Archive for November 2014

Paying a high price for the woeful MTA – By George J. Marlin

November 16, 2014

The following appears in the November 7-13, 2014 issue of the Long Island Business News:

For most New Yorkers, the Metropolitan Transit Authority is an enigma. At best, they see the MTA as a maze of poorly managed transportation agencies that stick them with the tab for fiscal and operational incompetence.

Created by Gov. Nelson Rockefeller in 1968, the MTA consolidated, under one state-controlled oversight board, three ailing commuter systems: Long Island Rail Road, the New York City Transit Authority and Metro-North Railroad, plus the prosperous Triborough Bridge and Tunnel Authority.

The key component of the Rockefeller initiative was the TBTA, because its toll-collecting facilities were generating significant annual surpluses. Instead of lowering tolls to reduce the burden on commuters, the surplus money was allocated to cover the operating deficits of the other MTA transit operations. This arrangement, the political class proclaimed at the time, would be the panacea for all mass-transit ills.

Alas, it was not to be. Misuse of capital-project funds, public-employee union pandering and fiscal slight-of-hand not only sucked up the TBTA surplus, but forced toll and fare increases time and again.

Gov. George Pataki, for instance, inflicted great harm on the MTA when he recklessly refinanced MTA debt in 2002. He approved $12 billion of restructuring that produced limited short-term savings and extended debt due to be paid off between 2015 and 2032. E.J. McMahon of the Empire Center for New York State Policy wrote at the time that Pataki’s actions “weakened the agency’s infrastructure budget for a generation.”

In 2009-2010, the MTA had to borrow to meet its payroll and deferred pension payments to the tune of $125 million. To stem the hemorrhaging, Gov. David Paterson and the state Legislature further picked the pockets of taxpayers by imposing a “regional payroll tax.”

Pandering to unions has resulted in a majority of the MTA’s 68,000 employees making more than $100,000 a year. In 2013, the average pay of MTA police was $125,000. The Empire Center reports that among non-police operating subsidiaries, LIRR employees were the MTA’s highest-paid workers, earning an average of $84,000, with 28 percent of railroad employees receiving more than $100,000 – including 166 who more than doubled their base pay with overtime and other extras. And these figures don’t include the 7.5-percent retro pay included in the giveaway election-year contract deal Gov. Andrew Cuomo cut with LIRR unions.

To add to the MTA’s woes, State Comptroller Tom DiNapoli reported in October that “significant challenges remain, in particular, closing the unprecedented funding gap in its proposed five-year capital program.”

The DiNapoli Report revealed:

  • Cuomo’s labor agreements will cost $1.5 billion more than originally budgeted.
  • Non-pension, unfunded retirement and post-employment benefits (i.e., healthcare insurance) at the end of 2012 totaled $19.9 billion.
  • Capital-program bonded debt is expected to reach $39 billion by 2018, more than double the 2003 level.
  • Overtime is projected to hit $801 million in 2014, 30 percent higher than four years ago.
  • The 2015-2019 capital projects plan, which totals $32.1 billion, has a funding gap of $15.2 billion.

These dismal findings explain why the MTA raised tolls and fares between 2007 and 2013 by 29 percent, more than twice the inflation rate.

While it’s projected that tolls and fares will go up another 4 percent in 2015 and 2017, that may not be enough if the MTA proceeds with its $32 billion building plan. Closing the capital program’s funding gap through borrowing “would put added pressure on fares and tolls,” DiNapoli concluded, noting every $1 billion borrowed increases debt service by an amount comparable to a 1-percent increase in fares and tolls.

Not a pretty picture. And commuters and taxpayers will, as always, be shelling out more of their hard-earned dollars to pay for the fiscal follies of inept and shortsighted pols.