Municipal Government

MTA Under Fire – Walder Pledges to Continue his Capital Plan

By Bendix Anderson
October 18, 2010

After months of outrage and public outcry, the board of the Metropolitan Transit Authority (MTA) voted October 7 to raise fares 8 percent.

Fare hikes are just part of massive campaign of MTA layoffs and service cuts — but construction workers have cause for relief. The MTA is going ahead with most of its capital plan to rebuild its infrastructure, a plan which will hire tens of thousands of workers.

“We have not stolen from our capital program the close our operating deficit,” said Jay H. Walder, MTA’s Chairman and CEO, at the September meeting of the New York Building Congress.

State budget cuts and falling tax revenue carved a $900 million hole in the MTA’s budget for 2010. The State Legislature alone cut about $140 million earmarked for the MTA.

To fill the gap, the MTA has cut $500 million from its annual operating budget. “These are recurring savings that we will achieve year after year,” said Walder. “We’ve eliminated more than 3,500 positions, including 20 percent of our Headquarters operation.”

The MTA also renegotiated contracts with suppliers, cut projects from its operating budget, and plans to cut $54 million from its overtime expenses in 2010.

Controversy came with the budget cuts. The MTA had a long public fight earlier this year over the layoffs of more than a hundred token booth workers and another fight over proposed cuts to student MetroCards.

The latest budget cuts and fare hikes this year are in addition to service cuts earlier this year and a 10 percent increase in fares and toll in July 2009.

“Further service reductions or higher fare increases would signal management’s failure to deliver on its promise to overhaul MTA operations,” said New York State Comptroller Tom DiNapoli in a September audit.

Capital plan preserved — for now
But despite the budget crunch, the MTA is continuing with most of its $26 billion capital plan, which runs from 2010 through 2014. The plan is now only $2 billion smaller than the $28 billion capital plan proposed in August 2009.

The plan will continue to restore and modernize the existing system, complete the East Side Access project and the first phase of the Second Avenue Subway, and examine future expansion projects. It will create 20,000 new jobs per year and $37 billion in economic activity. “It will create jobs from Ronkonkoma to Tonawanda, from Bay Shore to Buffalo,” says Walder.

The plan will also cure vulnerabilities in the system, like a switching machine, that caught on fire August 23, shutting down the Long Island Railroad for a week.  That machine had originally been installed in 1913. “There are similar vulnerabilities, the equivalent of 1913 infrastructure, across our entire system,” said Walder.

However, the State Comptroller estimates that the $26 billion capital plan will cover only two-thirds of the MTA’s total infrastructure needs. In addition, only the first two years of the plan are now funded. The program has a $9.9 billion budget gap for its last two years — the MTA projects that state and local governments will step forward to fill the gap. In addition, the funded part of the plan includes $4.4 billion in borrowing through a bond issue.

If state and local governments fail, once again, to contribute, the entire budget hole could be filled with borrowing by issuing bonds. However, “Such a heavy reliance on debt would place a serious burden on the operating budget, just as heavy borrowing in the past has contributed to the MTA’s current fiscal crisis,” according to the State Comptroller’s audit.

October 18, 2010

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