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Straphangers Will Be Asked to Shoulder MTA’s Growing Debt and Labor Costs

A new report [1] [PDF [2]] from New York State Comptroller Thomas DiNapoli says that the MTA budget picture is slowly improving as tax collections and ridership increase with a recovering economy, but that won’t protect straphangers from big fare hikes.

Revenues from the Payroll Mobility Tax [3] and the more volatile tax on real estate transactions are expected to increase, driven by employment gains and the commercial real estate market. But the MTA’s operating budget — currently $12.5 billion annually — will face widening gaps because of ever-increasing debt and labor costs, growing from $487 million in 2013 to $1.44 billion in 2016 – a total shortfall of $3.76 billion over the next four years. The increase in labor costs is especially pronounced when it comes to health insurance and pensions.


Unless Albany takes action, fare hikes will cover most of the budget gap created by growing labor and debt costs. Photo: renaissancechambara/Flickr [5]

Governor Cuomo and the state legislature have not stepped up with new funding, so the MTA has its own plan to cover nine of every 10 dollars in the budget gap. Toll and fare increases will pay for 82 percent of the shortfall. Fares are expected to increase every other year, rising 35 percent between 2007 and 2015 – almost three times faster than inflation.

Why will each MetroCard swipe cost more? Let’s take a look at the debt and labor costs creating the gaping maw that straphangers will soon be asked to fill.

In order to upgrade trains, buses, and stations and fund system expansions, Albany will continue to pull out the credit card. Borrowing will account for 60 percent of the 2010-2014 MTA Capital Program’s $24.3 billion budget, twice the rate of borrowing in the 1980s. The consequences:

Labor costs make up 60 percent of the MTA’s annual budget, and costs are expected to grow in the coming years.

Despite the planned fare hikes, transit ridership is expected to recover its pre-recession highs, outpacing growth in bridge and tunnel traffic, which is expected to remain below its 2007 peak.