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September 27, 2010



DiNapoli: Risks Identified in MTA Financial Plan

Proposed Gap Closing Plan Relies Heavily on Service Cuts, Fare Hikes



The Metropolitan Transportation Authority (MTA) faces a budget gap of more than $1 billion next year, which could more than double to $2.1 billion by 2014 unless the MTA begins to drive more efficiencies in the way it does business, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. The report found that fare increases and service reductions account for 57 percent of the MTA’s gap-closing program, and many of the proposed management initiatives to improve worker productivity and reduce costs still need to be implemented.

“We’re seeing the effect of the recession and years of undisciplined bloat and inefficiency,” DiNapoli said. “The MTA’s current administration is working to close its budget gap, but commuters and taxpayers are demanding results. The MTA needs to change the way it does business. Repeated fare hikes and service cuts can’t change a culture of complacency. My office has identified more than $296 million in waste and savings opportunities over the last year alone, and we recently began a forensic audit of the MTA’s $600 million overtime budget. These are tax dollars. Inefficiency and complacency just don’t cut it.”

DiNapoli’s review of the MTA’s financial plan identified $264 million in budget risks for 2011, more than one-quarter of the gap-closing program’s value in that year, $404 million in 2012, $515 million in 2013, and $551 million in 2014. Among the risks cited were anticipated savings in the paratransit program, labor costs, overtime, and from unspecified future actions and reducing the MTA’s subsidy for Long Island Bus. These risks would remain even after the MTA raises fares and tolls by 7.5 percent in 2011 and again in 2013.

DiNapoli’s report also found that the MTA’s scaled-back five-year capital program still has a $9.9 billion funding gap and only the first two years are fully funded. The MTA assumes that the state and local governments will fill the gap, an optimistic assumption in the current economic environment.

The MTA raised fares and tolls by 10 percent in July 2009 and plans to raise them another 15 percent over the next three years—more than three times faster than the rate of inflation. The impact on commuters of future fare increases will be magnified if the two-year expansion of the federal tax break for mass transit is allowed to expire on December 31, 2010.

Last month, DiNapoli announced his office was initiating a forensic audit of the MTA’s overtime practices to examine how the MTA manages this significant cost driver.  DiNapoli’s office has completed 12 audits and 11 reports examining MTA finances and operations since 2007. The office also issued a
summary report of these efforts, highlighting $296 million in wasteful spending and savings opportunities. The report reiterates DiNapoli’s recommendations that the MTA:

  • Maximize revenue-generating opportunities from its vast real estate portfolio;
  • Improve bus fuel-purchasing practices, which cost the MTA an extra $39 million, and;
  • Reduce its reliance on personal and miscellaneous services contracts, which cost an average of $1.5 billion annually.

Click here to download copies of the financial report and the summary report, or visit www.osc.state.ny.us.

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