The MTA plans to pay for its latest proposed contract with Long Island Rail Road unions by taking $40 million from a fund the agency set aside to finance infrastructure improvement and maintenance projects, officials said.
The money will come from the agency's "pay as you go" capital pot, which is funded through the MTA's operating budget revenue streams -- including fares and payroll taxes, said MTA chairman Thomas Prendergast.
"When you're faced with a looming strike and the impact that will cause to the economy and the riding public, you need to get to a different level," Prendergast said. "And we have gotten to a different level."
Some transit advocates warn that using the capital fund is not a good idea.
Eyeing workable choices
William Henderson, executive director of the MTA's Permanent Citizens Advisory Committee, said that using money intended for critical system repairs and improvements should not be a viable option, even faced with the MTA's fare hike threats.
"If you're a family, and the options are do you go without food or without medical care for your kids, at some point you have to say, 'None of these choices are really workable choices,' " Henderson said.
He said the "pay as you go" fund is especially important as the agency enters its next five-year capital plan, estimated to cost about $30 billion, without any identified sources of funding for it and with new priorities to shore up its system from future natural disasters such as superstorm Sandy.
The MTA's latest contract proposal calls for 17 percent raises spread out over seven years, rather than the six demanded by the unions, which can legally strike July 20. The agency says other incentives will make up for the difference, including a new daily allowance of at least $5 per worker.
A way to achieve savings
The proposed contract, which has not been accepted by the unions, would cost the agency about the same as the union's proposal -- $40 million a year, the MTA says. The agency would eventually realize some savings from changes in the terms of newly hired employees' wage schedules, benefit costs and pensions.
For example, any LIRR workers hired after the contract is ratified would have to work twice as many years to achieve top pay, would contribute 4 percent of weekly wages to health care costs -- or twice as much as previously hired workers -- and would have to permanently contribute toward their pensions. Current LIRR workers only do so their first 10 years.
The MTA's offer comes after months of maintaining that funding what the two presidential emergency boards have recommended could require fare hikes as steep as 12 percent.
"I can't keep up with the amount of changes they've made. 'We can't afford it. We can't afford it without a fare change. We can afford it without a fare change,' " said lead union negotiator Anthony Simon. "Their credibility is zero."
Union officials say their economist estimates the total value of the MTA's proposal at just 44 percent of the contract recommended by two separate federal mediation boards and demanded by the unions.
In its negotiations with the unions, the MTA first said that its fiscal solvency depended on a three-year wage freeze from workers.
It later said it could not afford more than 11 percent raises for workers.
Prendergast said the agency is only affording its proposed deal "at great sacrifice."
To pay subway workers' recently accepted contract, which called for raises of 8.25 percent over five years, the MTA cleaned out an $80 million fund earmarked for LIRR retiree pensions, and will annually take $70 million from a $370 million "pay-as-you-go capital" reserve -- money set aside to pay down ongoing capital projects.
Twenty-year commuter Tom Hughes of Island Park said he's angry at both sides: The MTA for offering the unions as much as it is, and the unions for holding out for more.
"When I first read it, it sounded like they practically gave them everything they wanted . . . I don't know what else they could possibly be looking for," said Hughes, 43, an executive with a commercial film production company. "Where is that additional $40 million going to come from? It's going to come from us."