Money Can’t Buy Subway Happiness
AS subway riders suffer through train delays and packed cars, the political class has hit upon the easy fix: more money. Gov. Cuomo wants the city to give more, while Queens Sen. Mike Gianaris wants a new tax on millionaires.
But if the first $15.6 billion a year doesn’t help, how much will?
A historical review of the MTA’s finances reveals that the authority is taking in a record amount of revenue. Just 12 years ago, the MTA took in $7.8 billion.
That’s right: The authority’s tax, fare and toll take has — rather neatly — exactly doubled, even as inflation has pushed prices up just 28 percent.
Over the longer term, the MTA is doing even better. Thirty-six years ago, New York decided to supplement the MTA’s fare and toll revenues with dedicated taxes, which were supposed to bring in $2.2 billion in today’s dollars (after inflation) and put the MTA on a sound financial footing.
“1981 was a significant year in the history of the authority . . . a year in which our transportation system halted deterioration and gained a future,” then-chairman Richard Ravitch said in that year’s annual report.
Today, the original taxes, plus several others, comprise $5.5 billion in annual dollars.
Whenever you hear a transit advocate say the MTA needs a dedicated tax, ask him why a tax on wage earnings, a special sales tax, a business-income surcharge, a petroleum tax, a taxi-ride tax and several real-estate-related taxes aren’t enough.
OK, so the MTA’s revenues are up — but they’re still not enough to keep up with spending. That’s because the MTA has vastly increased service to keep up with a near doubling of ridership since the 1980s, right?
Nope. The number of weekday subway trains is up just 24 percent in the past three decades. And the MTA’s workforce numbers are flat or down, depending on how you want to measure it (trust me — it’s complicated).
So what is the MTA spending its money on ?
The biggest culprit in skyrocketing costs is employee benefits. Consider that in 1985, retirement and health benefits for New York City Transit personnel cost $1.2 billion in today’s dollars. Today, they cost nearly $3.1 billion annually.
At the MTA as a whole, in 2005, such costs constituted 23 percent of employee spending, costing $2.5 billion in today’s dollars. Today, they constitute 30 percent, costing $4.5 billion.
This increase in benefit costs alone consumes all the additional revenue that the MTA takes in from the payroll tax the Legislature implemented in 2009. Should the Legislature enact a new tax, ever-increasing benefits likely will consume that, too.
To be clear: this isn’t the unions’ fault. It’s MTA management — prodded by successive governors, including Cuomo — that has allowed costs to soar, by promising too much. The MTA owes nearly $19 billion in health-care promises to future retirees — and has set just $300 million aside.
Money that goes to employee benefits is money that can’t go to capital investment. So the MTA must borrow — another huge cost.
In the early ’80s, the MTA had virtually no debt. Today, it owes nearly $40 billion — and Cuomo wants it to borrow another $10 billion over just five years.
Debt payments will cost the MTA $2.6 billion this year. And the MTA’s legacy of debt from past capital-investment programs consumes today’s revenues even as some of the infrastructure funded with that debt has expended its useful life. 1980s-era buses are long gone — but the MTA still owes money for them.
To be clear: The MTA’s current woes aren’t because of money, or a lack thereof. The city’s economy is doing well — and the authority has a balanced budget with some cash to spare, despite these huge costs.
But if this is how things work — or don’t work — in the good times, how would they run in the bad?