MTA chief Jay Walder yesterday re leased a $12.7 billion budget for next year that, he says, “achieves stability” without chopping service. Sure, stability — thanks to lots of borrowing. All it takes is a nudge from a pol or two to send the rest of the plan crashing down.
The good news first: For the first time in three years, the MTA has produced a budget without new service cuts, above-inflation fare hikes or cries for an Albany bailout. Thanks to prior cuts in service and back-office efficiencies, plus the $1.7 billion annual bailout the MTA secured from Albany two years ago, the agency should end next year with $4 million left over.
Plus, as a parting gift before leaving for a new job in Asia, Walder has cobbled together funding for the MTA’s five-year, $26 billion capital-investment plan, which faced a $10 billion hole.
The MTA will double last year’s capital savings by another $2 billion, taking advantage of a weak construction market, buying cheaper buses and cutting more back-office jobs. But the plan’s other patches are perilously thin: $6.9 billion — 70 percent of what the agency needed — will be borrowed.
Walder says it’s OK to borrow so much because the MTA will repay about $6.2 billion in old debt and $2.2 billion will be borrowed from the feds, at low Treasury rates. But the MTA has been in such straits for years now because it borrowed too much in the first place.
Back in 2000, Gov. George Pataki directed the authority to put a previous capital plan on the credit card. Since then, debt costs have tripled, to $2 billion annually. In five years, they’ll be nearly $2.6 billion — up another 29 percent. The Pataki strategy was a bad idea — not a template.
Then, too, Walder has “found” some money that may quickly vanish again: He’s counting on $3.8 billion in federal grants — which might be reasonable, if Congress weren’t threatening to slash just such “discretionary” spending.
He’s also counting on $380 million from the Port Authority — which has its own budget woes, and must also answer to New Jersey, which may not like this idea.
Sure, the capital plan’s still-fragile state isn’t Walder’s fault: It’s the governor and mayor who decide how to spend our finite money. But Walder can’t credibly say he’s fixed the problem.
The MTA’s day-to-day operating budget looks better — but its numbers may not reflect political reality.
By 2013, the MTA assumes $78 million a year in savings by holding its unions to three-year wage freezes — the same as Gov. Cuomo has asked of state unions. Plus, to address soaring health-care and pension costs, it “will continue to seek increased contributions from employees for the cost of health insurance and will support legislation addressing pension reform.”
Good ideas. But getting railroad and subway unions to agree — without a big fight that Cuomo may not want — will be a feat.
The MTA must pull off another political trick — or face another half-billion deficit in 17 months. Come Jan. 1, 2013, it means to hike fares by $448 million, or 7.5 percent. In theory, lawmakers OK’d this as part of the 2009 bailout. But most people don’t know that — so it may be political poison. Will Cuomo allow the fourth rate hike since 2008?
Another risk looms, too. Suburban lawmakers have been agitating to repeal the 2009 payroll tax for their counties. Walder’s “stability” could tempt Cuomo into giving the pols a little of what they want, yanking another few hundred million from the MTA budget.
Lastly, there’s the issue of general competency. Under Walder’s replacement, will the MTA stick to its new relative austerity or backslide? Overtime costs, for example, skyrocketed again this year, despite pledges to cut back. At $578 million, they’re on track to match their 2009 peak. That’s because it snowed. But, hey, it snows.
The budget is balanced — as long as nobody so much as breathes on it. To the next MTA chief, beware: The next three years may not be more fun than the last.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.