A budget watchdog group, calling the financing mechanisms of New York’s Metropolitan Transportation Authority “volatile and insufficient,” has proposed an alternative that it said would curb deficits.
In a report released Wednesday, the nonprofit Citizens Budget Commission suggested funding regular replacement needs with operating revenues rather than borrowing. It suggested a so-called 25-50-25 formula, in which riders pay about 50% of the operating costs of services while auto users and taxpayers each pay one-fourth.
The MTA runs the New York City subway system, regional commuter rail lines, and seven toll bridges and two tunnels.
CBC, in an attempt to minimize debt, would also expand those expenses to cover the costs of buying such items as subway trains, buses and commuter rail coaches.
By 2016, that policy would provide nearly $2.6 billion in additional annual revenue without new taxes, the report said.
The CBC issued the report as the MTA board is set to consider its latest round of fare and toll increases. Under the CBC’s proposal, the cost of a single-ride ticket would increase to at least $2.75 by 2016 -- the current fare is $2.25 -- but in constant dollars, it said, a subway ride would cost no more than 3 cents more than in 1996.
“Motorists would face increased costs for the use of their vehicles, in the range of $167 to $293 more annually, but the changes would be consistent with those in other global metropolices and related to the benefits drivers derive from a well-functioning transportation system.”
The authority has been operating with large deficits the past decade. It projects its deficit for 2016 to exceed $3.6 billion, or roughly 18% of operating expenses.
“The MTA is not financed in a sensible and stable manner,” the report said.
The commission based its proposal on the premise that auto user fees should pay for the facilities available to drivers.
Charles Brecher, the CBC’s consulting research director, said reaction to the report was mixed.
“I think the 50% ratio on fares were seen by some advocates, including Gene Russianoff, as a bit high,” Brecher said in an interview. “But people view more money through cross-subsidies from auto users favorably.” Russianoff, an attorney and chief spokesman for the Straphangers Campaign rider advocacy group, praised the CBC report in principle. “But the issue is that it would put a lot of the burden on the riding public,” he said.
CBC, culling data from the Federal Transit Administration, said New York City Transit already has the highest fare box operating ratio – the share of operating costs covered by fares – in the nation at 53%. By comparison, the average for large systems nation-wide was 38% in 2011, according to FTA data.
The commission urged transit and political officials to reconsider congestion pricing for drivers, which would include East River bridge tolls and congestion fees, which would parallel London’s system. “It will take a while,” said Brecher, who acknowledged the political opposition to these projects while citing support of some versions by Mayor Michael Bloomberg and Samuel Schwartz, an engineer and former city transportation commissioner.
“We appreciate the Citizens Budget Commission’s attempt to take a serious look at the MTA’s financial challenges and offer thoughtful recommendations on how to meet them,” MTA chairman Joseph Lhota said in a statement. “The MTA has made great strides in cutting costs and stabilizing its finances, and has regularly said we need a stable and reliable funding source for the sake of all our customers and the entire New York economy.
“However, the CBC’s choice of budgeting methods would create the appearance of a phantom deficit, instead of reflecting our fully balanced budget as required by law. Still, we are glad the CBC is helping to advance the discussion of how to stabilize the MTA’s long-term finances.”
Moody’s Investors Service rates the MTA’s transportation revenue bonds A2, while Standard & Poor’s and Fitch Ratings assign A ratings.
The MTA next week intends to sell $950 million of dedicated tax fund refunding bonds.
