[NYC4Life]

NY Times

M.T.A. Approves Austerity Budget

By WILLIAM NEUMAN
Published: December 17, 2008

The board of the Metropolitan Transportation Authority on Wednesday approved an austerity budget for 2009 that calls for painful cuts in bus, subway and commuter rail service and a steep increase in fares and tolls, all aimed at plugging a $1.2 billion deficit.

In virtually the same breath, officials at the authority appealed to lawmakers in Albany to pass a financial rescue plan that would soften the fare and toll increase and avoid most of the service cuts by creating a dedicated payroll tax and charging tolls on bridges over the East and Harlem Rivers.

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, starting in June. A monthly unlimited-ride MetroCard could rise to more than $100, from $81.

The success of efforts to help the authority are far from assured, as the state grapples with its own budget crisis. On Tuesday, Gov. David A. Paterson unveiled a budget proposal for the state that included dozens of increased taxes and fees. That means a bailout of the authority would compete with other powerful interests, including advocates for schools and hospitals, for scarce government dollars.

The authority’s $11 billion budget calls for a 23 percent increase in revenues from fares and tolls.

Next week, the authority will issue a public notice for hearings on the fare and toll plan that will set the maximum possible increases. About a week or so after that, the authority will detail the expected increases to the base subway and bus fare, unlimited-ride MetroCards, commuter rail fares and bridge and tunnel tolls.

The authority and its supporters must now focus their efforts on building support among elected officials in the state and city.

That effort will be spearheaded by Richard Ravitch, a former authority chairman who led a state commission, appointed by Governor Paterson, that proposed the rescue package for the authority. That package calls for a payroll tax of a third of a percent, to be paid by businesses in the region served by the authority.

The tax would generate an estimated $1.5 billion a year to plug the immediate budget gap and, in the long term, help pay for capital expenses to modernize and maintain the transportation system.

The package also calls for tolls on the bridges over the East and Harlem Rivers, with the money, about $600 million a year, going to expand bus service in the region. It would raise revenues from fares and existing tolls by 8 percent and eliminate the need for most service cuts.

The authority’s executive director, Elliot G. Sander; its chairman, H. Dale Hemmerdinger; and several board members said they would work to persuade lawmakers to pass Mr. Ravitch’s plan.

Officials at the authority have said privately for months that they hoped that the State Legislature would pass a rescue plan before it became bogged down in broader budget issues. And they feared that if that did not happen, they would wind up in a bruising brawl with other interests over state support.

“The Legislature has understood for some time that the M.T.A.’s situation would be resolved in the context of a very difficult budget,” Assemblyman Richard Brodsky, a Democrat from Westchester, said on Tuesday, after the governor released his budget proposal. “This is not going to be easy.”

Meanwhile, 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 quickly.

The authority said that an important source of revenue — taxes on real estate transactions — was running well below the latest forecast for the month, a figure that had already been revised downward several times.
Those real estate and mortgage taxes brought in $37 million this month, compared with $103 million in the same period last year, Gary J. Dellaverson, the authority’s chief financial officer, told 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. The authority receives those revenues in a lump sum in the middle of each month.

But the reality turned out to be even worse, missing the mark by $27 million. Mr. Dellaverson also 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.



Copyright 2008 The New York Times Company