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August 27, 2008


Comptroller DiNapoli Calls for MTA
to Hold Off on Fare Hikes

Report: MTA Should Work With the State and City to Develop a
Comprehensive Plan to Finance Mass Transit

The Metropolitan Transportation Authority (MTA) should hold off on its fare hike plans until after the City and the State have fully considered the recommendations of the recently established congestion pricing commission and the MTA’s proposed five-year capital program, New York State Comptroller Thomas P. DiNapoli said in a report released today. The MTA has proposed raising fares and tolls in early 2008 and again in 2010 to help address sizeable looming budget gaps.

“The MTA should put New York’s commuters first,” DiNapoli said. “Before the MTA asks for more money from straphangers, it should develop a coordinated strategy with the State and City to balance its operating budget and to finance the next five-year capital program.

“The MTA has taken some good first steps to develop a long-term plan for its future fiscal health. But talk of a fare hike is premature. The City is trying to reduce congestion and encourage greater use of mass transit. Any fare increase should be the last piece of a comprehensive plan, not the first.”

The DiNapoli report shows that the MTA does not need a fare hike to balance its 2008 budget. The MTA forecasts a 2008 cash balance of $323 million. In addition, the MTA’s financial plan includes $516 million in reserves, and another $781 million that the MTA and the State plan to use for purposes other than balancing the budget.

However, under the MTA’s current timeline, the authority board would vote on a fare and toll hike this December. The MTA has proposed raising fares and tolls by 6.5 percent in 2008 in an effort to balance its budget in 2009 and another 5 percent in 2010 as part of its plan to index fares to inflation and to implement adjustments every other year. The MTA board vote would occur shortly before the Governor releases an Executive Budget that could include unanticipated new resources for mass transit, and before the State Legislature considers in March the recommendations of the congestion pricing commission, which also could result in new resources for mass transit, the DiNapoli report indicates.

“The MTA needs a commitment from its traditional financing partners so it can balance its operating budget and finance needed capital improvements while keeping mass transit affordable to commuters,” DiNapoli said, noting that the MTA will be unable to guarantee that future fare increases will be limited to inflation if it does not receive more assistance from its partners.

The DiNapoli report also shows:

  • Although the MTA’s July Plan forecasts a record year-end cash balance of $960 million for 2007, it expects budget gaps to grow to nearly $2.1 billion by 2011 from $965 million in 2008;
  • Authority spending is projected to exceed the level projected by the MTA two years ago by an average of about $435 million during each of calendar years 2007 through 2009;
  • The MTA saved only $12.3 million from management actions planned for 2006, which is just 41 percent of its target savings;
  • The MTA will need $18.8 billion to maintain the existing mass transit system and additional funds to continue key expansion projects;
  • Debt service — which is expected to grow to $2 billion by 2011 from $1.3 billion in 2006 — and health insurance costs will grow to account for nearly half of the 2011 budget gap; and,
  • The MTA plan to narrow the out-year gaps assumes it will receive more than $600 million annually in new governmental aid beginning in 2010. If these or other anticipated resources do not materialize, the MTA will face budget gaps that exceed $1 billion beginning in 2010. Closing a gap of this magnitude would require fare and toll increases of 20 percent on top of the MTA’s proposal to raise fares and tolls by 11.5 percent by 2010.

The report also notes that ridership on subways, buses, and commuter rails has reached the highest level in decades, increasing by 2.5 percent in 2006, and is projected to rise by an additional 1.6 percent this year.

Click here for a copy of the report.

Click here for mp3 audio.

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