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MTA-TWU Agreement: What’s the Plan Now, Governor?

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.

Photo: TWU

Senior Cuomo aide Howard Glaser, MTA Chair Tom Prendergast, Governor Andrew Cuomo, and TWU Local 100 President John Samuelsen at yesterday’s announcement. Photo: TWU

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?

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IBO: MTA Fares on Pace to Rise 50 Percent Over Next Decade

The 2009 MTA funding package passed by Albany included a plan to increase fares and tolls every other year. The most recent of those fare hikes, implemented in March, increased fares 8.4 percent, with the MTA anticipating another increase in 2015. If this pattern continued for the next decade, fares would rise 50 percent, to $3.75 per ride, according to an analysis by the city’s Independent Budget Office requested by NYPIRG’s Straphangers Campaign [PDF]. Unless city and state leadership act, fares will drastically outpace the inflation rate, even as crossing the East River bridges and driving to the most congested, transit-rich part of the city remains toll-free.

Under the MTA's current funding model, fares are set to outpace inflation, according to the city's IBO. Photo: Darny/Flickr

After the introduction of the MetroCard, which brought free bus-to-subway transfers in 1997 and unlimited ride passes in 1998, the average fare paid by riders, adjusted for inflation, fell by more than a third between 1996 and 2002. But since then, “increases in the average fare have outpaced inflation,” IBO says, and the initial gain for straphangers is set to be wiped out by 2027.

If fares kept pace with inflation, the base fare would be $3.25 in a decade — 50 cents less than the IBO projection, which forecasts fares rising 15 percent faster than inflation.

Burdened by debt-financed capital spending and rising health care and pension costs, the MTA’s expenses keep rising, and it has fallen mainly on straphangers to foot the bill.

“Constant fare hikes will overburden riders, discourage use of mass transit, and cannot be sustained over time,” Gene Russianoff of the Straphangers Campaign said in a statement, calling on Governor Cuomo and the legislature to find a solution.

The MTA is under the governor’s control, but a funding solution also needs support from the city’s political establishment. The city’s contribution to the MTA hasn’t increased since 1993, and the value of that contribution has decreased due to inflation. So far, many of the mayoral candidates have been eager to push the funding burden to people who don’t vote for them, by supporting the unlikely reinstatement of the commuter tax. Even John Liu’s bridge toll proposal would give city residents a free ride.

More realistic funding solutions have only attracted the attention of Democrat Sal Albanese, Independence Party candidate Adolfo Carrión, and Republican George McDonald, who have all endorsed a plan to toll traffic on bridges entering the busiest parts of Manhattan, while lowering tolls on bridges between the outer boroughs.

Given the mounting pressure on straphangers, which has received some attention from the Daily News and Times editorial boards recently, it’s time the other mayoral candidates step forward with some realistic proposals.

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Instead of More Fare Hikes, How About Bridge Tolls That Make Sense?

In one fell swoop, Governor Cuomo and the state legislature could drastically reduce NYC's traffic dysfunction while rescuing New Yorkers from the fourth fare hike in five years. Image: Sam Schwartz

Since the beginning of 2008 — right around the time that Albany legislators failed to enact congestion pricing — NYC subway and bus fares have been hiked three times. Now the fourth fare hike in five years is on the horizon, and with Albany lawmakers sitting on their hands as MTA revenues fail to keep up with costs, there’s no relief in sight for millions of transit-riding New Yorkers.

Today MTA Chair Joe Lhota announced four options under consideration for the 2013 fare hike. The scenarios are weighted so that the fare hike will either fall primarily on riders who buy unlimited Metrocards or on those who mainly buy pay-per-ride cards. Monthly unlimiteds could cost $21 more, or single fares could go up to $2.50 from $2.25. (The Straphangers Campaign has produced a handy chart [PDF] to see how each option would affect your expenses.)

Either way, this string of hikes puts the fare on pace to triple the rate of inflation, according to a recent report from Comptroller Thomas DiNapoli. While working families in New York City end up paying hundreds or even thousands of dollars more out of pocket to cover higher fares, Governor Cuomo and the state legislature haven’t shown any intention of stepping in to help. In fact, they’ve made the situation more precarious by raiding the MTA’s budget and weakening the agency’s dedicated funding.

It doesn’t have to be this way. At any point, Albany could help to lessen the burden on working New Yorkers while simultaneously eliminating a source of enormous dysfunction in the region’s transportation system: the discrepancy between the free East River bridges and the MTA’s tolled crossings, which produces debilitating traffic jams and will only get worse as fares and tolls rise under the status quo.

