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New York MTA releases 'sobering' 2009 preliminary budget, four-year financial plan


Higher fuel costs and lower real estate tax revenue continue to make financial planning life difficult for officials at New York's Metropolitan Transportation Authority (MTA). Witness MTA's Preliminary Budget for 2009 and proposed Four-Year Financial Plan for 2009-2012, which the authority released yesterday.

The proposed plan reflects what MTA termed as "sobering developments" that have occurred since the last plan was issued in February — namely, rising fuel costs and a precipitous drop in real estate tax revenue. The July Financial Plan assumes a fuel-cost increase of $81 million in 2008 and $127 million in 2009, and reduced real estate tax projections of $201 million in 2008 and $242 million in 2009. Accordingly, the $216 million budget deficit projected in February for 2009 has grown to more than $900 million — even as ridership continues to grow.

"The proposed plan acknowledges that despite the fiscal crisis we're facing, the MTA must first cut our own costs and tighten our belt before asking our customers or government partners for more money," said MTA Executive Director and Chief Executive Officer Elliot Sander in a prepared statement. "We have taken extraordinary measures to become a leaner organization, and we have asked all of our funding partners to help close the gap left by rising fuel costs and plummeting real estate revenues."

Among the gap-closing measures:

• The plan presumes each MTA agency will do some "significant belt-tightening," cutting costs by 6 percent over four years. These cuts would come on top of 5 percent cuts MTA made between 2004 and 2007. In all, the plan proposes an additional $45 million in cuts ($15 million in 2008 and $30 million in 2009).

• MTA plans to take out an inter-agency loan of $135 million to reduce the gap in 2009 and 2010. Additionally, $120 million in funds that had been allocated from the 2006 surplus but not yet committed will be transferred back to the operating budget in 2008 for future gap-closing. Finally, MTA will reduce its subsidy to Long Island Bus by $4 million annually, returning to its historical $10 million allocation, and begin charging official city, state and county vehicles at bridge and tunnel crossings, yielding an additional $10 million annually.

• Labor: The plan assumes that MTA employees will make what the authority terms a "modest contribution" through negotiation of new contracts.

* MTA customers, too, would be asked to contribute through a fare and toll increase that would take effect in July 2009 and yield an 8 percent increase in fare and toll revenues. The increase effectively would move forward by six months the 2010 increase that had been announced as part of the MTA's plan to adjust fares and tolls every two years to keep them level with the rate of inflation.

• MTA's February Plan assumed additional governmental aid of $600 million beginning in 2010; now, MTA will seek more than $300 million of that aid in 2009, including a list of proposed changes: full reimbursement of lost fares ($104 million) associated with providing peak-hour half-fare discounts to seniors ($15 million) and reduced fares to school children, not currently reimbursed by the city or state ($89 million). The city currently pays $13.8 million annually for seniors and the state and city currently pays $90 million annually ($45 million each) for school fare reimbursement, which has not changed since 1995; $113 million in 2009 from the city to increase its paratransit funding to 50 percent; $50 million annually from elimination of state real estate tax loopholes; and $59 million between 2008 and 2009 in state tax restorations.

In addition, the MTA will ask the federal government to eliminate federal mandates that cost the authority $62 million annually.

As a result of these and other gap closing actions, MTA expects to carry a $15 million surplus into 2010, helping to lower that year's forecast deficit to $250 million. Without these measures, budget gaps are expected to grow to more than $2.3 billion in 2012, potentially requiring outsized fare increases and service cuts.

The MTA board will not consider a final budget until December, but the July plan allows for an extended period of public discussion about the authority's finances and budget proposals, MTA said.

Contact Progressive Railroading editorial staff.

More News from 7/24/2008