The MTA is the fifth−ranking debtor in the United States, a predicament that means that by 2015, its debt payments will take a quarter of its income.
Only California, New York state, New York City and Massachusetts owe more, according to financial reports. The Metropolitan Transportation Authority is facing a $1.2 billion budget gap that the agency says could reach $2 billion by later this year.
How did the MTA get into such straits?
Perhaps the single biggest reason is it was forced to borrow more than $24 billion to pay for its Capital Program. That includes gigantic projects like the Second Avenue subway, the East Side Access to bring Long Island Rail Road trains into Grand Central Terminal, purchasing new subway cars and buses and some types of maintenance. The day−to−day operation of the transit system is another matter.
The Capital Projects get periodic federal cash infusions, but on the condition of local cash contributions.
“The MTA was going to need major contributions of money for these capital projects,” MTA Executive Director Elliot Sander told a group of community newspaper reporters recently. “The administration of Gov. [George] Pataki said ‘borrow it.’ ”
Transit activists point out that the administrations of Mayors Rudolph Giuliani and Michael Bloomberg have also been stingy in aid to mass transit.
Observers might ask why build these super expensive projects in light of present conditions? But transit experts point out that planners expect another million people in the city in the next 25 to 30 years and the transit system is already carrying a near−record number of straphangers with some subway lines well over capacity.
They maintain the expansion must go ahead if New York expects to remain the world’s financial capital.
Another important reason the MTA is broke is the precipitous plunge of the real estate market. The MTA had, for years, been flush from fees and receipts on mortgages, transfers and taxes on transactions in what had long been a hot city real estate market.
That market started to cool more than a year ago, with MTA Chief Financial Officer Gary Dellaverson calling the results “scary” and “disastrous.”
Shortly after the real estate slump slashed the real estate fees for the MTA, the agency had to cancel $30 million worth of new bus service it had promised.
Pension costs for its nearly 70,000 MTA employees, including 33,700 bus employees and subway track and other types of workers, are also a major factor.
Finally, 550,000 city schoolchildren benefit from half−fare MetroCards. New York City and state both have recently cut back on their contributions to the subsidies for discount school MetroCards.
Reach contributing writer Philip Newman by e−mail at email@example.com or phone at 718−229−0300, Ext. 136.
©2009 Community News Group
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