The MTA’s financial situation became much murkier yesterday as Governor Cuomo announced that retroactive raises will be part of a labor agreement between the transit authority and the Transport Workers Union.
Up until yesterday’s announcement, MTA leadership had insisted that the authority’s financial health depended on “three years of net-zero wage growth.” Keeping labor costs flat was the key assumption behind the MTA’s financial plan.
Now the validity of the MTA’s financial plan is in doubt.
TWU members will receive raises of one percent for the first two years and 2 percent in each of the final three years. Since employees had been working without a contract for two years, the first two years represent retroactive raises.
MTA chairman Tom Prendergast insisted that the wage deal was “within the financial plan,” and that no fare hikes or service cuts would be necessary. But it is difficult to reconcile Prendergast’s claim with the MTA’s publicly available financial information.
The wage increases will likely cost the MTA between $200 million and $300 million a year, an amount that exceeds the agency’s projected cash balance for 2014 and beyond. The MTA financial plan projected a $64 million surplus by the end of 2014, falling to $6 million by 2015 and a $255 million deficit by 2017 [PDF].
So how will the MTA balance its budget without fare hikes or service cuts? Should we assume that the MTA leadership and Governor Cuomo have a plan?