The solution? Cuomo and the legislature could enact “Gridlock” Sam Schwartz’s “Fair Plan” [PDF], as Gene Russianoff of the Straphangers Campaign noted in a statement today:

Blocking or reducing the fare increase is possible, if we get more help from Albany. One promising plan is to generate new revenue by both raising and lowering tolls on city bridges and tunnels in line with where there is the most and least congestion. Under this plan – developed by a former New York City traffic commissioner Sam Schwartz, known as Gridlock Sam ­– tolls would go down on some facilities (like the Throgs Neck and Verrazano-Narrow Bridges) and be instituted on others (Brooklyn and Manhattan Bridges.) The State would need to authorize some of the tolls.

So far, Transportation Alternatives has collected more than 15,000 signatures asking Albany to stop the next fare hike. If you sign on, I suggest adding a note about the Fair Plan.

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

A new report [PDF] 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 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

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:

  • Debt service passed $1 billion annually in 2005, is expected to pass $2 billion in 2012, and is forecast to pass $3 billion in 2016. By 2018, debt service is expected to consume 20 percent of the MTA’s revenue.
  • The 2015-2019 Capital Program, which could include future phases of the Second Avenue Subway, is not yet funded. If borrowing continues to be the major payment method, annual debt service could reach $4.4 billion by 2024.

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

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Amid Christie and Cuomo Raids, Port Authority Plans Huge Fare and Toll Hike

The Port Authority has planned massive fare and toll hikes for the PATH and its bridges and tunnels, made worse by billions taken from the agency by Governors Christie and Cuomo. Photo: Terraplanner via Flickr.

Crossing the Hudson River will get much more expensive under a proposed Port Authority plan to sharply increase tolls and fares on its four bridges, two tunnels and the PATH train. The increases are a result of the poor economy, the costs of rebuilding after the attacks of September 11, and the expensive repairs needed on the agency’s aging infrastructure, said the Port Authority. Left unstated was the enormous cost of raids on the agency by the state governments of New York and New Jersey.

Under the Port Authority proposal, the cost to drive a car across a bridge or tunnel would increase by $4 this September, with another $2 increase in 2014. Tolls will increase the most on the costliest users. By 2014, the peak E-ZPass toll would be increased by 75 percent. Off-peak tolls would be doubled.

Truck tolls will nearly double during most times of day, reflecting the exponentially greater wear and tear inflicted by heavier vehicles. The Port Authority also hopes to disincentivize cash payments by tacking on a $3 surcharge, rising to $5 in 2014, for those who haven’t switched to E-ZPass.

PATH riders will also be forced to pay. The base fare will rise from $1.75 to $2.75; with discounts, the average fare will increase from $1.30 to $2.00 per trip. PATH riders will be spared from additional fare hikes in 2014.

To sell the toll package, which needs approval from both Governor Andrew Cuomo and Governor Chris Christie and is sure to be a heavy political lift, the Port Authority is broadcasting both its record of fiscal responsibility under popular but politically threatened executive director Chris Ward and the necessity of the projects the toll increases would fund.

The agency’s operating budget has been flat for three years, they said, while the capital budget has already been cut by $5 billion. That comes even as the costs of rebuilding at the World Trade Center have topped $11 billion and extra security requirements have added another $6 billion to the agency’s costs. The proposed toll increases, including those scheduled for 2014, would raise roughly $1 billion, according to the New York Times.

But Christie and Cuomo also bear responsibility for the Port Authority’s budget.

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Without New MTA Funds, Transit Riders May Face Return of 70s-Era Disrepair

In 1974, the Franklin Avenue Shuttle derailed, a not infrequent occurrence as deferred maintenance took its toll on the transit system. Photo: Doug Grotjahn via nycsubway.org.

Last week we wrote about how the looming $10 billion deficit in the MTA’s capital plan could lead to a $3.00 fare and $137 monthly pass within three years. That’s not the only way the transit authority could decide to respond to a lack of funding, however.

At the other end of the spectrum from fare-backed borrowing, the MTA could decide that it cannot take on any additional debt. In that scenario, the MTA would simply have to cancel or postpone every unfunded maintenance and expansion project — most of the next three years of the capital program. You can see those projects at the MTA’s capital dashboard, here. The result will be breakdowns, delays, and a slide back toward the decrepit and dangerous subway system of the late 1970s.

“You can expect to see the condition of the system decline pretty rapidly if you’re not doing this work,” said Felice Farber, the director of external affairs for the General Contractors Association of New York. “It’s not too hard to get back to the poor quality service of the past,” she said.

“You’ll have older buses, so they’ll be breaking down more often,” explained Pete Foley of TWU Local 100. “Subways will have to go slower,” as they pass over worn out tracks, he continued. “Eventually you’re going to have cracks. You’ll have derailments if you have a crack in the rail.”

Delays will be more common during rush hour as well, due to the lack of regular preventive maintenance. “You’ll be fixing things when they break,” said Foley. “They’ll wait until it’s an emergency.”

