Assessing The Overall Picture

More stations will look like East 143rd St.-St. Mary’s St. if the MTA’s finances don’t improve in the near future. (Resized photo courtesy of Eye On Transit)

I spent most of my Monday watching the live webcast of each MTA meeting that was scheduled at their headquarters. Going into the day, I expected to hear bad news & unfortunately my expectations were met. The MTA agreed to go through with their budget savings plan which I blogged about earlier. Before I go into my observations about the meetings, here are some reports about what took place at them. Lets start with the report by Pete Donohue of the New York Daily News:

Straphangers will have to endure crumbling train stations longer, live without bus and subway service increases and maybe pay higher fares, top transit officials warned Monday.

The Metropolitan Transportation Authority released a torrent of bad news as the tanking economy – with declining tax revenues and rising operating costs – continue to inflate budget gaps.

CEO Elliot Sander and MTA Chairman Dale Hemmerdinger unveiled a draft amendment to the authority’s capital plan that includes delaying overhauls of 19 subway stations to after January 2010.

Citing higher construction costs and a need for more money for new projects to address problems like subway flooding, the revised planning would postpone $2.7 billion in upgrades beyond next year. They will be penciled into the next five-year plan, which is largely unfunded, officials conceded.

Transit officials said the MTA can afford just a fraction of planned increases to bus and subway service, including new bus routes and expanded hours of operation.

Tax revenues are $120 million below projection, leaving a ballooning 2009 deficit potentially greater than $500 million, Sander said, raising the possibility of fares and toll hikes as early next year.

“Should riders be concerned? Absolutely. Am I concerned? Absolutely,” he said.

NYC Transit President Howard Roberts  said he would salvage some planned increases in subway service by trimming some transit positions.

Roberts also was subject to some tough grilling and criticism by two of Mayor Bloomberg‘s representatives on the MTA board.

Mayoral rep Jeff Kay expressed “great concerns” that the MTA couldn’t afford even the more modest service increases and is putting riders on a roller coaster of expectations.”This is a great example of us, frankly, playing rope-a-dope with the public. It’s in, it’s not in, it’s in,” Kay said.

Nark Lebow, another Bloomberg board member, griped about the continued rise in subway train delays and other “alarming” statistics. More than 15,000 trains were delayed in April – compared with 6,542 in April 2006, MTA statistics show.

Lebow said such statistics suggest the causes were “merely by senior staff lack of supervision of what goes on underground.”

Roberts said his agency is working hard to reduce delays and said a lack of managerial talent is not an issue.

Despite all the doom and gloom, Sander said fare and toll hikes were not absolutely inevitable. He said he hopes the state Legislature will adopt funding solutions due in November.

Here is the report from William Neuman of the New YorkTimes:

The Metropolitan Transportation Authority released a cascade of grim financial assessments on Monday that mean delays in subway station renovations and other major improvements, as well as possible cutbacks in service and increases in fares and tolls.

In a series of public meetings of authority board committees, officials said the authority would be forced to cut projects valued at $2.7 billion from its 2005-9 capital spending program, largely because of soaring costs on construction projects already under way.

The projects being cut include 19 subway station renovations and important projects for the modernization of subway signals and repair facilities. The authority’s chief executive, Elliot G. Sander, said those projects were expected to be included in the authority’s next five-year spending plan, which begins in 2010. But he acknowledged that the authority did not yet know how it would find the financing for that plan.

Officials also said the revenues from taxes on real estate transactions, which have buoyed the day-to-day operations of the transit system in recent years, were falling off at an alarming rate, resulting in a shortfall this year of $122 million. Revenues from the real estate taxes are on track to end the year about $280 million below budget projections.

And costs are up, especially in subway and bus operations, where overtime and fuel prices have led New York City Transit to go $60 million over budget through May.

“Should riders be concerned?” Mr. Sander said in an exchange with reporters at the authority’s headquarters in Midtown. “Absolutely. Am I concerned? Absolutely.”

Mr. Sander said the financial picture would become clearer next month when he presents a preliminary budget for 2009.

“We remain hopeful that revenues will rebound and subsidies will increase, but if they do not then we will, of course, have to consider fare and toll increases and/or service cuts,” he said.

Officials also acknowledged that because of the rocky budget numbers, they would not carry out a package of major service improvements promised for buses, the subway and commuter railroads.

But even a more modest series of subway service improvements that officials said will begin next month to ease overcrowding on several lines prompted a board member to question whether the authority could afford it.

“If we put this in, six months from now are we going to have to take it away?” said the board member, Jeffrey A. Kay, at a meeting of a committee that oversees the transit system.

