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MTA Tries to Catch Up With Its Finances

Photo (cc) 2006 moriza

It's getting worse.

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.

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.

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."

Pedicab Industry Grapples with Rules, Recession and Rain

klingon65, flckr

Times are tough in New York’s pedicab industry. Drivers and owners of the bicycle taxis usually count on holiday season business to get them through the slow months of winter, but this year the recession and dismally wet weather weakened December business.

To further complicate the picture, new regulations governing the pedicab industry went into effect on Nov. 30, and it remains unclear how deeply these changes have affected business. The rules require that all pedicabs be inspected, insured, registered, and equipped with seatbelts and tail lights and that all pedicab drivers be licensed by the Department of Consumer Affairs.

Considering this is the low season for pedicabs, no one has much hard information on the impact of the new rules. A consensus appears to be merging, however, that things have changed.

David Pollack, executive director of the Committee for Taxi Safety and one of the strongest advocates for regulation, seems pleased with the results. "Pedicabs had been a big problem for the longest time," he said. "Guys running red lights or going the wrong way down one way streets used to be a constant issue." Pollack reported that complaints from taxi drivers abut the bicycle cabs had decreased.

Complaints from pedestrians are down too, according to the office of City Councilmember Daniel Garodnick, who represents several of the neighborhoods most trafficked by pedicabs. Persistent nuisances like pedicabs on sidewalks or in no parking zones, and aggressive drivers harassing passers-by for a fare seem to have dropped off, according to the council member’s office.

Not all are satisfied however. The City Room blog reported in December that the 2009 holiday season was one of the worst on record for the pedicab businesses. "The economic crisis, a series of wet weekends and new regulations requiring licenses for pedicab drivers have created a perfect storm of misery in New York’s pedicab industry," it said.

Cabs Without Drivers

While the weather and the economy have had an effect, some in the industry think the regulations have made the situation worse -- at least for now. For one thing, the number of people who have applied for pedicab licenses is far lower than the number of pedicabs in the city. According to the city's Department of Consumer Affairs, there are currently 943 registered pedicabs and 490 licensed drivers. For pedicab owners, many of whom own small fleets of the vehicles, this means massive amounts of lost revenue from rentals as their cabs sit idle.

"We’ve seen an 80 percent drop in revenue from December of last year," said Greg Zukowski, owner of Revolution Rickshaws, a company that rents out pedicabs to drivers.

Because the city did not put a cap on the number of licenses that can be awarded it is expected that the number of licensed pedicab drivers will eventually reach or exceed the number of registered pedicabs. When that happens, Zukowski expects things to pick up.

Whether or not some businesses will be able to last that long, though, is uncertain. January to March is the low season for pedicab rentals, and owners depend on a fat holiday to make it through that dry period. This year there were not enough pedicab drivers to fill the seats, and owners have been left struggling to find ways to get by.

The Drive to Regulate

When pedicabs began traveling city streets, they were subject to few, if any, regulations. By 2006, though, discussions had begun and the City Council held hearings on what, if any regulations, should govern the estimated 350 pedicabs then operating in the city. In 2007, the council passed legislation, which capped the number of pedicabs allowed to 325. It also required drivers to get licenses and have insurance; set safety standards for the cabs; and required pedicab operators to determine how they calculated fares. Mayor Michael Bloomberg, who initially supported the measure, vetoed it, but the council overrodethat veto.

The battle was not over. The pedicab owners sued the city, successfully challenging the system the Department of Consumer Affairs planned to use to award licenses. Last summer, the City Council passed new legislation, which eliminated the cap on the number of pedicabs. Otherwise, much of the original legislation remained, including the driver's license, mandatory safety inspections and required safety features like seatbelts and taillights.

License to Pedal

Obtaining a pedicab-driver’s license is relatively simple. The applicant must be a licensed driver, submit a photo ID and fill out several forms including a Child Support Certificate. According to the Department of Consumer Affairs, processing the application averages about five days. However several pedicab drivers did complain of slow turnover, most often because Consumer Affairs sent their license to the wrong address. The cost of the license is $35 a year.

Despite such problems, some drivers praise the new system. "In the past we were discriminated against by customers because the city wasn’t regulating the industry," said Jeff Larson, a pedicab driver for three years. "In general I think the regulations are very positive, especially the safety codes."

Now that they have been recognized by the city, pedicab owners and drivers think they deserve a more pedicab-friendly infrastructure.

"On the ground it's challenging," said Zukowski, who also is the head of the Pedicab Owners Association. "City infrastructure hasn't really accounted for pedicabs yet." He pointed to the lack of taxi-stands for pedicabs, rules forbidding pedicabs from riding across any of the city's bridges or in bike lanes, and a continuing dispute with the Department of Parks and Recreation over how and where pedicabs can give tours through Central Park.