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Fare Hike 2014: Without New MTA Revenue, $137 Monthly Pass Could Happen

If Albany doesn't do something about the $10 billion deficit in the MTA's capital program, MTA debt will pile even higher and transit riders will be forced to pay it off at the farebox. Image: NYS Comptroller

With each passing month, the MTA comes closer to the day of reckoning on its unfunded capital plan — the maintenance work that keeps trains and buses running and the expansion projects that provide more access to the system. While the first two years of the 2010-2014 capital budget were funded, there is a $10 billion deficit in the remaining three. So far, there doesn’t seem to be any plan from the city, state, or federal government to find this funding. In fact, between the State Senate’s goal of repealing the MTA payroll tax and the House GOP’s budget-slashing, there may be more obvious paths to the MTA losing revenue than gaining it.

Albany has twice passed up the chance to plug a major part of this gap by enacting bridge tolls or congestion pricing. Increasingly, it’s time to ask what happens to transit riders if legislators just don’t do anything. The options aren’t appealing: a $3.00 base fare or 1970s-style breakdowns and delays.

In one scenario, the MTA could decide that everything in the capital plan, from basic repairs to the system to megaprojects like the Second Avenue Subway, has to happen. In this case, they’d have to borrow the money to pay for the improvements up front. If the MTA borrowed all $10 billion, according to the state comptroller’s office [PDF], the MTA’s yearly debt service obligations would soar even higher than they are already projected to. In 2010, debt service cost the MTA $1.9 billion. If the capital plan is paid for by borrowing, by 2019 debt service would total $3.9 billion.

To pay for all that extra debt, the MTA would have to increase its yearly revenues the only way it can, by raising fares and tolls. According to Neysa Pranger of the Regional Plan Association, the MTA would need between $1 billion and $1.5 billion in new annual revenues to pay for $10 billion in bonds.

The 7.5 percent fare hike scheduled for 2013 — that’s on top of this year’s equivalently sized hike — is predicted to raise around $460 million a year, according to the comptroller’s report. Based on that number, it will take roughly a 24 percent fare hike to get $1 billion in new revenue and a 32.25 percent hike to reach $1.5 billion.

For riders, that’s a steep price to pay. If the fare hike is distributed evenly across different types of fares (for the latest hike, the base fare was held constant while the price of a monthly pass soared), that means a base fare between $2.80 and $3.00 and a monthly pass between $129 and $137.50 by 2014. If you think that people get mad about typical fare hikes, just wait.

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Fare Hike 2011: It’s Official

rider_rebellion

Advocates with Transportation Alternatives' Rider Rebellion Campaign outside MTA HQ this morning. The Rider Rebellion aims to build a coalition that will pressure Albany to enact better transit policy. Photo: Noah Budnick

The monthly unlimited Metrocard will break the $100 barrier on January 1, following today’s 12-2 MTA Board vote to balance the agency’s budget by enacting a package of fare increases. (Get full details on the fare hike package from Ben Kabak.)

NY1′s John Mancini reports that the MTA Board faced some predictably withering public testimony this morning. But the real culprits weren’t even in the room — they’re at home or in their district offices while the state legislature is in recess.

With the bottom falling out of the MTA’s dedicated revenue streams three years ago, fare hikes and service cuts have sometimes felt like an unavoidable outcome of the recession, but it didn’t have to be this way. Would fares be rising at the same time that service is shrinking if Sheldon Silver and the Assembly had passed congestion pricing in 2008? Would this be happening if Pedro Espada and the fractious State Senate had allowed bridge tolls to be included in the 2009 MTA funding package? What if Albany hadn’t swiped more than $100 million in dedicated transit taxes from the MTA last December (a maneuver that legislators can repeat whenever they want)?

Looks like Board members are trying to get these same questions out there. Take a look at some highlights from the meeting, courtesy of the Twitter feed from Transportation Alternatives’ Noah Budnick, who’s building some awareness for TA’s Rider Rebellion campaign:

MTA board member Norman Seabrook, “Congestion pricing could’ve been the answer to the people of this city.”

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New York Transportation Officials: We’re Broke

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In the absence of funds, transportation agencies are looking for cost-effective ways to move people. The Port Authority suggested it would be open to increasing Holland Tunnel capacity with a bus lane, for example. Photo: keithlam via Flickr.

The state’s top transportation officials delivered some tough news to the construction industry Friday: Public agencies are so cash-strapped they don’t even have enough money to maintain existing infrastructure.

With budgets battered by rising maintenance costs and recession-ravaged revenues, an industry-sponsored conference offered little prospect of further expansions to the state’s transportation system beyond the projects currently underway. Some combination of new revenue streams, cost-saving measures, and public-private partnerships will be necessary simply to keep New York moving, most suggested. Meanwhile, the cozy relationship between public officials and construction industry heavyweights was on full display, at times contradicting the general message of austerity.