“That’s what we should do — is expand service — but we need to make sure we have the money to do that,” he said. “Because we can’t expand it one day and cut it the next, and I fear that’s what were going to do in this situation.”

Mr. Sander said that he hoped a solution to the authority’s monetary straits would emerge from a commission created by Gov. David A. Paterson and led by Richard Ravitch, a former authority chairman. The commission is to hold its first meeting on Thursday and is expected to complete its work by November.

But there is likely to be plenty more bad news before then. The authority must present a preliminary 2009 budget next month, and Mr. Sander said that would include “a variety of potential scenarios.” Those would appear to include possible service cuts and fare and toll increases. Fares and tolls went up last March, and the authority had proposed raising them again in 2010. Only once before, in 1980 and 1981, has the authority raised fares two years in a row.

The authority said it was also scrapping the accelerated capital program that it created in a rush earlier this year to coincide with the legislative debate over Mayor Michael R Bloomberg’s congestion pricing plan. The failure of congestion pricing means the authority will stick with its regular schedule for capital spending on big-ticket items, with the current plan ending next year and a new five-year plan beginning in 2010.

The current $23.7 billion plan includes spending for new buses and train cars, nuts-and-bolts infrastructure items like subway ventilation fans and tunnel lighting and major projects like the Second Avenue subway.

But rapidly inflating costs have resulted in the trimming of many projects from the program as the budgets for others grow.

The station renovations that will be cut include 15 in Brooklyn: 10 on the D line; 4 on the N line; and 1 (Smith and Ninth Street) on the G and F lines. Four stations on the No. 6 line in the Bronx were also cut.

The amended plan also cuts $366 million in projects to build fans that draw smoky air out of the subway in case of fire and $223 million to modernize subway track signals and switches.

The changes will be submitted to the authority’s board for approval next month, and most of them must then be approved by the state’s Capital Program Review board, which includes representatives of the governor, the mayor, the Assembly speaker and the Senate majority leader.

Mr. Sander said the changes should not be viewed as cuts because most of the projects would be included in the next five-year program for 2010-14. But subway advocates were leery, citing the uncertainty surrounding the financing for that program.

“To me, a cut is a cut is a cut,” said Gene Russianoff, the staff lawyer for the Straphangers Campaign, a transit advocacy group. “Their spin is that they’re deferrals, but they’re deferred into no man’s land.”

In the context of the authority’s financial difficulties, Mr. Sander was asked about the appropriateness of a raise he received this year that increased his compensation by $10,000, to $350,000.

Mr. Sander portrayed the raise as being in the best interest of the authority, saying that other transit systems paid their executives more. “Our ability to retain and attract talent is significantly at risk,” he said. “The reality is the salary structure for the M.T.A. is set in relation to my salary.”

Here is a complete list of the 19 stations which were scheduled for renovation:

  1. 8th Avenue
  2. 9th Avenue
  3. 18th Avenue &
  4. 18th Avenue
  5. 20th Avenue &
  6. 25th Avenue
  7. 62nd Street
  8. 71st Street
  9. 79th Street &
  10. Bay 50th Street
  11. Bay Parkway &
  12. Burhe Avenue
  13. Castle Hill Avenue
  14. Fort Hamilton Parkway &
  15. Fort Hamilton Parkway
  16. Middletown Road
  17. New Utrecht Avenue
  18. Smith-9th Streets
  19. Zerega Avenue

As I stated at the beginning of this entry, I spent many hours watching the live webcast & the news was depressing to say the least. It is scary to hear that the MTA is already $60 million dollars over budget & we are only half way through the year. The cause of this mainly rests on the skyrocketing cost of fuel although overtime is part of the problem as well. You know things must be bad if they have to cut the installation of vents inside tunnels which would play a key role in the case of a fire emergency underground. However the details of what is being cut is known, I would like to take this time to focus on my overall thoughts of the meeting among other things.

I am a big believer in reading people’s body language to get a better understanding of who they are or in other cases the situation at hand. I could have had the volume muted but still figure out what was going on. The body language from Dale Hemmerdinger & Elliot Sander gave off very negative vibes. While one could question if they wanted to be there as that could have been assumed based on their look, I felt it was more of a “I know we are in deep shit, how do we fix this” vibe that resonated from the two.

I also want to acknowledge MTA Board member Jeffery A. Kay who really got into this meeting from the outset. Either he was ramping it up for those in attendance/watching online or he really was passionate about wondering what was wrong with our system. I happen to agree with his comments about the agency playing “rope-a-dope” with riders. He is 100% right about this as one minute things are fine & we can expect one thing. The next minute we are told that shit will probably hit the fan & we are getting little or nothing as originally promised. I also liked the fact he kept grilling NYC Transit President Howard Roberts about NYCT being over budget & what would they do to fix it.

