MTA budget better than expected, but fare hikes still to come

subway
The MTA’s finances are better than expected, according to a report from the State Comptroller’s office.
Photo credit: Miles Dixon

State Comptroller Thomas DiNapoli released a report on Friday detailing positive findings for the MTA’s financial prospects.

DiNapoli reported that the MTA has since February eliminated its 2014 budget gap, but still faces challenges, particularly when the next round of bargaining occurs. Part of the savings that allowed the MTA to close this budget gap came from the authority paying less for employees’ health insurance than they anticipated.

DiNapoli found $1.9 billion in resources the MTA did not expect to have just seven months ago, thanks to an array of factors, including higher tax revenues, lower pension contributions and lower energy costs than what was projected.

Given that, however, he expressed dismay that the transit authority still plans to raise fares and tolls by 15 percent over three years.

DiNapoli notes that fare and toll hikes have consistently exceeded the rate of inflation over the past six years, and the MTA has plans to raise fares and tolls by 7.5 percent in 2015 and another 7.5 percent in 2017, which he said is more than double the projected inflation rate. Transit advocates with the Straphangers Campaign adjusted those hike numbers to 8.4 percent, saying that the MTA’s goal is to generate 7.5 percent more in fare revenue, but will have to increase by more than 7.5 percent in order to account for an anticipated “dip in ridership,” though the Comptroller predicted the use of the MTA’s mass transit services will exceed pre-recession levels in 2013. DiNapoli said ridership on the city’s subways last year was the highest since 1950 and ridership on Metro-North Railroad is on track to set a new record in 2013.

The Straphangers Campaign noted that the city has already seen fare hikes of 8.4% in 2011 and 2013 and said New Yorkers already pay more of the transit system’s operating costs than residents in any other major U.S. city, citing data from the Federal Transit Administration that places New Yorkers’ contribution at 60 percent, while Chicagoans pay 44 percent for the CTA, Washington, D.C. residents pay 51 percent for the Metro and Bostonians pay 36 percent for the MBTA.

But part of the issue, MTA spokesman Adam Lisberg noted, is that the MTA’s costs consistently exceed the rate of inflation and “are still projected to increase at twice the rate of inflation.”

Lisberg said the authority “is focused on cutting costs across all operations, including areas such as paratransit, debt service, health care and pension costs that were once considered uncontrollable.”

The $1.9 billion that closed the budget gap came in part from these areas: $404 million from lower pension contributions, $317 million from lower debt service and $218 million from lower health insurance costs for active employees and retirees, according to the State Comptroller’s report.

But the MTA said those sources of revenue aren’t sources that are guaranteed to repeat and therefore can’t be built into a year-over-year budget and used to decrease projected hikes. That sort of unanticipated revenue instead goes to investing in long-term capital improvements.

 

Follow Danielle Tcholakian on Twitter @danielleiat



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