “aging” period. A vote could come at the end of this week, but in all likelihood, we won’t know the future of the MTA until next week.

For the MTA, his bill would shelve most, if not all, of the planned service cuts. We should still be stuck with a fare hike, and the bridges — the same bridges that cost me a Metrocard swipe each day to cross — would remain free. We would be hit with more driver’s licensing fees even if we don’t drive, and the taxi drivers are going to raise hell about this plan. But that’s that. Now let’s see the Senate actually pass it.

The Gang of Four have spoken. While rumors of a soda tax to help fund the MTA were swirling earlier today, the latest Senate financing plan for the MTA includes a series of surcharges, fees, fare hikes and taxes designed to close the transit agency’s budget gap.

The latest proposal, allegedly endorsed by the group of four state senators who refuse to endorse tolls, is an amalgamation of all of the proposed plans so far. It’s not clear how or even if it accomplish the goal of funding future MTA capital programs as the Ravitch Commission’s report did, and with payroll — and no exemptions for that tax — a centerpiece of the plan, it won’t have the support of the state G.O.P. either.

Jimmy Vielkind at Politcker NY had a rundown of the plan. According to Vielkind, the plan looks a little something like this:

• A drop-off tax for taxis of either 50 cents or a dollar, depending upon how much is needed for upstate roads bridges.
• A car registration surcharge.
• A payroll tax, without exemption for school districts or non-profits.
• A driver’s license surcharge.
• The smaller fare hike proposed by the M.T.A.

So that’s that. The Democrats are willing to give some money to upstate roads while making cabs more expensive. That’s sure to go over well with Bhairavi Desai and the Taxi Workers Alliance. I hope the Democrats have shored up the support of upstate Democrats and at least some Republican if they’re willing to pork up this bill for upstate roads and bridges.

Meanwhile, this bill doesn’t do a terrible job of spreading the pain, but it targets the wrong people. By instituting a driver’s license surcharge, the state is penalizing people like me who have a license but rarely use it. They should be taxing the people who drive on unnecessarily free bridges and not those of us who want a government-issued identification card. It’s a fix that will impact far more people than the tolling plan and in worse ways.

Albany has taken a good idea and turned it into a bad one, but that’s the way New York State politics works. If there’s more on this bill today, I’ll have it. The plan should be written up by tomorrow, and then it’s just a matter of political support. Again.