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April 23, 2010

 

DiNapoli: Fare Hikes May Be Steeper Unless MTA Controls Costs

Agency Must Focus on Eliminating Waste, Inefficiency to Avoid More Cuts in Service

Fare and tolls may increase faster than currently planned by the Metropolitan Transportation Authority (MTA) unless it controls unnecessary costs, warned State Comptroller Thomas P. DiNapoli in a report issued today. While the MTA is making progress closing a $756 million budget gap, the Comptroller estimates that a $319 million gap remains in the current year. Moreover, the gap could grow to $405 million depending on the success of certain gap-closing measures. Next year’s gap already totals an estimated $537 million and could reach $860 million without aggressive measures to cut unnecessary spending and waste at the agency.

“The MTA has to squeeze out every penny of wasteful spending,” DiNapoli said. “Mass transit has to be affordable for working New Yorkers. The MTA should focus on eliminating waste rather than cutting services and raising fares. My office has found administrative redundancies and outside contracts where savings can be achieved. Chairman Walder has made some progress, but so much more needs to be done.”

The DiNapoli report indicates the combination of service cuts and fare increases already planned by the MTA may not be sufficient to address the severity of the budgetary imbalance. Further, the MTA board still has not been presented a comprehensive plan to close this year’s gap. In December 2009, the MTA faced a new budget crisis when funding was reduced to the MTA as part of the efforts to close the State’s budget gap; a labor arbitration panel ruled against the MTA; and revenue from the new mobility tax, which was expected to generate $1.1 billion in 2009, fell short of target. The MTA estimates these developments created a $412 million budget gap for 2010 and increased the size of the out-year budget gaps.

The MTA has proposed raising fare and toll revenue by 7.5 percent on January 1, 2011, which would generate $408 million in that year, and by another 7.5 percent on January 1, 2013. Unless the MTA successfully reduces costs or, less likely, obtains additional governmental aid, fares and tolls may increase sooner or faster than currently planned.

DiNapoli’s report also found that:

  • MTA spending has grown at an average annual rate of 7 percent during the past five years, more than twice the rate of inflation and far faster than recurring revenue;
  • The MTA’s outstanding debt totals about $27.5 billion, 54 percent higher than it was five years earlier. Debt service totaled $1.4 billion in 2009 and is projected to reach $2.2 billion by 2013. In 2004, the MTA paid $848 million in debt service;
  • Since 2002, the MTA has raised fares and tolls by nearly 44 percent, and it plans to raise fare and tolls by at least 15 percent over the next three years; and,
  • Energy costs have nearly doubled from $261 million in 2003 to $498 million in 2009, and are expected to grow to $802 million by 2013.
  • Collections from the new mobility tax and real estate transactions have been weak, and could fall short of the MTA’s revised expectations.

Click here for a copy of the report

 

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