New York's Metropolitan Transportation Authority adopted a $12.08 billion operating budget for 2011 at its monthly board meeting Wednesday. The budget closes a projected $900 million deficit with a combination of fare and toll increases that go into effect on Jan. 1, labor concessions, efficiency savings, and recurring actions taken this year.
The MTA operates the nation's largest mass transit system as well as tolled bridges and tunnels serving the New York City metropolitan area.
The MTA plans to market $1.65 billion of bonds for 2011 capital spending. The board approved the issuance of up to $750 million of taxable Build America Bonds before the end of the year to take advantage of the program before it expires. Subject to market conditions, the deal could price next week on the authority's transportation revenue bond credit, which is backed by diverse revenue streams that include subway and bus fares.
The budget also authorized the use of taxes enacted last year by state lawmakers to be pledged to debt service on bonds. The largest of these is a payroll tax on the employers in the 12 counties served by the MTA known as the payroll mobility tax.
The MTA has sold short-term debt against the PMT but has yet to establish a separate credit or announce when it would do so. The MTA has said it expects to sell $6 billion of bonds secured by the tax.
Goldman, Sachs & Co. was selected to lead the inaugural sale of bonds on such a credit as part of an underwriting request for proposals that was also approved Wednesday after finance committee approval on Monday.
The MTA's $26.27 billion five-year capital plan is only funded for capital commitments made in 2010 and 2011, leaving a $9.9 billion gap. Authority chairman and chief executive officer Jay Walder said 2011 projects are funded and that resolving the funding gap will become an issue in the latter part of next year.
The budget ends a $24 million subsidy for Long Island Bus, a Nassau County bus service. Nassau and MTA officials continue to negotiate an agreement on funding for the service. The authority expects to continue to operate for the first three months of 2011. The MTA has operated the county's bus service, which the county owns, since 1973. In 2000, the county began to reduce its funding for the bus service, and the MTA made up the difference. Nassau is the only suburban county for which the MTA operates and subsidizes bus service.
Nassau County deputy county executive of economic development Patrick Foye, who represents the county on the board, said that he had proposed a multi-year plan that would dramatically increase county funding while the MTA decreased its funding.
"This situation has been 10 years in the making," Foye said. "It is not reasonable to expect this situation to be resolved in one fell swoop … or to be resolved immediately."
The budget included a reduction to 7.5% from 8% of the assumed annual rate of return on pension funds, following the lead of the state comptroller's office, which made a similar reduction earlier this year. The lower rate required the MTA to increase its contribution by $34 million in 2011.
The fare and toll hikes were enacted earlier this year to raise those revenues by 7.5% The hikes will increase revenue by a projected $411 million in 2011. Another fare hike in 2013 would then raise an additional $454 million.