Speaker after speaker laid out the costs involved just to maintain the state’s aging infrastructure. Joel Ettinger, the head of the New York City region’s metropolitan planning organization, said that over the next twenty-five years, “an amazing 98 percent of the money is going to go just to state of good repair and operations.” That’s a full $950 billion through 2035, he said.

Port Authority tunnels, bridges, and terminals director Victoria Cross Kelly presented her agency’s top capital project priorities, including billion dollar replacements of the Goethals Bridge, the George Washington Bridge suspender cables, and the New Jersey approach to the Lincoln Tunnel, as well as a number of smaller projects. “Each and every one of these has somewhere in their title ‘rehab’ or ‘replace,’” she said. “There’s no new added functionality.”

New York City Transit’s chief engineer, Fredrick Smith, pointed to the system’s dire need for new track signals. Currently, a quarter of the subway’s signals are over 70 years old. “How reliable do you think that is?” he asked. Unfortunately, the MTA capital plan for 2010-2014 is only funded through next year and the bulk of the signal work is theoretically scheduled for 2012.

Even for the basic tasks of keeping bridges up, roads paved, and transit running, current funding is inadequate. “Increased, stable resources need to be provided,” said acting NYS DOT director Stanley Gee. Gee singled out the project to rebuild the deteriorating Tappan Zee Bridge and add transit access across it as particularly problematic. “There’s no way that existing tolls can build that bridge,” he said.

As for where that money might come from, Gee was open to any possibility. “Pricing obviously is one,” he said. He also suggested a mileage tax to replace declining gas tax revenue. Gee isn’t counting on help from one potential savior, however: the federal government. “We don’t expect a long-term extension of federal funding any time soon.” Gee ultimately urged the audience, filled with politically powerful firms, to convince elected officials to fund transportation.

From a sustainability perspective, the upside of the funding scarcity is that many transportation agencies are looking to do more with less — and that can mean prioritizing transit. “We need to focus on making the best use of what lanes and tracks we have,” said Port Authority Director of Regional Development Andy Lynn. Calling the Lincoln Tunnel’s exclusive bus lane a great success story, Lynn said “We need more of that.” During the Holland Tunnel’s evening rush, he noted, buses make up less than three percent of the vehicles, but carry 48 percent of the people. There is currently no exclusive bus lane in the Holland Tunnel.

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Rider Anger Grazes Incumbent Pols at Fare Hike Hearing

Outside Cooper Union yesterday evening, the sidewalks were packed with news cameras, security squads, political campaigners and activists pressing passersby with their plans for the MTA. Inside, the transit authority held the first of ten mandated public hearings on its proposed fare and toll hikes. Though attendance was sparse, the citizens who lined up to speak in all but unanimous opposition to the fare hike spared no venom for whichever target they chose, the MTA or the state government.

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On the eve of today's primary election, most of the anger over the impending fare hike was directed at the MTA, not state legislators. Photo: Noah Kazis

More often than not, it was the transit agency who received the brunt of their anger, despite the abysmal performance of the state legislature and other elected officials when it comes to the last several years of transit policy.

At issue is a slate of fare and toll hikes. The most significant would raise the price of a 30-day transit pass from $89 for unlimited rides to either $104, a 17 percent jump, or to $99 with a 90-trip cap.

The hearing took place on the eve of New York’s primary elections, a time when the elected representatives who’ve forced the transit agency into its current position should have to reckon with the consequences. The state legislature has been slashing its general fund contributions to the MTA for years and last December raided more than $100 million in dedicated transit taxes from the authority. State pols rejected revenue streams that could fund transit — congestion pricing and bridge tolls — in 2008 and 2009.

Not one of the first thirty speakers, however, made the connection and suggested that transit riders employ their most powerful tool, the ballot, in today’s elections (though one did suggest voting in November). That said, the primaries had the much-appreciated side effect of sparing everyone the train of self-aggrandizing, MTA-bashing politicians who monopolized microphones during the previous round of MTA public hearings.

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Staffers with Transportation Alternatives' Rider Rebellion campaign were handing out flyers describing the state legislature's responsibility in underfunding the MTA. Photo: Noah Kazis

The only pol who appeared in person was Manhattan Assembly Member Richard Gottfried. Perhaps surprisingly, Gottfried didn’t attack the transit authority. Insofar as he did criticize the MTA, it was for serving as his colleagues’ punching bag. “I urge the MTA to stand its ground,” he said, “and demand that the federal, state, and local governments make adequate funds available for public transit.” Claiming that the farebox makes up more of the MTA’s revenues than any other transit system in country, he argued that “riders are already overpaying.”

But in most cases, public testifiers took out their anger on the MTA.

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