MTA Politics

Calling New York a failed state in its current iteration isn’t too much of a stretch. We have a governor with no public support, and a State Senate that can’t stop its in-fighting long enough to pass any sort of legislation. When they do get their collective acts together for a long enough period of time to get something done, the results fall far short of what is promised as is the case with last May’s MTA funding package.

Over the weekend — unfortunately on a Saturday when fewer people are around to read it — The New York Times took Albany to task for its MTA failures. In a scathing editorial, the Gray Lady called upon Albany to find a better solution for the MTA. With a budget shortfall of nearly $800 million, the MTA is on borrowed time, and The Times succinctly outlines the sources of the shortfall. Tax revenues are down; the payroll tax brought in $200 million less than expected; fare revenue is down by $100 million; Albany cut $143 million; the upcoming TWU raises will cost the agency $100 million. It is a perfect storm of bad circumstances.

The Times though is concerned with the machinations in Albany right now. Writes the paper:

Now Governor Paterson is threatening to make things worse. In a clear pander to suburban voters in this year’s governor’s race, he is calling for cutting the payroll tax in seven suburban counties around the city while increasing the payroll tax in the city’s five boroughs.

A Legislature that is heavy on representatives from New York City is unlikely to go along — at least on raising the city’s taxes. The danger is that legislators, also facing voters this year, will decide to cut suburban payroll taxes without making up the loss to the transportation authority.

Some advocates are suggesting the agency shift some of its federal stimulus money — supposed to be reserved for maintenance, subway construction and upgrades — to use for operations. Transportation experts warn that if that happens, the system would deteriorate. Remember the ratty old subways of 30 years ago?

Albany must come up with a lasting solution for the M.T.A. That means leaving the payroll tax alone and finding new revenue sources — starting with tolls on Manhattan’s free bridges that could raise an estimated $600 million a year. It may mean raising fares, although that should be a last resort. It will mean supporting the new Metropolitan Transportation Authority chairman, Jay Walder, including in his plans to lay off workers as he streamlines the system.

What it should not mean is doing away with free passes for needy students. Both the state and city will have to contribute more to help pay $214 million a year to help keep these students in school.

The transit system that feeds the New York City area is crucial to the welfare and commercial vitality of the entire state. Governor Paterson and the Legislature have a responsibility to make sure it has the money it needs to keep working.

In a nutshell, this editorial tracks closely with everything I’ve been writing over the last few months. Albany must find a better solution. It’s time to renew the push for East River Bridge Tolls. It’s time for a sensible solution for transit in a city more heavily dependent on its subways and buses than any other in the nation.

Late yesterday afternoon, David Paterson unveiled his plan to help cover the MTA’s deficit while assuaging suburban concerns over the payroll tax by shifting more of the tax burden to city-based businesses. Those doing business in the five boroughs would see the tax increase by 60 percent while those outside the city would see it decrease by 50 percent. These tax adjustments will supposedly restore the payroll tax revenue to the amount originally projected last May and deliver another $230 million to the MTA this year.

Last night, I called this move a political one designed to earn the beleaguered Paterson some points outside of the City, but many of my readers believe it to be a more equitable distribution of the tax burden based upon those who benefit from transit. The reality is that city businesses — the major economic drivers of the entire metropolitan area — are not going to look too kindly upon higher tax rates during a bad economy. Already, the Mayor and other business officials are slamming the plan.

The Mayor last night put out a scathing statement that highlighted the now-dead effort to bring congestion pricing revenue to the MTA. He said:

“First the Governor proposed a state budget that slashes support for New York City but not the suburbs, and now he proposes to wallop city businesses with more taxes while lightening the load for businesses in the suburbs. The idea that the State can spare the suburbs while sacking the City is terrible economics, grossly unfair, and contrary to every principle of good regional development. We in New York City saw the MTA’s problems coming and came up with a plan that would have created a steady stream of revenue for capital programs. Now the Governor proposes to shift an extra half billion dollar burden onto New York City taxpayers, who are the economic heart of our region. I will work night and day with our City’s delegation in Albany to stop this wrongheaded proposal from moving forward.”

Business leaders echoed the Mayor’s call but also took the opportunity to question the MTA’s business practices. “A far-reaching and dependable regional transit system is among New York State’s greatest assets,” Kathryn Wylde, head of the Partnership for New York City, said. “[We] remain open to discussing new ways to improve the MTA’s finances, so long as the approach is equitable and balanced. Additional funding, however, cannot be justified unless the MTA gets better control of spending and improves its contracting and procurement processes.”