Any kind of regulations and improvements to tackle these issues will probably be put on the back burner for now, while those concerned about pedicabs see if the new regulations have made a difference. "Things always get better in the winter," said Wally Rubin, manager of Commmunity Board 5 which represents some of the most heavily trafficked pedicab routes in the city). "So if changes are made in November, as they were this year, the time to test them is spring and summer, not January."

MTA Cuts Produce Deja Vu Along with Outrage

w line, subway, metropolitan transportation authority
Photo (cc) 2005 Vidiot

Are the drastic service cuts adopted by the Metropolitan Transportation Authority board yesterday a bow to reality or simply a tool to goose the state legislature into giving it more money?

Earlier this month the MTA revealed that it faced a budget gap of around $400 million. The gap arose from a combination of factors, according to the agency. The state legislature reduced MTA funding by $143 million in its end-of-the-year deficit reduction plan, a payroll tax enacted by the legislature has brought in around $100 million less than expected and a State Supreme Court judge ruled that the MTA must make good on an 11.5 percent pay hike to transit workers over the next few years. All this put the Metropolitan Transportation Authority in a place no one wanted it to be again -- facing a major funding shortfall and promising drastic cuts if something isn't done.

On Wednesday morning, the MTA board voted unanimously to accept a budget that will eliminate two dozen bus routes and the W and Z subway lines, shorten the G and M lines, cut door-to-door paratransit service, and eliminate free rides for school students. Over 700 workers are expected to be laid off, and MTA administration will take a 10 percent pay cut. The MTA board will have to hold a round of public hearings and another vote before the cuts go into effect next year. A number of board members who voted for the plan voiced their hope that the cuts can be avoided.

Service cuts won't begin until July. Students would have to start paying half fare in the fall and finally full price in 2011.

The Blame Game

Now, as advocates and straphangers and parents rage against the cuts, a game that played out last spring will start all over again -- with the legislature blaming the MTA for being alarmist and for not being forthright about its financing and the MTA accusing the state of being unwilling to come up with a sustainable funding mechanism for the authority.

Again straphangers will be left in the lurch, wondering if the state will act fast enough to make sure they aren't stuck holding the bill.

"They're the ones that put a deal together and said, 'You're fine for two years," board member Jeff Kay has said, referring to the legislature. "It's their deal that fell apart."

Manhattan Borough President Scott Stringer told the board New Yorkers are tired of the MTA's constant cash crises. Their "budget dance is quickly becoming known as the hustle," Stringer said.

Austin Shafran, spokesman for the Senate majority, took a more conciliatory approach. "We don't blame the MTA for the fiscal crisis," he said. "They didn't cause the financial problems, but more can be done to avoid these cuts."

Shafran attributed the $100 million shortfall in payroll tax collections to a lack of compliance, something typically seen with new tax collections. Despite that, he said, "The MTA has to tighten their belt and do more with less, like most New Yorkers."

Here We Go Again

"I am pretty ticked we are right back where we started," said Gene Russianoff of New York Public Interest Research Group's Straphanger's Campaign. The scenario played out for months last year as the MTA and advocates pressed the legislature to pass a bailout plan. Transportation activists pushed for a plan that would put tolls on bridges into the city -- making drivers part of the plan, as they put it. But recalcitrant senators balked at proposed tolls, mocked the MTA's bookkeeping.

Eventually, under mounting public pressure, the legislature passed a plan that did not include tolls on bridges, but also avoided significant service cuts and raised fares less than originally proposed. It did include the payroll tax. The package was largely seen as a stopgap.

Now, seven months later, with the state, too, facing financial crisis, there was no rush to plug the MTA's funding gap.

Some say the MTA's proposed cuts, specifically eliminating free rides for students, are designed to shock politicians into action- -- perhaps even to get them to consider congestion pricing next year.

"Last spring, we worked very hard with a number of other organizations to create a mechanism that would get the MTA through not just the thin times but the long haul," said Wiley Norvell of Transportation Alternatives. "But instead what we got puts the burden on straphangers and businesses. Drivers were left out of it. Now we have severe cuts laid on straphangers. And advocates are forced to make a Sophie's choice between funding capital projects or just keeping what we have running."

Norvell said he is heartened by recent comments from Mayor Michael Bloomberg and Gov. David Paterson to the effect that implementing congestion pricing or bridge tolls would have headed off this financial mess. "Hopefully, what is on the table sets things back in motion to put the fourth leg back in place- -- congestion pricing," said Norvell.

