New York City M.T.A. Approves Cuts

Stephen Millies being carried away by New York City police after he strongly objected to the new Metro Transit System austerity budget. He works with the Bailout the People campaign. (NYT Photo).
Originally uploaded by Pan-African News Wire File Photos

December 18, 2008

M.T.A. Approves Cuts but Seeks Help

By WILLIAM NEUMAN
New York Times

Facing its worst financial crisis in decades, the Metropolitan Transportation Authority approved an austerity budget for 2009 on Wednesday that calls for painful cuts in transit service and a steep increase in fares and tolls.

But the first service cuts and the fare increase were delayed until the spring, providing time for state lawmakers to enact a rescue package to shore up the authority’s teetering finances. Even as they passed the $11 billion budget, many of the authority’s board members said they would begin pressing elected officials to back a rescue plan.

“What I’m going to do, and I know a lot of other people on this board are going to do, is go up to Albany, look our lawmakers in the eye, and say to them, ‘Why can’t you put transit first on the agenda for a change?’ ” said Doreen M. Frasca, a board member.

She said that halting transit cuts was crucial to helping the city recover from the deepening recession. “Investments in transit are the only thing that are going to get this economic ox out of the ditch,” Ms. Frasca said.

The agency’s budget includes a 23 percent increase in fare and toll revenues, to start in June, and cuts in subway, bus and commuter rail service in much of the region, some of which would start earlier. The measures are needed to help close a $1.2 billion deficit.

Jeremy Soffin, a spokesman for the authority, said that the first cuts would include the closing of some subway station booths, eliminating customer service agents in subway stations and cutting back off-peak bus service, all of which could begin as early as May. Some other major changes, like the elimination of the W and Z subway lines, would not take place until late in the year.

Authority officials have said that any bailout must be approved by March. Mr. Soffin said that hearings on the details of the fare increase and service cuts will begin in January and the board will probably vote on them in March. Planning for the service cuts, including new work assignments for employees and possibly preparing for layoffs, can take months, he said.

The focus now turns to Albany and the bailout plan proposed by Richard Ravitch, a former authority chairman, who led a state commission to address the authority’s fiscal woes. His plan would impose a regional payroll tax generating $1.5 billion a year and tolls on the East River and Harlem River bridges, which would raise $600 million more. The plan, if enacted, would limit next year’s fare and toll increases to 8 percent and would stave off most service cuts.

If the authority does not receive new sources of revenue, it seems likely that the base subway fare could rise to at least $2.50, from $2. A monthly unlimited-ride MetroCard could rise to more than $100, from $81.

The Ravitch plan has the support of Gov. David A. Paterson, but it is far from clear how it will be received in the Legislature.

Efforts to help the authority are complicated by the state’s own budget crisis. On Tuesday, Mr. Paterson unveiled a budget proposal for state government that included dozens of increased taxes and fees. Officials fear that the authority will have to compete with other powerful interests, including supporters of schools and health care services, for scarce government dollars.

Tim Gilchrist, the governor’s deputy secretary for economic development and infrastructure, said on Wednesday that he was preparing legislation to carry out the Ravitch plan that would be presented to the Legislature early next month. He said the hope was that action could be taken early in the year, well before the state budget deadline in April.

“The earlier it’s wrapped up, the earlier we can calm people’s fears down,” he said.

Mr. Ravitch said he was “increasingly optimistic” about his plan’s prospects, noting that it had received support from business and environmental groups.

“I’m spending most of every day talking to people,” he said. “I’m talking to individual elected officials all the time and I’m very encouraged.”

But he said there was no coordinated lobbying strategy for the plan and that he had not heard from authority board members with offers of help in approaching lawmakers.

The board voted 13 to 1 to approve the budget during a lengthy meeting at its Midtown headquarters. The meeting was disrupted by a man who took off his shoe and was hustled out by police who feared he was going to throw it at the authority’s chief executive, Elliot G. Sander. The man, Stephen A. Millies, was charged with disorderly conduct.

The only board member who voted against the budget was Norman I.Seabrook, head of a municipal labor union.

“We are being pawns in a game between the city and the state,” he said, calling on state and city officials to provide more money for the authority. “We’re the ones who have to pull the trigger on something that makes no sense. We’re the bad guys.”

Several other board members called the service cuts and fare increases in the budget unacceptable but said they were voting for them in the hopes that the cuts would force the state to find more revenues for the authority.

Under the service cuts, the authority would run fewer trains and buses during off-peak periods and on weekends, meaning more crowding and longer waits. Among other changes, the W and Z subway lines would cease to exist; late-night service would be eliminated on 25 bus routes.

There were indications that the doom and gloom may not end with the passage of the budget, and that the authority’s finances could become much worse very quickly.

The authority said this week that an important source of revenue — taxes on real estate transactions — was running well below recent forecasts, which had already been revised downward several times to account for the economic downturn.

Those real estate and mortgage taxes brought in $37 million this month (the proceeds are received by mid-month), compared with $103 million in the same period last year, Gary J. Dellaverson, the authority’s chief financial officer, said at a meeting of the board’s finance committee on Monday.

“This is a really sobering number,” Mr. Dellaverson said. “This does show how frightening this economy can be in terms of our sensitive taxes.”

He said the authority had tried to be very conservative in predicting real estate transaction tax receipts as the economy worsened, basing its forecasts on projections made by the city.

He said that projections of December’s tax receipts had repeatedly been reduced as the year progressed, falling to $88 million from $99 million before finally being revised down again only a month ago, to $64 million.

But the reality was even worse, missing the mark by $27 million.

Mr. Dellaverson warned that the authority’s budget relied on similar forecasts for other taxes, like a portion of the sales tax and a surcharge on corporate income taxes, that could decline sharply along with the economy.