September 24, 2008
DiNapoli: MTA Faces $522 Million Budget Gap for 2009
Wall Street Downturn Could Hurt Chances for Additional State and City Aid
The Metropolitan Transportation Authority (MTA) must develop a contingency program because its gap closing program relies too heavily on additional State and City assistance, which may not fully materialize given the recent developments on Wall Street, according to a report New York State Comptroller Thomas P. DiNapoli released today.
“The turmoil on Wall Street has created serious fiscal challenges for the City and the State, which will likely limit their ability to provide additional assistance to the MTA,” DiNapoli said. “To its credit, the MTA has directed its agencies to develop contingency plans, but the focus must be on administrative costs, not service cuts. Like everyone, the MTA has to learn to do more with less.”
The report also expressed concern that the Wall Street downturn could further erode tax collections and result in job losses that could ripple through the regional economy, resulting in lost ridership.
In July, the MTA projected operating budget gaps, on a cash basis, of $1.1 billion in 2009, $1.9 billion in 2010, $2.1 billion in 2011, and $2.3 billion in 2012. These gaps represent 11 percent of revenue in 2009 and more than 22 percent of revenue by 2012. The DiNapoli report found that while the MTA’s budget gap estimates were reasonable when they were presented in July, the State has lowered its forecast of dedicated transit taxes by $381 million over the financial plan period.
To balance the 2009 budget and narrow the budget gaps for subsequent years, the MTA has proposed a $6.4 billion gap-closing program. The report found that the gap-closing program is risky because it relies so heavily on actions that are either outside the MTA’s direct control or are still unspecified. Nearly half of the resources are expected to come from additional State and City aid. Less than one quarter would come from internal actions, and 37 percent of those savings remain unspecified.
After assessing the gap-closing program and other risks, the report concluded that the MTA still faces budget gaps of $522 million in 2009, $1.4 billion in 2010, $1.6 billion in 2011, and $1.8 billion in 2012. DiNapoli noted that even if all of the MTA’s gap-closing measures were successful, it would leave a gap of $250 million in 2010 – or the equivalent of a five percent fare hike. The MTA must have balanced budget for 2009 in place before the year begins.
Compounding the problem is a lack of resources to fund the MTA’s 2010-2014 capital program, which is needed to maintain and expand the system. According to the DiNapoli report, the next capital program has a funding gap of at least $15 billion.
The DiNapoli report also found that:
Click here for a copy of the report.