By Sewell Chan and William Neuman November 10, 2008 11:32 am November 10, 2008 11:32 am
The Metropolitan Transportation Authority faces a $1.2 billion budget deficit in 2009 — $300 million more than it had projected in July — that will very likely require new fare and toll increases or service reductions unless it gets new state and city aid or finds new sources of revenue, officials warned on Monday morning.
At a meeting of the finance committee of the authority’s board, the authority’s chief executive, Elliot G. Sander, said the authority faces a dire fiscal situation that could influence riders across the subway, bus and commuter-rail networks. The deficit was caused, he said, by the collapse of revenues from real estate and corporate taxes, which until just a few years ago had given the authority a string of healthy surpluses.
“The word draconian is not inappropriate,” Mr. Sander said at a news conference after the meeting. He was flanked by the authority’s chairman, H. Dale Hemmerdinger, and its chief financial officer, Gary J. Dellaverson, in describing the potential service reductions.
“They will be very, very significant,” Mr. Sander said. “Whatever that mix that we come up with, in terms of fare and toll increases and service reductions, there’s no question that they would have an impact, significantly, on our customer and on the functioning of that region.”
The magnitude of the fiscal challenges confronting the authority was evident in a PowerPoint presentation presented at the meeting and posted to the authority’s Web site.
Real estate transaction taxes, which represent an important share of M.T.A. revenue, provided the authority with more than $1.4 billion in 2006 and nearly $1.6 billion in 2007. This year, the authority is on track to collect only $995 million in such taxes — about $50 million less than had been projected in July.
And the situation is expected to get even worse. The authority now expects to collect $895 million in real estate taxes next year, and $877 million in 2010.
The authority is required to pass a balanced budget in December for the fiscal year that starts on Jan. 1. A final decision on the fare and toll increases, and service cuts, will most likely not be reached until after a state commission on M.T.A. finances, appointed by Gov. David A. Paterson and led by a former authority chairman, Richard Ravitch, delivers its report on Dec. 5 and after Mr. Paterson releases the state executive budget on Dec. 16.
The Ravitch commission is contemplating imposing tolls on the four East River bridges — the Brooklyn, Manhattan, Queensboro and Williamsburg Bridges — that are run by the city, unlike the authority’s bridges, like the Triborough, which already charge tolls.
Asked about the toll proposal, Mr. Sander, who was a city transportation commissioner in the Giuliani administration, replied: “I’ve previously said that from a broader transportation-policy standpoint, I’m comfortable with that, but that should not be interpreted as my support for it in this context. We are looking at that suggestion, along with many, as we’ve said publicly.”
Mr. Sander attributed the authority’s financial condition to the heavy borrowing for capital projects that occurred in the early part of this decade, when the authority was under the control of Gov. George E. Pataki and the previous chairman, Peter S. Kalikow.
“The 2000-2004 capital program was essentially put on a credit card,” Mr. Sander said, and is “the largest contributor” to the current operating deficit. Already, the heavy borrowing now costs the hundreds of millions of dollars in interest payments each year — and the figure is projected to rise to $2 billion by 2012.
Mr. Paterson said in a statement on Monday:
The financial information provided this morning to the M.T.A. Finance Committee is another reminder of the dire fiscal situation facing all New Yorkers.
In April, I appointed Richard Ravitch to head a commission charged with recommending strategies to fund M.T.A. capital projects and operating needs over the next 10 years, a period when the Authority will be under unprecedented financial pressure as it expands and rebuilds its core infrastructure to provide the additional capacity needed to allow the region to grow. The Commission will report its recommendations in early December.
Addressing the fiscal challenges facing the M.T.A. and the state over the next several years will require shared sacrifice, difficult choices and cooperation from all funding partners. We should be open and transparent in facing these challenges and in discussing options. The M.T.A.’s subway system, buses and extensive regional commuter rail network are the lifelines of the greatest city in the world, and I will continue to work with Richard Ravitch, M.T.A. Chairman Dale Hemmerdinger, M.T.A. C.E.O. and Executive Director Lee Sander, Mayor Bloomberg and the legislative leaders to ensure our transit system continues to serve the 8.5 million people who depend on it each day.
During the most recent transit strike, I developed a liking for walking to and from my job – about an hour and fifteen minutes each way: it was clean, free, non-polluting, healthful, and most of all, not subject to the miserable conditions of the MTA-run subways. I welcome the opportunity to give up the sub-par subways once and for all!
Isn’t it interesting MASS transit which provides our city, region and nation a host of substantial benefits must pay its own way but “our” government gives a PRIVATE company $150 Billion of taxpayer money with virtually no strings and in an instant but nor a penny for the MTA ???????
Well in the same way they killed the idiotic congestion pricing plan, it is up to the State Legislature to kill tolls on the East River bridges. These bridges are simply continuations of the streets..what’s next tolling you in Brooklyn if you drive on Flatbush Avenue past Grand Army Plaza…it’s the same thing as imposing a toll for continuing on Flatbush Avenue across the Manhattan Bridge…these tolls are counter productive and as always discriminate against residents of the outer boroughs.
But we have a millionaire Mayor who just doesn’t give a damn about the outer boroughs.
disband the MTA board, rip apart their accounting books, and find all the places where the millions and billions are being hidden away in this quasi-governmental quagmire. everyone knows the MTA is corrupt and steals most of their budget while the system lays in tatters, trains fall apart, security is lax, and service is quietly cut. Bloomberg should use his might and fiscal know how to choke the MTA into submission.
