The deficits looming at New York's MTA won't be quite as high as projections from a few months ago -- but the nation's largest transit agency says biannual fare hikes are still necessary. Translation: riders will pay more for a MetroCard in both 2015 and 2017.
At its monthly board meeting, the MTA unveiled its preliminary operating budget for 2014-2017. While the agency is benefiting from an upturn in the economy -- increased tax revenues along with higher-than-expected state aid is giving it the fuel to fund $18 million in service enhancements -- it will still need to deal with a projected deficit that starts next year.
"It is a favorable plan," said MTA chief financial officer Robert Foran. "We're able to add service, we're addressing those out-year deficits, and I think we're doing the things we've pledged to do, which is trying to address these long term costs and preparing for the next capital program. Which will be a big program and the funding is still uncertain."
The agency is projecting out-year deficits of $240 million through 2017, down from an earlier projection this year of $327 million.
"I'd point out that to the extent that we have a loss or reduction in the Payroll Mobility Tax, or (any) subsidy that we receive, without replacement, it just creates a hole that has to be addressed," said Foran. "There's economic uncertainty. The national economy remains weak, and our local economy, while improving, is improving on an uneven basis."
Although the agency is assuming a fare increase yield of 7.5 percent in 2015 and 2017, the actual dollar amount of any fare hike isn't yet known. "The issue of what the size of that fare increase is, and how we can manage our costs and increase our revenues to maybe have a different number than what is projected today, is a focus we will have," said MTA chief Tom Prendergast.
While the MTA began vigorously cost-cutting years ago, it is still grappling with so-called 'uncontrollable' costs like pensions, paratransit, debt service, and employee benefits and healthcare -- all of which are increasing at rate that's higher than inflation.
The agency is also dealing with a spate of train derailments and signal failures some have blamed on the weather. "There's no doubt about it, weather events can influence a transit system," said Prendergast. "Heat has very unique consequences for continuously welded rail, it has consequences for air conditioning for underground systems, heavy rain does the same thing. It's been clear for the past few years -- whether you want to argue about the cause of it -- some level of climatic change is occurring because we're seeing increased frequency and magnitude of storms."
He said the MTA is working to make the system more resilient. "We just can't say to people 'oops, that was a heat kink today. Oops, it was a temperature rise.' We've got to be able to manage the system in a way where we either don't have those resultant effects -- or we minimize them."