New York’s Metropolitan Transportation Authority plans to release a $12.04 billion preliminary budget for 2011 today, officials said.
The preliminary plan relies on a combination of planned fare and toll increases, labor concessions, efficiency savings and recurring actions taken this year to close a $1.03 billion deficit. Operating costs in 2010 are projected to be $11.4 billion. The authority will propose a final budget in November that must be adopted before the end of the year.
The MTA will propose a menu of fare hikes designed to increase fare and toll revenue by 7.5%. If approved by the board in October following a public comment period, they would go into effect on Jan. 1, 2011. The hikes will increase revenue by a projected $413 million in 2011. Another fare hike in 2013 would then raise an additional $457 million.
The recession has hurt the authority’s revenues, particularly in the collection of dedicated tax revenue. The real estate market bubble boosted revenues for the MTA but the bust has been painful. Dedicated real estate taxes are projected to be $432 million in 2010, rising to $499 million in 2011. At the height of the market in 2007, those taxes brought in $1.6 billion to the MTA.
Recurring cuts and streamlined operations already approved or enacted will save the authority an estimated $381 million in 2010 and create recurring annual savings of about $525 million.
Late last year the state cut $143 million of aid allocated to the MTA as it dealt with its own fiscal troubles. At the same time, dedicated tax revenue came up short. Those two factors created an $540 million gap in 2010 that combined with shortfalls at the end of 2009 totaled more than $900 million.
The Legislature in May enacted a payroll tax — known as the payroll mobility tax — in the 12 counties served by the MTA as a major piece of a rescue package for the authority. The MTA plans to use the tax to pay for the first two years of its $26.27 billion five-year capital plan. How that will happen is not certain.
Authority officials last year said they expected to create a stand-alone credit to secure bonds using the PMT but needed to see how it performed first. MTA officials are still undecided on whether to create a standalone credit, though it remains a possibility. The authority has sold short-term debt secured primarily by the PMT, but for now it assumes it will continue to sell transportation revenue bonds.
The tax faces two legal challenges. Last month the town of Brookhaven and the William Floyd Union Free School District, both in Suffolk County, filed lawsuits against the state, MTA and state officials seeking relief from the PMT and a stay against further collections of the tax. The MTA said in its most recent official statement that the claims are without merit.
Debt service is projected to grow to $2.05 billion in 2011, compared to $1.8 billion in 2010.
The preliminary budget calls for labor to agree to keep wage costs flat for two years whenever a collectively bargained contract is up for renewal. After that, costs would then rise at the rate of consumer-price indexed inflation.
Under the plan, any increases in wages or benefits would have to be offset by savings elsewhere, such as increased productivity.
This year, the MTA has reduced head count through attrition, layoffs and elimination of vacant positions. In November 2009 the agency had 69,762 employees or unfilled positions. By the end of 2010 that will be reduced to 66,292 employees or unfilled positions
The MTA operates the nation’s largest mass transit system as well as tolled bridges and tunnels, serving the New York City metropolitan area.