Streetsblog saves its indictment for the Gang of Four who refused to support Richard Ravitch’s call for East River bridge tolls or congestion pricing. Wrote Ben Fried this morning:

So think of the New York City payroll tax hike, if it comes to pass, as a testament to the obstinacy of Carl Kruger, Pedro Espada, Ruben Diaz, Sr., and the disgraced Hiram Monserrate — as well as their GOP counterparts like Marty Golden and Andrew Lanza who sat idly by and did nothing to help the Ravitch plan last year.

Nine months after these NYC-based State Senators killed bridge tolls and nearly two years after members of the city’s Assembly delegation stopped congestion pricing in its tracks, we now face the distinct possibility that NYC businesses will end up shouldering more than three times the payroll tax rate as suburban businesses. Think back to all the city politicians you’ve heard float make-believe proposals about reinstating the commuter tax or making only non-NYC motorists pay bridge tolls. This new tax on New York City — on their constituents — is their handiwork too.

And so here we are, in another MTA political mess, this one inspired by our accidental governor. The state has a few options at its disposal: It could raise the payroll tax across the board to fund transit; it could push through congestion pricing or East River bridge tolls; or it could further push the pain onto the backs of New York City workers and residents who already pay more than their fair share to subsidize suburban commuter rails. Paterson has chosen to put forward the last and worst option. Can it get past the State Assembly and Senate? Will New Yorkers pay more or will the MTA continue to suffer?

After spending the early part of this week highlighting politicians who do not seem to care enough about transit to educate themselves, we find ourselves faced with a high-ranking New York official who nearly gets it. Christine Quinn, speaker of the City Council, has engaged in a very public campaign to support the student MetroCard program and to speak out against the MTA’s proposed service cuts. She’s nearly on the right track with some of her words, but I am wary of fully supporting her plan.

At a rally on Tuesday to protest cuts to the student MetroCard program, Quinn spoke about throwing Council support behind the student rides. More importantly, she stressed how the City Council would consider more funding for student transportation during the spring budgeting sessions and how she would prioritize this item. “I recognize there is a city responsibility in this funding, and we are willing to have that conversation and see what can be done,” Quinn said.

For this, I applaud Speaker Quinn. She is doing what a politician should be doing. She is promising to explore how the city can fulfill its funding obligations to the both the MTA and the New York’s students, many of whom rely upon free transit to get to and from school. She recognizes that these cuts aren’t something the MTA would choose to do but that years of financial neglect from the city and state have backed the MTA into a corner.

But beyond this proposal, Quinn’s actions get a little murky. In addition to her vow to find more money for student rides, she calls upon the MTA to take four actions immediately to stave off the cuts. Those are, according to her action center, as follows:

• Reallocating 10 percent of direct stimulus aid to MTA operating expenses ($91.5 million);
• Using budgeted PAYGO capital funds for operating ($50 million); and
• Reallocating 10 percent of additional stimulus transit aid to State to operating ($30 million).
• Do not implement any actions without a full set of public hearings.

First, let’s dispose of the last item. Numerous politicians have tried to criticize the MTA for passing a budget a week after it was unveiled and with no input for the public. This ignores the reality that the MTA Board was, by law, required to pass a balanced budget before the end of the 2009 calendar year and had just three weeks from the time the budget crisis was announced to do so. The agency has pledged to hold hearings this year and will reevaluate the proposed cuts before they need to be implemented in June.

The other three are, in effect, the Gene Russianoff Plan, and I’ve already voiced my reticence over using capital funds for operating deficits. In a nutshell, my fears concern the precedent such a financial move would set and the MTA’s dire need to continue investing in system maintenance and expansion even in the face of a short-term operating deficit.

If the agency is to reshuffle its budgets to cover its operating gap with capital funds, such a move will become the lazy legislature’s fallback every time a hole opens up in the MTA budget. Albany will begin reducing capital expenditures in order to meet operating budget projections, and the agency’s capital budget will empty faster than a raided piggy bank. If this is the last-gasp proposal to stave service cuts, I would support it, but until every other available long-term funding option has been exhausted, we cannot fund the MTA through a short-term reshuffling of its two separate balance sheet.

Right now, Quinn is an ally of transit, and she should remain so. I won’t sign her petition yet, but I won’t begrudge those who do. Until we know that other options — bridge tolls and congestion pricing — simply will not work, we cannot rob from the future for a short-term fix today. It won’t solve the systemic problems with the way the MTA is funded and will only exacerbate these shortcomings in the future.