A lot will have to go right for the Metropolitan Transportation Authority to avoid deficits that could reach nearly $1 billion in four years, including the realization of $1.6 billion in savings and a disciplined new approach to overtime spending, MTA officials said Thursday.
The projections came as the MTA unveiled its latest proposed operating budget and four-year financial plan, which incorporates the projected results of an ongoing reorganization of the transit agency that aims to reduce costs, including by eliminating 2,700 jobs.
Even though lower-than-expected revenues and higher-than-expected labor costs have driven up the agency’s expenses by nearly $467 million since the authority updated its financial plan in July, MTA chief financial officer Robert Foran said he expects the agency will be able to balance its books through 2021.
That prediction assumes realizing the $1.6 billion savings goal in the MTA Transformation Plan, as well as reaching affordable contract settlements with unions, stanching some of the $300 million lost each year in unpaid fares, renegotiating a cost-sharing agreement with New York City over special transportation services for the disabled, and cutting the costs of “controllable overtime” by $176 million.
By taking those measures, MTA officials said the agency will avoid any “budget-driven” service cuts or fare increases beyond the agency’s usual plan of raising rates by 4% every other year. The next such increase is scheduled for 2021.
Without the projected savings, Foran said the MTA will encounter sizable deficits beginning in 2021, and reaching $901 million by 2023.
“The Transformation Plan implementation is critical,” Foran said at the Manhattan meeting of the MTA Board. “Otherwise, we’re going to have unmanageable deficits in the future.”
Some members of the MTA Board, which will vote on the financial plan next month, questioned the agency’s math, and its priorities, in the spending plan. The budget includes $249 million in funding to hire 500 cops — nearly doubling the size of the MTA Police force — and $100 million in new maintenance costs, including for LIRR stations. It also includes a pilot program to eliminate cash transactions onboard LIRR trains — a move union officials said could drive up losses in unpaid fares.
MTA Board member John Samuelsen, who represents bus and subway unions, took issue with a plan to move $93 million from the agency’s operating budget to its capital budget next year to help pay down debt on long-term infrastructure projects. Samuelsen said moving the money from its operating budget allows the MTA to “cry poverty” and deny workers fair raises.
“That money that’s going from the farebox into capital is money that should be injected into this contact settlement to avoid … whatever ugly conclusion we’re on our way to right now,” Samuelsen said.
MTA chairman Patrick Foye defended the agency’s accounting practices, noting that prioritizing the agency’s $51.5 billion proposed Capital Program also helps reduce operating costs, because deferring infrastructure maintenance can drive up day-to-day costs.
“We are closing the gaps in our budget and moving forward on transformation to give customers the 21st century transit system they deserve,” Foye said in a statement.
MTA Board member Norman Brown, who represents railroad workers, questioned the legitimacy of the agency’s projected overtime savings. He noted that, ever since the MTA earlier this year vowed to crack down on overtime amid accusations of fraud among some workers — including at the LIRR — OT costs have continued to grow.
“I don’t see how one leads to the other,” Brown said. “You guys have alleged a history of abuse in overtime, but I assume that over the last year, you’ve been exerting maximum scrutiny over the overtime.”
- 2020 proposed operating budget: About $17 billion
Assumptions in 2019-23 MTA financial plan
- Recovering at least $50 million in unpaid fares annually: $200 million
- Achieving target savings in MTA reorganization, including by eliminating 2,700 jobs: $1.6 billion
- Reducing "controllable" overtime costs: $176 million