Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

New York Post

 

A Phony MTA Fix

March 18, 2009

By Nicole Gelinas

Senate Plan Makes It Worse

SENATE Majority Leader Malcolm Smith yesterday unveiled a stop-gap "fix" for the MTA. Thankfully, the half-baked proposal is unlikely to be adopted - because it would do more harm than good. But there's a real danger that the solution that Albany finally settles on will be nearly as bad.

The state-run Metropolitan Transportation Authority faces a billion-dollar-plus deficit this year, more than 10 percent of its annual spending. It says it'll have to resort to hefty fare hikes and cuts in service unless it gets help.

Smith bills his idea as an enlightened compromise, because it borrows some ideas from the bailout plan outlined by former MTA chief Dick Ravitch three months ago and supported by the governor. But Smith ditches that plan's East River bridge tolls (which most of his members won't support) and instead aims to raise $900 million-plus a year through a smaller version of the payroll tax that Ravitch had also proposed.

But what's really being compromised is the assurance that the city's trains and buses will run properly in the future.

The MTA actually has two huge problems. It faces yearly deficits in its operating budget as far as the eye can see - and its capital-spending budget is short billions. That money's needed to maintain ever-deteriorating subway infrastructure and to continue modest (and long-overdue) expansions like the Second Avenue Subway.

The Ravitch plan addresses both problems; Smith's, only the first one. And the way he addresses it will only worsen the second problem.

As a condition of giving the MTA the money from the new payroll tax, Smith and his conference would insist that the agency keep this year's fare hike to just 4 percent.

Yet the MTA has said that it needs to raise fares by 8 percent even if the authority gets the much bigger bailout that Ravitch proposed. Mathematically, then, the Senate plan makes no sense - less money from Albany can't mean lower fare hikes.

Worse, the Senate - by tying new aid for the MTA to an arbitrary limit on fare hikes - dangerously politicizes the fare-hike process.

Of course, politicians already love to demagogue whenever the MTA moves to raise fares. But here, the Legislature would put the MTA in an untenable position. If the MTA were to consent to a smaller-than-needed fare hike in return for the new money, it would make its deficits much worse next year - or even sooner.

Nor is there any guarantee that the new payroll tax will raise as much as Smith thinks. Workers' incomes, upon which the tax would be based, could easily fall off faster than the state expects.

So, under Smith's plan, as deficits grew, the MTA would soon have to raise fares again anyway - after saying it could keep them to 4 percent. The agency's public credibility is tenuous enough now without Albany talking it into telling a lie.

And, again, Smith ignores the capital-budget problem. Perhaps he figures that people only worry about fare hikes and immediate service cuts. Of course, people will care about capital spending when the deferral of maintenance results in a deadly derailment or fire. But, hey, maybe it will be somebody else's problem then . . .

It's heartening, then, that Gov. Paterson seemed to want no part of this "compromise" yesterday - and that the MTA bigwigs stood with him.

But it's worrisome that Smith may have made the most astute political calculations.

Yesterday, he repeated over and over that the big reason that the Senate won't give the MTA money for its projects (as the Ravitch plan does) is that its finances are "a black hole." Backing him up was Sen. Bill Perkins, who oversees public authorities.

Perkins insisted - falsely - that, at public hearings earlier this year, "the MTA would never give us the numbers" about its budget woes. As a condition of new aid, then, Smith wants an outside "forensic" audit of the MTA and better "corporate governance."

In reality, at that public hearing, Perkins seemed far more interested in playing to the audience about fare hikes than in the MTA's revenue and spending estimates. And he wasn't remotely interested in the MTA's biggest problem: its outrageous benefits costs for workers who retire at 55, which will soon swallow up much of any new bailout money.

So it's hard to have much confidence that an audit overseen by the Legislature will shed much light on anything.

But it should be yet another reminder for the MTA that a big reason why Smith et. al. can get away with their games is that the public truly doubts the MTA can be trusted with any new money.

The MTA shouldn't just wait for Smith to do a politically slanted audit that "proves" that. Instead, it should try to beat the Senate at its own game - by explaining clearly and publicly where every dollar goes, and why.

It could even go as far as some states have done - putting every single dollar spent in a searchable online database for people to scrutinize.

If the MTA doesn't make some such effort to build real public trust, New Yorkers will remain at the mercy of politicians like Perkins and Smith - who seem determined to take the public on an endless thrill ride to nowhere.

Original Source: http://www.nypost.com/seven/03182009/postopinion/opedcolumnists/a_phony_mta_fix_160056.htm

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

On Obamacare's Second Birthday, Whither The HSA?
Paul Howard, 10-16-14

You Can Repeal Obamacare And Keep Kentucky's Insurance Exchange
Avik Roy, 10-15-14

Are Private Exchanges The Future Of Health Insurance?
Yevgeniy Feyman, 10-15-14

Reclaiming The American Dream IV: Reinventing Summer School
Howard Husock, 10-14-14

Don't Be Fooled, The Internet Is Already Taxed
Diana Furchtgott-Roth, 10-14-14

Bad Pension Math Is Bad News For Taxpayers
Steven Malanga, 10-14-14

Proactive Policing Is Not 'Racial Profiling'
Heather Mac Donald, 10-13-14

Smartphones: The SUVs Of The Information Superhighway
Mark P. Mills, 10-13-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494