Big Service Cuts Ahead for N.Y.'s Cash-Strapped MTA

New York's Metropolitan Transportation Authority plans major service cuts next year to deal with revenue shortfalls in the current month and beyond, the agency announced yesterday.

The MTA faces a triple-whammy this month as the Legislature cut $143 million of state aid that had already been allocated, a $229 million shortfall opened up in new revenue streams created in a bailout plan that passed earlier this year, and it lost an arbitration appeal over raises to union workers.

"We're grappling with a loss of nearly $400 million virtually overnight," said MTA chairman and chief executive officer Jay Walder following a finance committee meeting. "I wish I could tell you that losing this amount of money in this amount of time does not have painful consequences. Unfortunately, I can't."

The finance committee approved a series of changes to the proposed $11.98 billion 2010 operating budget that faces a full board vote tomorrow.

The MTA had $27.2 billion of debt outstanding as of Nov. 30, according to the authority's year-end review released yesterday.

A large part of the current-year revenue shortfall came from lower-than-expected collections for a payroll tax on employers in the 12 counties served by the MTA. The tax was enacted retroactively this year through March. The agency expected to receive $1.05 billion of payroll tax in 2009 but now expects to receive $229 million less.

MTA chief financial officer Gary Dellaverson said that the tax base on which projections were made has declined slightly and new estimates reduce future years' collections by $50 million.

"Clearly, some employers have not paid their liability," he said. "Others appear to be delaying payments until April."

Compliance with the new tax is expected to bring in an additional $129 million beyond what was projected in 2010 as employers pay 2009 liabilities, according to Dellaverson.

To deal with the shortfalls in the current year, the revised budget proposal would take several actions, including the use of reserves, eliminating a newly proposed reserve, and delaying payments to the authority's pension fund.

Cuts in future years are more controversial. The MTA would cut two subway lines, cut bus routes, cut and then eliminate a program that provides free subway fares for students, and cut spending on paratransit services. Those cuts would be phased in over the next year, giving lawmakers and the MTA an opportunity to find funding alternatives, much like they did this year when a bailout from Albany allowed the authority to restore cuts.

Whether Albany will be able to come to the MTA's rescue again is unclear.

On Sunday, Gov. David Paterson announced he would withhold $750 million of scheduled payments to school districts, municipalities and insurance carriers. He said the action was necessary to keep the state solvent.

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Transportation industry New York
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