Tuesday, December 8, 2009

After $200M state error, a $343M MTA shortfall

The Metropolitan Transportation Authority will end 2009 where it begin: amidst a financial crisis that could lead to service cuts — but hopefully no fare hikes — in 2010.

In an e-mail to the MTA Board members this afternoon, MTA CFO Gary Dellaverson said that, in addition to the $143 million in state appropriations cuts, the MTA is now facing the reality of a shortfall in the payroll tax collections that will reach approximately $200 million. In total, the MTA’s 2009 revenue totals will miss expectations by $343 million, and although the agency can roll this cuts over into 2010, the MTA faces, in the words of Dellaverson, some “very difficult choices” as it prepares its balanced budget for next year.

“Receipts from the recently enacted mobility tax now appear to be under-running projections by about $200 million for this calendar year,” Dellaverson said. “This is a shocking development both because of the magnitude of the under-run (about 20%) and the late date of its discovery. As recently as last week, the State was continuing to advise us of their comfort with the forecast. We do not yet know what is causing these disappointing results. While compliance and timing may be a part of the answer, there is a substantial disconnect from the current performance of other similar tax sources.”

MTA officials were prepared for the original $143 million in state cuts, but this new shortfall caught them by surprise. “It’s the extra $200 million that’s really painful,” MTA spokesperson Jeremy Soffin said.

Although the MTA has long borne the brunt of a public skeptical of its ability to manage its own finances, officials at the agency and outside transit watchdogs stressed the state’s role in this new found gap. Jeremy Soffin called it, a “significant unraveling of the rescue package passed by the Legislature in the spring.”

Gene Russianoff of the Straphangers Campaign was more pointed in his ire toward Albany. “The Campaign,” he said in a statement, “calls on Governor Paterson to investigate whether New York State Department of Taxation and Finance has adequately administered and enforced the new payroll tax and on the MTA to redouble its efforts to find new administrative savings and financial actions that will maintain current fare and service levels in 2010. In 2010, both the governor’s office and the State Legislature are up for election. Hundreds of thousands of riders will not take kindly to broken promises on decent and affordable transit.”

While we await a state response to this Albany accounting error, the MTA is springing into action. The agency’s fiscal year ends at the end of the calendar year, and the Board is under a legal obligation to approve a balanced budget before the end of the month. Furthermore, the agency has committed to avoid a fare hike in 2010 but has plans to raise fares in 2011 and 2013. “It remains our intentions to stick with that understanding on the fare schedule,” Soffin said.

So the agency will look to roll this budget problem into 2010, and as Dellaverson turns his gaze internally, agency spokespeople could not say how the MTA would cover a gap. Service cuts remain on the table, and Jay Walder, the new CEO and Chairman, will continue his initiative to “overhaul with how the MTA does business.”

Furthermore, the MTA is now putting a $350 million bond issuance on hold until the agency board has a chance to review the budget.

All in all, this news caps a turbulent fiscal year for the MTA, and it is news we all could have done without. The agency has promised to “be as transparent as possible about where we were, what caused the situation and what we’re trying to do,” and Dellaverson will have an updated budget proposal when the Board’s Finance Committee meets next Monday.

Still as the authority looks for guaranteed revenue sources, as state calculations continue to fail, the East River Bridges remain free, and congestion pricing is but a glimmer in the eyes of transit advocates. As 2009 nears its end, this story is far from over.

1 comment:

  1. When I hear that the MTA is in need of more $ I want to do a Whitney Houston and say "Show me the receipts!" Come on, you mean to tell me that NOBODY thought to themselves "Gee, we're in a recession and there might be more jobs lost so lets adjust our payroll tax figures to what the current unemployment rate is +15-20% more just to be safe" I mean these people get paid the big bucks and they hold our jobs in their very hands because face it we need them to get to work.

    After numerous "Oppsies" by the MTA I feel that we really need to have a federal commission come into the MTA and look at the companies assets and liabilities with a fine tooth comb. If they own real estate that is not being used they should sell it, if they are spending foolishly (like having workers being paid to be idle) they should cut it out immediately and finally the board should be replaced from top to bottom because it's apparent that they do not have yours and my interest at heart.