How about considering LAYOFFS? Wait, no. Their underworked, overpaid workers would complain.
I stand in the stations in the morning, waiting twenty minutes for my train (which is late), and then watch as one express train goes past packed, and then another completely empty two minutes later. That second train SHOULDN’T have been running. Compound those completely empty trains one after another all day long – no wonder they’re in a hole.
If the MTA is unable to get their trains to run on time, they should consider service reductions…and then get the trains to run on time.
I wouldn’t care if they came once every ten minutes, as long as they CAME ONCE EVERY TEN MINUTES.
Every time there is a fiscal squeeze, the same proposals get trotted out. No one supported these ideas before, hopefully no one will support them now. Putting tolls on the East river bridges is simply wrong. These bridges are NY’s legacy from its past. A past that did not seek to toll and tax everything in sight. These structures were built to help connect the city, to allow it to become whole. They were built to help the city grow by allowing the residents of Brooklyn and Queens to have FREE access to Manhattan. No one denies that the city is in dire fiscal straits. But when this crisis passes, the tolls will remain.
I say put tolls on those bridges – the people of Staten Island have been forced to pay exorbitant tolls just to get to another boro, more than twenty years after the Verrazano bridge (our only direct link to the rest of the city) was supposed to become toll-free. It’s time the rest of the city either feels our pain or learns to bite the bullet and take mass transit.
An increased gasoline tax should be imposed and directly tied to increased mass transit funding. Driving should be more expensive given its environmental costs and mass transit should be encouraged, not rolled back.
let’s not forget how they (the MTA) sold those mid-Manhattan rail yards for NOTHING to Mr. Bloomberg’s friend, the billionaire Jets owner, when they were trying to build the stadium downtown (are they still doing that, god forbid?) and trying to win the Olympics siting bid.
those yards in prime real estate space and in the then white-hot real estate market were worth stratospheric amounts, many, many untold billions. And for what — to watch a bunch of millionaires chase a ball in the city instead of in New Jersey.
Mismanagement and corruption at the highest level. Did anyone answer for that — no, let’s just increase the fares and tolls and cut service.
Too bad they gave away so much money to their developer buddies these past few years. But who in government will ever stand up to these developers? Nobody, because our politicians depend on their huge donations to run for office. Something’s seriously broken.
The solution is simple. A 10 percent cut in salaries and new projects. It is amazing that MTA execs relied on huge transfer taxes during a real estate bubble for financing. How incompetent are these people?
I would also do a surcharge on Manhattan residents who are the greatest beneficiaries of the transit system. A resident tax of 500 per person should do the trick. It makes no sense to burden the other boroughs with higher tolls and fees since they get less benefit from the transit system.
Why are we even considering tired old proposals like this? These ideas have been around forever. They were never implemented because they are bad ideas. Why not put tolls on our highways? The Belt Parkway, the Grand Central, etc.. The logic for dong so can’t be any better or worse than for tolls on the bridges. No matter how you try and disguise it, a toll is a tax. Since the flow of goods, services and people is vital for the cities economy, everyone benefits from having safe and sound bridges, tunnels, and roads. If everyone benefits, everyone should pay. There is no justification for increasing the taxes on a small group when the benefits are shared by all of the residents and non-residents of the city.
Is it me or does the MTA seem to mismanage its budgets? One year there is a big surplus then the next its a big deficit. How about firing the expensive high level executives and promoting competent mid-level executives with a sliding performance based pay raise of up to 8%.
How about instead of continuing to over-develop Manhattan, Bloomberg develop the outer boroughs! An new and expensive Yankee stadium could use some great hotels and restaurants around it, more money for the Bronx.
There is no question that the MTA can operate more efficiently. But the borrow and spend Pataki Administration increased the MTA’s debt payment by ONE HUNDRED MILLION DOLLARS EACH MONTH!!!! with the approval of former MTA chairman and real estate developer, Peter Kalikow. That is not a misprint folks. So even the shrinking state revenue is not solely to blame.
The only fair answer is an increase in the taxes paid by the real estate industry in the metropolitan area whose properties would be worthless without a functioning transit system. It is time to stop asking the working people to bear the ever increasing financial burden placed upon us by the former governor and his wealthy MTA appointees.
Another area ripe for reform are outdated labor agreements on LIRR that cost the system millions. As outlined in the recent NY Times expose on retirement abuses, LIRR unions, as the only state employees with the right to strike, are able to avoid cost-saving reforms by threatening to cripple the region, The answer lies with New York congressional delegation which can can put them under the Taylor Law.
Raise tolls for all those that DON’T use EZ Pass and create traffic snarls for miles approaching the bridges for everyone else. Make them pay $20 to cross the river, keep it at $4.50 for the rest of us. It should not only raise more money, it should speed up transit across the bridges and reduce pollution.
Seems like last time this happened they found out that the MTA had been cooking the books and they actually had a surplus. Maybe they need to get audited before we take their word that they need more money.
also, this is why you don’t spend it immediately when you have a surplus, wouldn’t that billion from last year have been useful now?
Riding the subway each day, my amazement at the decrepit state of the system never ceases.
The trains never come on time, they are filthy, the conductors are rude and lazy– never answering questions or offering help, and the stations themselves smell of urine and garbage, with rats running around.
Are we a first world nation? Really? Could’ve fooled me. MTA is embarrassingly incompetent. And now a fare hike? What do they DO with their money? It certainly doesn’t go into the system.