New York’s Metropolitan Transportation Authority intends to cut nearly in half the size of its planned fare and toll increases for 2015 and 2017, its chief financial officer said.
According to Robert Foran, who delivered the November financial plan for 2014 through 2017 to the MTA board on Wednesday, the biennial hikes will be 4% rather than 7.5%.
Foran cited favorable re-estimates and other changes since July, such as higher passenger and toll revenues, higher real estate receipts and paratransit savings, lower health, welfare and pension re-estimates, and reduced debt service.
The balance sheet since July is net favorable by a cumulative $791 million over the four years, according to Foran. “That’s the bottom line of all the puts and takes, pluses and minuses,” he told board members in Midtown Manhattan.
Previous biennial hikes imposed as part of a New York State aid package in 2009 were 10% and two more of 7.5%. “We needed to change that dynamic,” MTA chairman and chief executive Thomas Prendergast told reporters after the meeting.
Two months ago, state Comptroller Thomas DiNapoli urged the MTA to modify the fare hikes, pointing out that the authority’s financial condition had improved of late and that since 2007, the authority has raised fares by 29%, more than twice the inflation rate.
“The MTA’s fare hike reduction is good news for commuters. In difficult economic times, any relief from rising fares and tolls will help ease the financial burden on New Yorkers,” DiNapoli said in a statement Wednesday afternoon.
The authority is one of the largest issuers in the municipal marketplace with roughly $32 billion in debt. Moody’s Investors Service rates the MTA’s transportation revenue bonds, primary form of issuance among four major credits, A2. Standard & Poor’s and Fitch Ratings assign A ratings.
The board, by state law, must vote next month on the 2014 budget and four-year financial plan.
The adjustments to fare and toll hikes would reduce revenues by $905 million over four years. Foran said annual cost reductions would total $500 million over that time, and the authority will pursue other savings initiatives such as early payment of vendors, reducing Internet technology costs and consuming less energy.
Foran said the MTA is holding its fiscal 2014 budget increase to just under 2%. It also increases its annual pay-as-you-go capital commitment by $40 million to $370 million, beginning in 2015, to effectively serve as a down payment for the 2015-2019 capital program; invests $217 million in new operational and maintenance needs; maintains other post-employment benefits contributions to deal with an $17.8 billion unfunded liability; and eliminates deficits in 2014 through 2016 with a “manageable” 2017 deficit of $191 million.
Foran, however, warned that the financial plan and capital program hinge on a “net zero” agreement with labor, in which any pay raises over three years would feature tradeoffs of comparable value such as worker efficiencies or reduced health benefits or efficiencies. Failure to achieve that could cost the authority $300 million annually, as would the loss of the payroll mobility tax, which upstate communities frequently challenge in court.
“Either of these risks would increase by $1.2 billion over the plan period,” said Foran, and would require significant one-shot, or stop-gap items, additional fare hikes, reduce MTA funding capacity by $5.3 billion, or implement more than three times the 2010 service reductions.
“It’s a difficult balancing act, but one that we will continue to do,” said Prendergast.
Some board members questioned whether the authority to continue restoration of the 2010 service cuts.
Board member Charles Moerdler said transit workers deserve unconditional raises. “It’s illusory and inappropriate to have triple [net] zeroes. People are entitled to a living wage,” he said.
The MTA is in ongoing discussions with Transport Workers Union Local 100. Their contract expired Jan. 15, 2012.