Mr. Kay was spot on with his comments “If we put this in, six months from now are we going to have to take it away? That’s what we should do — is expand service — but we need to make sure we have the money to do that. Because we can’t expand it one day and cut it the next, and I fear that’s what were going to do in this situation.”

I (among with many others I’m sure) feel there is a real strong possibility of these service upgrades being a short term thing. This would be a classic tease that would only cause more strain on our system & the relationship between riders & MTA officials. If the money is not there with 100% certainty for these service upgrades, I feel they should be completely put off until it is. While this would not help the conditions of our current system, I don’t see the purpose of a fix tease which in the long run does more harm than good.

Personally I feel that Howard Roberts means well but I have to call into question his way of funding the minor service upgrades that will be coming soon. His answer mainly focused on trimming the fat within his division in terms of job positions. While that sounds good on paper, shouldn’t we ask why this was not done already just based on the ideals of a common sense way to run your business? Clearly there are some financial missteps that are happening within New York City Transit & these need to be addressed immediately & not just because it will lead to service upgrades. The trimming of the fat should have been factored into their overall strategy since day one.

A common theme from the meetings was deferment in terms of the projects that will be cut from the current capital program. The common time frame for the deferments was the next capital program which begins in 2010. Here are my questions, where is the money going to come from for these same projects & more for the next capital program? What excuses will he hear as to why badly needed projects will be deferred to the 2015-2019 capital program?

Lets be realistic here, most of these cuts are deferred to the next capital program on paper. However the next capital program is mostly unfunded. Who knows if the money will even be there for these important projects along with other ones in the pipeline. To just say oh don’t worry, these projects will be in the next capital program is not good enough. Why should we believe that when all indications point to the financial situation of the agency not improving anytime soon. Lets throw in the wild card of what our government will do. Even though if history tells us anything, we know what they will be good for….

Our elected officials at this time continue to shortchange the MTA in funding. The revenue stream for the agency is not dependable as it goes in cycles. The current cycle is obviously not good which the numbers clearly show. No matter what industry you are involved in, it is an obvious sign of dire financial times when your projections could possibly fall $280 million below what was expected. This leads into what the main problem here is which boils down to the blueprint of how to fund our transportation network.

When you fund a transportation network, it can’t be based on the financial windfalls of things such as real estate taxes. While real estate in general over the last number of years has enjoyed record growth in the tri-state area, it still is an industry that runs hot & cold. When things are going well, the cash seems to grow on trees. However when things are going bad, shit hits the fan. How could the MTA expect to rely on such an industry to sustain their budgets? This was clearly poor business accumin being shown & now we are paying the price.

If that was not bad enough, to expect fare revenue to cover operation & expansion costs was a huge mistake.  Since when did you think the fares we pay would be anywhere near enough to keep the system running as is along with expansion? Once again this is a clear sign of poor business accumin. It is obvious that those in charge got caught up in the “Shiny Happy People” real estate boom & did not pay attention to common sense financial practices that would help when things went south.

However I can’t put the full blame on the MTA in terms of financial missteps. Our government is just as guilty if not moreso for neglecting the financial needs of the MTA & its riding public. What can be expected considering that the state government is filled with many people who don’t have a clue about the needs of riders in the tri-state area as evident by idiotic decisions such as the one that led to the defeat of an important bill that benefited bus riders.

It does not take a genius to figure out what needs to be done in terms of funding. One only needs to look back at NYC Subway history. When our system was in its worst condition, funding was severely lacking & the results played out before our very eyes. When our system was allocated more legitimate funding, the results turned around for the better. The benefits of a properly funded transit system & improved outlook of the area go hand in hand. If our current elected officials can’t see this, we need to get officials in there who can see.

The transportation network in the tri-state area is arguably the most important one in the world & should get treated as such by everyone from our elected officials down to the riders themselves. It ls clear that more funding is needed along with better business accumin. It is time everyone steps up & does their part or we are all going to be in serious trouble!

xoxo Transit Blogger

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Subway Riders Criticize The MTA…

Last week I wrote about the MTA approving their budget savings plan which cut some projects including the rehabilitation of 19 subway stations. Javier C. Hernandez of the New York Times spoke with some straphangers to get their feelings on the cuts. He…

[…] past June the MTA announced plans to cut 2.7 billion dollars from the current five year capital program. The cuts which were criticized by many riders & transit advocates were going to postpone such […]

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