Changes to the Metropolitan Transportation Authority's four-year financial plan slightly worsen the outlook for the agency that operates mass transit in metropolitan New York, said the watchdog Citizens Budget Commission.
The MTA in February modified the rolling plan it adopted three months earlier.
"The revised plan … reflects more fundamental changes in MTA financing arrangements, reducing subsidies from earmarked and other state taxes without replacement funds that were in the past provided through state funding," Jamison Dague, the commission's director of infrastructure studies, wrote Wednesday.
The update specifies the cost of the recently negotiated 28-month labor contract with Transport Workers Union Local 100, which the union ratified last month. It covers 38,000 transit workers and sets the wage pattern for other represented transit workers.
It features 2.5% wage increases — above the MTA's previously projected 2% increases — spread over 28 months, and a clause that entitles the TWU to match potential wage gains by other MTA unions.
"This clause does not cost the agency anything now," said Dague. "However, it has the potential of reopening wage increases for more than half of all MTA employees."
A message seeking comment was left with MTA officials.
According to Dague, the February update reduces the value of projected savings on TWU health benefits by $64 million over the plan. "This combined with the $52 million cost of the contract have an unfavorable impact of $116 million during the plan," he said.
In addition, said Dague, Gov. Andrew Cuomo's executive budget, which he released in January, reduced the dedicated tax and state subsidy revenue from the MTA's previously budgeted amount, resulting in lower dedicated subsidies and taxes in each year, totaling $271 million in reduced revenues over the financial plan.
On the positive side, the MTA expects to reduce operating expenses due to unspecified efficiencies by $25 million in 2017 and $50 million in each year thereafter, a total favorable impact of $175 million.
"Much of the 'low-hanging fruit' has been picked, and the agency has noted the difficulty of identifying and implementing more efficiencies," said Dague.
Overall, said Dague, "The MTA can accommodate the revenue reductions and higher labor costs in the short term, although the projected 2020 cash deficit is now larger than what was anticipated in the previous plan."
He said a 1% annual general reserve, if not needed each year, could provide $650 million over the plan period. "Absent the availability of these funds new policy actions will be required to keep the agency from serious red ink," he said.
