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MTA Tries to Catch Up With Its Finances

by David King, Feb 22, 2010
 
Photo (cc) 2006 moriza

It's getting worse.

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The Metropolitan Transportation Authority faces an operating gap of about $800 million and its five-year construction plan is down $10 billion. The authority is already planning cuts that include eliminating free rides for students and reducing Access-a-Ride services.

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Now, a recently released report by the Drum Major Institute for Public Policy, titled "The Urgency of Resurrecting Congestion Pricing in New York," claims fares could rise 15 percent by 2011 if new funding sources aren't found. The report has spurred a discussion of how to establish a long-term funding mechanism for mass transit.

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Meanwhile, the war over the root of these financial problems continues: Politicians blame mismanagement and greed at the authority, while the authority and advocates claim politicians are simply unwilling to provide the agency with proper funding.

A Steady Stream of Money

While transportation advocates are encouraged by reaction to the Drum Major Institute report, they fear history will repeat itself. Several plans for funding mass transit -- including congestion pricing and putting tolls on the East River bridges -- have died at the Capitol in the last few years. Now, advocates say they are now entirely at the mercy of legislators.

"At this point, the reality is we had plans, one from the mayor, two from [Richard] Ravitch. This time around who is going to bring it up? There is no guiding hand in this. Who would work for this? Who would want to take that risk?" asked Neysa Pranger of the Regional Plan Association. Pranger and other transportation activists will be in Albany on Monday to lobby legislators on MTA funding issues.

These advocates say they think the legislature has to come up with a plan of its own. "The one thing we have learned from Albany the past few years is they don't like being told what to do. I think any plan needs to be organic, to come from the Senate or the Assembly," Pranger said.

To that end, advocates hope that service cuts will motivate New Yorkers to complain to legislators -- a tactic they hope may be effective since this is an election year.

"To put it crassly," said Pranger, "we are going into an election, and they have to decide whether they want to deal with cuts or taxes, and neither sits well with people. But they need to deal with this issue and the student MetroCard issue, and I don't think they want to deal with results of inaction."

Congestion Pricing Revisited

John Petro, the author of the Drum Major Institute study, wants to revive congestion pricing -- an $8 daily charge on cars entering or leaving Manhattan below 86th Street between 6 a.m. and 6 p.m., Monday through Friday. He estimates it could generate $400 million or more a year to help keep fares at a reasonable price. But other advocates say that the authority's financial situation is so desperate that it would take a congestion pricing plan, the current payroll tax and full funding from Albany to keep the agency afloat.

"Even if congestion pricing passes, Albany and City Hall will have to commit to properly funding the MTA or the situation won’t get better," said Petro.

While congestion pricing might be politically unpopular, the report's findings may make it more palatable for the city residents and legislators who argued the proposal would disproportionately affect working and middle class New Yorkers. According to Petro's calculations, without new funding sources a family of four with two working parents and two school age children would see their mass transit costs increase by $2,300 a year in 2011.

Legislators in the past railed against congestion pricing as well as the Ravitch plan, which would have placed tolls on East River bridges, saying that either change would hurt their working class constituents. One of the most outspoken critics of bridge tolls, Sen. Ruben Diaz, explained his opposition to the tolls tearlier this year: "Taxi drivers have to pay, too, and they will have to increase their fares. Who is gonna pay for that? The people," he said. But advocates point out that 67 percent of households in his district do not have access to a car and rely on mass transit.

The data shows middle and working classes would not be the ones paying to drive into the city under a congestion-pricing plan, Petro says. "We know from transit data that middle class and working class families use mass transit to get to New York if they work in the central business district," said Petro. "This idea that congestion pricing would hurt middle class families is very frustrating because it is patently false."

Petro said that only 5 percent of working New Yorkers commute by car in the city's central business district. Data from the city's Independent Budget Office from 2007 shows the median annual income of those who do drive into the city is 30 percent higher than the income of those who commute by mass transit.

"There has been a lot of misinformation that was aided by politicians who talked up this line that congestion pricing would hurt the working class," said Petro. "It will definitely be a slog to get this through Albany. The first step is addressing that this is misunderstood -- who would it affect, who it would benefit, who would have to pay."

Advocates say politicians are building on the public's distrust of the MTA to avoid responsibility for properly funding the organization.

Other Plans

Other proposals lto address the authority's fiscal problems include using federal stimulus funds to temporarily prop it up or redirecting capital funds into its operating budget. Advocates oppose redirecting capital funds because they say that money is used to maintain the infrastructure of the transit system, to make sure riders are safe and the system runs smoothly, as well as to expand service routes.