But skepticism about charging people to drive into Manhattan persists. Sen. Kevin Parker said he would need more details. "Congestion pricing is not a silver bullet," he said. "The last plan that was before us would have cost the state more money in the first two years before it actually made money because of spending on infrastructure. So it would not solve an immediate cash crisis."

Those Student Metrocards

While the route cuts are severe, the idea of charging students, many of whom now get three free rides a day, to go to school has sparked the most outrage. "I have two daughters and I can't believe they would get rid of rides for students," said Russianoff. He estimates it would cost him around $900 to provide his daughters with Metrocards for most of the year.

Council Speaker Christine Quinn and Councilmember James Vacca proposed that the MTA use $90 million in unspent stimulus funds and $50 million in operating funds that are currently going to supplement the MTA's capital budget to avoid major cuts. But some advocates note that doing this would take away the urgency and make it harder for the MTA to force the legislature to consider congestion pricing -- or at least increasing its funding.

Paterson and Senate Democrats have responded to massive parent and student outcry and say they will act quickly in next year's budget to restore funding to the program.

In most other cities, the school system or city or state government -- not the transportation authority -- funds student ride programs, according to Russianoff. Here, he said, city funding for the program has "flatlined" while costs have increased, and "the state's support is down to an astonishing $6 million.

While Bloomberg said, "We are not going to stand for" elimination of the free student rides, he has apparently not offered to increase the city subsidy.

No Love Lost

In general, the relationship between the legislature and the MTA remains tepid at best. "The MTA's credibility with the legislature is very low," said Russianoff. "They were told the bailout was enough. Then the MTA turned on a dime and all of a sudden, out of nowhere, they have this gap, and the legislature was shocked by the turn of events."

The rift between the MTA and the legislature is probably what stands in the way of instituting a steady source of MTA funding -- a source such as congestion pricing. A lot of legislators simply think the agency cannot be trusted. They see this budget crisis as "manufactured" and "alarmist."

Republican Assemblyman Joel Miller, who represents Dutchess County, does not mince words. "You can't trust these guys," he said. Miller went on to compare MTA officials to former Federal Emergency Management Agency head Michael "Brownie" Brown, saying the agency was headed by political appointees without any real experience.

He is supporting legislation that would actually phase out the MTA's payroll tax by the end of next year but conceded his bill has as much chance of moving as "you and I do of flying without an airplane." And so, Miller said, he expects "the rest of the state will just be used to make New York City happy until the three men in a room aren't all Democrats from New York City."

As for the service cuts, Miller did not express much concern. "So now New York City has to face service cuts. Boo hoo," he said.

Senate Democrat Brian Foley has proposed a bill that would reduce the payroll tax in Suffolk and Nassau counties.

The two members' action undercut the threadbare relationship between the MTA and suburban legislators.

The MTA's City Critics

Meanwhile, Democratic senators and Assembly members who represent the outer boroughs and opposed tolling the bridges last spring have remained fairly silent as the MTA's fiscal crisis has played out. A number did not return calls for this article.

Sen. Martin Dilan, head of the Senate Transportation Committee, said he was shocked by the MTA's shortfall announcement, specifically about the lower than expected returns on the payroll tax. He wrote Walder to share his displeasure.

"It is an affront to our burgeoning partnership, often discussed in previous months, to exclude us from this critical information," Dilan wrote, adding: "Additionally, it is difficult to think that our exclusion was simply a matter of being overlooked. One can only conclude that by going to the press first, your organization was in fact using the media to once again stir the bees' nest, rallying fears of insufficient funding and potential fare increases and service cuts."

Senate Finance Committee Chair Carl Kruger had also issued a statement blaming on the MTA for its fiscal projections. "Our ability to budget is only as good as our ability to forecast," he said.

He went on to say that he expected the payroll tax to "kick in" in the coming months. "It is my hope," he wrote, "that the MTA will not create an atmosphere of confusion or a needless sense of unrest over what appears to be self-adjusting bookkeeping issues. We all recognize that shortfalls are real and that expenditures are exceeding revenues. That is why we're addressing the situation in this manner."

Calling the MTA "the Grinch that stole education," Parker condemned the authority for suddenly announcing a $400 million deficit and then voting on a plan before anyone had time to take action. "I have no idea what's going on with the MTA's books," he said. "We still haven't received the forensic audit we asked for earlier this year."

Despite such suspicions of the MTA, Norvell hopes that the current brouhaha over drastic service cuts will lead to real discussion about congestion pricing. He said he thinks the public won't let legislators off the hook.

"This spring, something unique happened," said Norvell. The public and the media didn't allow legislators to use the MTA as a wooden shield. That didn't fly last spring and legislators were forced to come up with a decent compromise. Beating up on the MTA for months doesn't create new revenues."

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