DiNapoli: Riders to bear MTA debt burden
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MTA railroad, bus and subway fares have climbed much faster than the rate of inflation in recent years, and "nearly all" of the money generated by next year's planned fare hike will be needed just to pay for existing projects and agency debt, according to a new financial analysis.
The state comptroller's annual financial outlook report on the Metropolitan Transportation Authority, released Tuesday, concludes that while the agency's finances "have improved appreciably over the past two years," it still faces big challenges -- including the slow economic recovery, upcoming negotiations with unions and uncertainty surrounding its payroll mobility tax, which a State Supreme Court struck down as unconstitutional in August. That ruling is under appeal.
While acknowledging those challenges, Comptroller Thomas DiNapoli said that the MTA's fare and toll hikes are "placing a burden on working men and women across the metropolitan region."
His office reported that by 2015, with a 7.5-percent increase planned for March, fares and tolls will have climbed by 35 percent since 2007, while inflation has gone up by about 15 percent in that same period.
The fare and toll hike next March is expected to generate an extra $450 million a year for the agency, but DiNapoli's report points out that 88 percent of that money will be needed to pay off debt or finance infrastructure projects already under way.
The report also predicts that the MTA will need at least $20 billion more in its next five-year capital plan, covering 2015 to 2019, just to maintain and modernize its existing system. And the report says, the MTA doesn't know where it will get that money.
MTA chairman Joseph Lhota said in a statement that he appreciated DiNapoli's "thoughtful and thorough analysis" of the agency's financial future.
"His report recognizes the significant financial challenges the MTA faces in the near term, the aggressive steps we have taken to meet them, and our ongoing efforts to address longer-term challenges, including identifying funding sources for our 2015-2019 Capital Program," Lhota said.
William Henderson, executive director of the MTA's Permanent Citizens Advisory Committee, said DiNapoli's report strengthened the case for a new funding model for the MTA, which counts on fares to cover 41 percent of its costs.
"The percentage is going to continue to rise, which is something that's very concerning to us," Henderson said. "Riders are already paying a lot."
DiNapoli's report notes that employment in the 12-county MTA service area has increased by 241,900 jobs since December 2009, giving a boost to mass transit use.
The report also says that various cost-cutting initiatives are expected to save the MTA $1.1 billion annually by 2016. Nearly half that comes from overhauling how the MTA provides transit services for the disabled.
Key findings in comptroller's report
BORROWING. The MTA is borrowing $14.8 billion to pay for its 2010-2014 capital plan -- about 60 percent of the total costs. Debt service is expected to reach $3 billion by 2016, 41 percent higher than in 2012.
PAYING DOWN. Fare and toll increases represent 82 percent of the money being used to close operating deficits over the next four years. Management cost-cutting will cover the remaining 18 percent.
OVERTIME. The MTA paid $655 million in overtime last year and expects to pay $578 million this year -- $25 million above budget.
BENEFITS. Health and welfare costs are projected to rise by 42 percent over the next four years, reaching $1.2 billion. Pension costs are expected to rise from $1.3 billion this year to $1.5 billion in 2016.
SAVINGS. Cost-cutting initiatives started in 2010 are expected to save the MTA $1.1 billion a year by 2016.