Gene Russianoff of the New York Public Interest Research Group said that thanks to anti-incumbent sentiment and the anti-tax fervor, the legislature will likely rule out bridge tolls and congestion pricing. He thinks the best case scenario could involve the MTA securing federal stimulus funding. "They could use stimulus funds to buy time and allow chairman Jay Walder to institute efficiencies he has planed," said Russianoff.

The worst plan currently proposed in Albany, according to Petro and a number of other advocates, Gov. David Paterson's plan to restructure the payroll tax, which has so far failed to live up to funding expectations.

Paterson's plan would increase the payroll tax in New York City from .34 to .54 percent, while counties in the rest of the MTA region would see their share reduced from .34 to .17 percent. Not only has the plan been slammed by Mayor Michael Bloomberg, Karthryn Wylde of the Partnership for New York City and loads of city legislators, but it would only raise a little over $200 million next year -- not enough to ward off already proposed service cuts.

Paterson's proposal would, to a degree, address the authority's funding problems. But the plan is a long shot because of Paterson's bitter relationship with legislators, and advocates charge that it has less to do with patching the MTA budget deficit than with pandering to suburban counties.

"It is little more than a shell game to reduce the tax for a portion of the MTA service area and then nearly double it for all businesses, including independent contractors like realtors, operating in New York City," said New York State Association of Realtors President Hank Fries. Fries’ organization is against any payroll tax to support the MTA. "Gov. Paterson is missing a key opportunity to demand meaningful reforms that result in long-term MTA cost containment," said Fries.

Transportation advocates say that the MTA's current financial situation is at least in part due to the failure of the payroll tax revenues to reach the levels projected by the state. Meanwhile, the legislature cut the MTA budget by $140 million in its end of the year deficit reduction plan approved in 2009.

The Fight Over Student Metrocards

The MTA made what is seen as a political gambit to spur the legislature to provide more consistent funding by approving a plan to phase out for free MetroCards for students. The plan, announced earlier this year, comes during a politically sensitive time as city legislators head into election season. The legislature is already dealing with public backlash and anti-incumbent sentiment left over from the Senate coup and cutting student MetroCards would not help them. However, it isn’t clear who is less popular -– legislators or the MTA.

In recent days, more than 19 members of the Assembly have called on the MTA to stop plans to cease funding free rides for school children. They sent a letter to MTA Chairman Jay Walder calling on him to continue the program. They argue the cuts will unfairly affect working class and poor families.

"Our working and lower-income families will not be able to absorb these additional costs, especially in the current depressed economic state we are in," said Assemblyman Felix Ortiz. "This cut is discriminatory in that it affects minority communities to a much higher degree. Everyone is entitled to an education; it should never become a privilege for those who can afford it."

Ortiz said he can't see providing the MTA with more funding until the agency makes its accounting more transparent. "Until they reveal their two sets of books and say here is book A and book B, we can't listen to the MTA. We need to fire everyone, restructure and reorganize," Ortiz said. "The MTA needs to get rid of the fat at the top."

Since 1995 the state and city provided the MTA with $45 million apiece to help fund the student MetroCard program. In 2009, the state decreased its share to $25 million. But the authority says the cost of funding the program has increased over the years and is now actually $214 million. City Council Speaker Christine Quinn and some senators have indicated they would be willing to look at increasing thei commitment to student transportation funding.

In a letter to Walder, Assemblyman Richard Brodsky questioned the cost of the program. "While the MTA asserts it needs $214 million in additional state and city aid to preserve the program, the actual cost of free and discounted student fares is close to zero. We reject the MTA's assertion that the program must be valued at the ostensible lost revenue, and point out that state and city funding for the program actually exceeds the cost of providing the service."

The letter continues, "We understand the use of political tactics in budget controversies. But there are limits, and the decision to put students and families out as a pawn in the struggle to increase city and state funding crosses a line."

Transportation advocates called the letter a farce, saying it was a shameless attempt by the assemblyman to distort the issue and skirt their responsibilities.

Russianoff, for example, points out that the load of students riding in the morning and afternoon certainly necessitates the use of more busses, which costs the MTA.

"About 20 percent of the morning bus peak is due to schoolchildren," said Russianoff. "I am disappointed in [Brodsky]. He has done good work watching over authorities and passing important legislation this year but I don't think he is adding anything constructive to the conversation."


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