In a reprise of last year, New York's Metropolitan Transportation Authority yesterday passed a "doomsday" budget that slashes services, but on a delayed schedule.
Many of the cuts that were approved last year for the 2009 budget never took effect because lawmakers crafted a rescue package that was meant to generate enough revenue to avoid the cuts. Some of the latest cuts are deemed necessary because some of that rescue funding failed to materialize.
The $11.98 billion 2010 operating budget's most controversial measure — a plan to phase out free and discounted transit passes for schoolchildren — could also spur legislative action. Under the adopted budget, the student pass program would be cut in half in September 2010 and eliminated in September 2011.
The service cuts, which include eliminating bus and subway lines, have also renewed talk of congestion pricing, New York City Mayor Michael Bloomberg's plan to raise funds for transit by charging fees on vehicles traveling in large sections of Manhattan. The state Legislature did not support the mayor's proposal. The MTA has to hold public hearings before the service cuts can take effect. Actual cuts could begin in the spring and most would take place mid-year.
MTA chairman and chief executive officer Jay Walder said the authority is also looking for ways to restructure that would reduce operating costs.
"We need to rethink every aspect of our operation. We need to permanently reduce the cost of what we're doing," hesaid at board meeting yesterday. Walder said the process should yield "substantial savings" a year from now but did not offer a specific savings target.
The MTA was acting to close a $383 million gap by the end of 2009 that opened up in the past two weeks. The primary causes of the sudden hole were a $143 million cut by lawmakers to already appropriated funds and a $229 million shortfall in collections from the new payroll tax enacted as part of this year's rescue plan.
Lawmakers cut the appropriation to help partially close the state's $3.2 billion current year budget gap. The payroll tax, which applies to employers in the 12 counties served by the MTA, was expected to generate $1.05 billion in 2009 but is now estimated will raise $100 million less. The state expects that in 2010 it will recover an additional $129 million from that source that is owed in the current year but which has not yet been paid by employers.
Last week, the MTA also lost an arbitration dispute over raises to Transit Workers Union employees that will cost it an additional $91 million in 2010 and $173 million in 2011.
The MTA will almost certainly enter 2010 without a new five-year capital plan. Gov. David Paterson, who has effective veto power over the $28.08 billion plan, has called a new proposal unaffordable. Some board members echoed the governor.
"Our capital plan is totally unrealistic in light of the present economic conditions and will certainly seriously hurt the maintenance of our existing infrastructure," said finance committee chairman Andrew Saul. "The plan that we now have is beyond the ability of this organization to manage it."
The adopted budget does not include cuts to capital spending and it included $50 million of pay-as-you-go capital spending. On Monday, MTA chief financial officer Gary Dellaverson said the pay-as-you-go capital spending was included so the authority could use it as a local match to access federal funding even if a five-year capital program has not been adopted by the time the funds were needed.
Walder said the MTA should be "extremely carefully before we look to the capital program for operating support" and warned against starting down a "slippery slope of allowing our transit system to decline in a way that took us literally 20 years to climb out of."
The MTA has $27.2 billion of debt outstanding. It expects to sell $2.57 billion of bonds in 2010.
