August 15, 2008
Aid to Transit Remained Flat as Fares Rose, Report Finds
By WILLIAM NEUMAN
Direct city and state subsidies to the Metropolitan Transportation Authority have remained relatively flat in recent years, while income from fares and from taxes dedicated specifically to the authority has soared, according to a report released on Thursday.
The report, from the city’s Independent Budget Office, was issued as the transit agency grapples with a looming financial crisis and is seeking added revenues for next year through toll and fare increases and additional city and state subsidies.
Both Gov. David A. Paterson and Mayor Michael R. Bloomberg oppose the fare increases and say that their governments have their own budget problems and cannot provide additional financing.
The report said that last year, city and state subsidies to the authority totaled $603 million. In 1990, the report said, the governments contributed $526 million. When the 1990 numbers are adjusted for inflation, the subsidies were equivalent to $862 million in 2007 dollars. Over the last five years, the subsidies have remained virtually flat.
For the most part, that money is required by state law or through longstanding agreements between the city, the state and the authority. For example, the city and state each pay about $159 million a year for general subway and bus operations, an amount that has remained steady since the mid-1990s.
(In making the comparison, the report does not include the current city financing for recently acquired private bus lines, which the authority took over in 2006. That subsidy amounted to more than $260 million last year, according to the report.)
According to the report, the authority received $3.7 billion last year from taxes that directly finance the authority’s operations, including taxes on real estate transactions in the city and the surrounding counties served by the authority’s commuter rail lines. That income has grown substantially over several years, largely because of the boom in the real estate market. In 1990, such taxes brought just $1.3 billon in inflation-adjusted dollars to the authority.
The transit system also receives federal subsidies, but they go to long-term improvements, not operating expenses, as the city and state subsidies do. The authority’s current financial troubles are due in part to the faltering real estate market, which has led to lower tax revenues.
The report also said that last year, revenue from subway, bus and commuter rail fares — and other sources, like advertising — was close to $4.4 billion, and tolls at the authority’s bridges and tunnels provided $1.2 billion. Fare revenue was close to $3.7 billion in 1990, when adjusted for inflation, while tolls were $1 billion.
Next year, the authority has said, it is facing a shortfall of close to $1 billion. To help plug that gap, it wants to raise fares and tolls and to have the state and city together to contribute an additional $300 million. In response, Mr. Bloomberg and Mr. Paterson have called on the authority to cut costs.
On Thursday, Mr. Bloomberg said again that the city could not afford to increase its contribution. “We have no money to do that, and it’s up to the state to find the money,” he said at a meeting of the United States Conference of Mayors in Manhattan.
But others said the study showed that both the city and the state need to do more.
“The city and the state have given the short end of the stick to the M.T.A.,” said Gene Russianoff, the staff lawyer for the Straphangers Campaign, a transit rider advocacy group.
Like the dedicated taxes, the subsidies to the authority that come directly from the city and state are paid for by taxpayers.
But Mr. Russianoff said the city in particular still had an obligation to make a larger contribution. "We’re looking at the city’s probably most important capital asset and probably the single biggest factor in its economy in terms of getting workers and students and tourists around,” Mr. Russianoff said. Referring to the levels of subsidy, he said, “The city is operating like it’s 1995.”
The report also questioned a claim by City Hall that its subsidy to the authority exceeds $1.2 billion a year. The city’s figure includes some items that do not appear in the authority’s budget, like $360 million to police the subways, which are patrolled by the city’s Police Department, and $344 million in debt service that the city pays on money it has borrowed, in part to help finance the authority’s capital spending.
On Thursday, Stu Loeser, a City Hall spokesman, said that those were legitimate costs related to the authority’s operations.
“We have budgeted that amount for the cost of policing the subway,” Mr. Loeser said. “If New York City were not to do that, it would be a cost that would have to be borne by the M.T.A.”
Mr. Loeser said it was wrong to draw a sharp distinction between the two types of financing and suggested that dedicated taxes may be preferable.
“If anything, that’s better, because it creates a dedicated revenue stream and takes transit funding out of the annual budget process and takes it away from competing against public housing or parks or hospitals or other valuable government activities,” he said.
Ken Belson contributed reporting.