Another MTA Meltdown
Seven months after Albany “saved” the Metropolitan Transportation Authority’s riders from doomsday service cuts, the MTA needs a bailout from its bailout. New Yorkers have just started to pay for state pols’ failures on transit.
In May, Gov. Paterson and lawmakers approved a slew of MTA taxes worth $2.1 billion a year. The bailout took a bite out of everything from rental cars to cab rides, but the centerpiece was a payroll tax: Downstate employers must fork over $30,000 to the MTA for every $10 million they pay to workers.
That tax was supposed to bring in $1.5 billion a year -- but it’s falling short. Earlier this week, MTA finance chief Gary Dellaverson informed board members of a “shocking” development: The payroll tax would generate $200 million less than thought, even though everything had seemed fine “as recently as last week.”
Shocking -- if you haven’t been paying attention. The payroll tax was always a terrible idea, and has made the MTA’s problems worse instead of better.
A year ago, when Albany first proposed the tax, I warned it “could be dangerously volatile.” In March, I further said that there was no “guarantee that the new payroll tax will raise as much as [Albany] thinks.”
The tax is based on workers’ incomes -- which fluctuate wildly. Some years, Wall Street (upon which New York’s economy depends) does well -- producing huge bonuses and pushing up incomes in general. Some years, not so much.
After the city started recovering from the tech bubble, personal income downstate rose by as much as 10 percent one year and fell by as much as 4 percent another. This makes the take from income-based taxes impossible to predict. In this case, the state based its estimate on personal incomes two years ago -- which we now see may be too optimistic.
But it could have gone the other way. What if the taxes were coming in $200 million higher?
Bizarre, but that may happen soon. If Wall Street bonuses are huge this winter, the MTA may be back telling us that things are OK, after all. The agency would once again face the tiresome charge that it keeps two sets of books.
Plus, the extra money would be an excuse for Albany to fork over raises to the Transport Workers Union.
Such volatile taxes provide state lawmakers with an excellent excuse to permanently ramp up spending on labor when times are good. Too bad it means a deteriorating transit system -- because it forces cutbacks on capital investment when times are bad.
Just as bad: As a condition of the bailout, the MTA agreed to skip a fare hike next year. But it may be that the lesser of two evils, between slashing maintenance and raising fares, is a fare hike. Then the MTA opens itself up to a charge that it didn’t keep its word.
Albany has yet to face what it will really take to fix the MTA: Force its unions to accept work-rule changes and cuts in future benefits.
Then, cut back state spending to give the MTA a fixed annual amount from an existing tax -- say, a little from the existing state income tax, and a little bit more than it now gets from sales and real-estate taxes.
Albany had another motive to take the craven way out, though: It wanted use the MTA bailout as cover to nab some cash for itself. In the last few weeks, the state has grabbed $143 million from the agency for its own massive budget gaps.
Now, with a $343 million hole, riders find themselves where they were last spring -- worried about big service cuts. (We’ll learn more on this from the MTA next week.)
But any cuts, while harmful to New Yorkers’ quality of life, are nothing financially, compared to the more than $2 billion the authority must spend on pensions and health-care next year.
Plus, to cover its new cash shortfalls, the MTA likely will delay payments on pensions this year and next -- making next year’s problems worse.
So what should new MTA chief Jay Walder do?
First, no more “shocks” -- the MTA should have budgeted conservatively here. Second, no whining about how if the MTA doesn’t get another bailout, everyone will suffer.
Walder should quietly make it clear that if Albany treats the MTA as a slush fund for unions and itself, foregoing real reforms, service cuts will hit certain districts the hardest:
* Lower Manhattan, from where Assembly Speaker Sheldon Silver presides.
* Gravesend, Sheepshead Bay and other Brooklyn neighborhoods that Senate Finance chief Carl Kruger represents.
* Tremont and other Bronx neighborhoods represented by Senate Majority Leader Pedro Espada.
Walder, with a fixed term as chairman, has independence. He should use it -- because without well-placed suffering now, everyone will suffer more later.
This piece originally appeared in New York Post
This piece originally appeared in New York Post