Despite calls from angry straphangers and policy groups, the MTA did not use its entire $330 million in additional revenue to thwart this year’s fare hikes. Last Thursday, the agency approved fare hikes and service cuts, including raising fares, tolls, and closing 164 subway station booths. 600 station booth clerks will now roam the stations as "customer service agents." The measures will raise an estimated $234 million for 2005’s operating budget. All 17 MTA board members, except Mayor Bloomberg’s four NYC representatives, voted for the hikes.

The MTA placed $200 million in a "rainy day fund" to help reduce possible shortfalls after 2005, but transit advocates insisted that the funds be applied to the deficit the agency decided to fill with the fare increase.

The fare increases may balance the 2005 budget, but the MTA operating deficit is expected to skyrocket to over $1 billion by 2006. While there are proposals for how to pay for the next construction program, there has been little mention of how the MTA will pay for day-to-day costs after 2005.

The huge future operating deficits are due to billions the transit system has borrowed to pay for capital improvements. Debt payments on these bonds will increase to a whopping $1.6 billion in 2007. If Governor Pataki does not come to the agency’s rescue, riders will pay this bill in the form of large, frequent fare hikes, which at some point will start to drive people out of the transit system. Unfortunately, transit advocates and civic leaders predicted these budget woes years ago (MTR #s 264, 275, 249).

Governor Pataki’s third term in office has not been kind to subway, bus and commuter rail riders.

LIRR and Metro-North riders saw an average increase of 25% in 2003, and will see up to a 15% additional increase this year.

Focus Shifts to Capital Program

Now that conversation over the MTA’s 2005 operating program is over, elected leaders and transit advocates will shift attention to the agency’s 2005-2009 capital plan. The MTA needs to fill holes worth roughly $17 billion to pay for essential maintenance programs, expansion projects and safety improvements. Discussion and debate over the program, prioritizing its elements and how to pay for them may last through 2005 or longer.

MTA Chairman Peter Kalikow, along with various civic, planning, and transit groups have suggested ways for raising revenue for the capital program, but none of them will be painless for elected officials. In the letter in which Kalikow proposed increasing certain business, fuel and real estate taxes to pay for the program, he noted that adding to already difficult debt service payments would greatly burden the system."Today, by finding the right mixture of funding sources, we have an opportunity to ensure that 2005 does not repeat the tragedy of 1975 and become the year future historians point to as the beginning of the Second Great Decline of this region’s mass transit system. Bold and difficult choices are necessary if the improvements of the past twenty years are to be maintained and the expansion needs of the transit system that serves the more important city in the world are to be funded." 

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