New York’s Metropolitan Transportation Authority introduced a financial plan on Wednesday that projected a $46 million cash surplus rolled into each of the next two years, but also deficits from 2014 to 2016 that range from $14 million to $231 million.
And top officials admit even those projections are iffy.
Variables include “net-zero” labor settlements in which transit workers forgo pay raises for three years, revenue from expected fare increases in 2013 and 2015, and continued receipt of dedicated taxes as projected.
“This is a risk-laden plan,” chief financial officer Robert Foran said during the MTA board’s monthly meeting. “We continue to make gradual progress, but finances continue to be fragile.”
Speaking with reporters after the meeting in the authority’s cramped meeting room on Madison Avenue, board chairman Joseph Lhota cited net-zero as a hovering X-factor.
“When I look at all my risks, I rank it as my biggest risk,” he said.
Contract talks, meanwhile, are ongoing with the Transit Workers Union.
The MTA’s $13 billion preliminary budget includes the restoration of $29 million worth of service cuts, prompting a slightly feel-good tone among normally cantankerous public speakers. The agency had cut $93 million worth of service two years ago. In addition, the MTA has delayed the 2013 fare and toll increases by two months. They will take effect in March.
But, said Foran, even with the planned increases and net-zero agreements, deficits totaling $374 million will remain. He projected a $129 million gap in fiscal 2014, followed by shortfalls of $14 million and $231 million.
“We’re in a fairly perilous position and we should not forget that,” said board member Allen Cappelli.
Pensions and other non-discretionary expenses, including employee health care costs, are eating away at the authority’s budget, according to Foran.
In his 2011 actual to 2012 midyear forecast, he said pension costs rose 19.3%, followed by paratransit and debt service at 10.5% and 9.8%, respectively.
According to MTA data, debt service consumes about 18% of the agency’s annual expenses. “Debt service is up because our capital program is increasing and we’re not getting the same level of funding on a persistent basis as we have in the past,” Lhota said.
According to Foran, since the agency released its February plan — it presents three such plans annually, in addition to a final proposal in December — costs of pension benefits and other post-employment benefits have risen, as have workers’ compensation costs. Other cost drivers include the MTA’s loss of an arbitration case involving about 3,000 bus drivers and other workers that received an 11% raise, and the relocation of MTA employees to 2 Broadway in lower Manhattan.
Savings initiatives, Foran said, include $230 million by replacing Access-A-Ride paratransit service with zero-fare MetroCards for such passengers; $22 million through a fare-evasion crackdown; and $4 million by extending credit-card fraud controls to railroads.
The MTA’s plan assumes revenue of $450 million and $500 million from 7.5% fare increases in 2013 and 2015, respectively. The authority will hold public hearings on the proposed hikes in November and will finalize the budget in December.
Last month, Standard & Poor’s and Fitch Ratings rated the MTA’s transportation revenue refunding bonds A, while Moody’s Investors Service rated them A2. Next Tuesday and Wednesday, the MTA will price $1.1 billion of Triborough Bridge and Tunnel Authority general revenue bonds, primarily to refund Series 2002B bonds.