The MTA Mess
DON'T buy the idea that the MTA is the victim of an unprecedented, unanticipated fiscal crisis that's nobody's fault: plummeting tax revenues due to the credit crisis, blah blah blah.
Sorry: Where the MTA finds itself today is the natural, predicted and only possible result of craven decisions made by a decade's worth of politicians and their appointees.
The state and city politicians responsible for the MTA are lucky that the credit crisis is providing cover for the agency's downfall.
Indeed, the MTA's budget from five years ago shows that the agency knew darn well that it had to change its ways. In 2003, the MTA was projecting a $1.5 billion deficit by last year if it kept spending as it was. (Which, of course, it did. What saved us last year? The remnants of Wall Street's now-exploded credit bubble.)
Yes, the Wall Street smash-up has been worse than most people expected, but that's like a reckless driver complaining when he crashes into a F-150 pickup instead of a Mini Cooper.
Who to blame?
Start with ex-Gov. George Pataki and his appointees, who let the authority run its debt up to dangerous levels.
In 2002, the MTA spent a little under $700 million on debt costs, or 11 percent of its cash expenses. This year, that bill will be more than $1.5 billion, twice as much, and more than 14 percent of its cash expenses. By financing a record percentage of capital spending with debt, Pataki & Co. avoided spending much on mass transit—while also avoiding letting the MTA fall apart on their watch.
Then there was the failure to stand up to the MTA unions and reform benefits.
Six years ago, the MTA spent $4.6 billion on labor costs. This year, it will spend more than $6.3 billion, largely due to too-high costs for benefits like health insurance.
In most of the private sector, workers are having to pay a substantial share of their own health costs. Yet, during the 2005 transit strike, New York won only small health-benefits reforms from its workers—not enough gain for the pain that the city went through.
That's Pataki's fault, too—plus Mayor Bloomberg's.
No, Bloomberg doesn't run the MTA. But across all levels of state and city government, it should have been obvious, by nearly a decade ago, that future benefit promises at the city, state and public-authority levels had become unsustainable. Yet no elected official has wanted to do the tough work of standing as a united front with other elected officials to work with, or against, labor unions to change those benefits.
Blaming the unions is too easy. Just like managers at GM and Ford, New York's leaders have long freely signed laws and contracts that gave the unions more political power and financial benefit. (At least the carmakers admitted a few years ago that they had gotten themselves into a mess.)
Former Gov. Eliot Spitzer isn't off the hook here, either. No, he wasn't in office long enough to impact an MTA contract—but he did bash the MTA for last year's perfectly reasonable fare hike, creating a huge distraction from the agency's real problems.
If, starting five years ago, the MTA had held its debt and its labor costs (even excluding the tougher-to-reform pension costs) down to the same as the inflation rate, it would be saving $1.1 billion a year by now. It would still have a deficit this year, but that deficit could be closed through a smaller fare hike than the one on the table. No panic, no crisis, no draconian service cuts.
There's nothing we can do about the past.
But what Gov. Paterson and Bloomberg do now to fix the MTA will likely mean the difference in whether they're someday seen as abject failures or heroic saviors of the city.
The natural result, a few years down the road, of the path that the MTA's now taking will be visibly deteriorated subway assets and service that's worse than today's (already unacceptable) service.
Bad service will drive people away from the city—and subway breakdowns will be seen, as they were 25 years ago, as shorthand for New York's failure.
Yet the solution isn't complicated.
Get the MTA's labor costs under control. No, that doesn't mean slashing workers—that's not real management.
The MTA, Paterson and Bloomberg should stand together on the MTA labor contract that expires in January. Cutting the MTA's non-pension benefits costs alone, through a combination of worker contributions and other savings, by 20 percent, would save the authority $200 million a year, or almost as much as its proposed job cuts will save.
Then Bloomberg and Paterson's people should go through the MTA's expenses line by line and hour by hour, reporting possible cost savings to the public in real time, on line.
The state and city should also try to figure out how to cut costs and deliver better service on things like bus service.
Consider: the Bolt Bus, a start-up of Greyhound, transports people from New York to Boston for $17.50 one way in comfort and style with free wireless Internet. Bolt is making an operating profit doing so, according to a spokeswoman, and offers health benefits to its union and non-union workers.
Yet the MTA wants to charge people $7.50 to ride the express bus from Brooklyn to Manhattan. Clearly, the agency should see if a private company or a few private companies can't do it for a lower price.
Then what?
The only thing to do is to look at what's been sucking money from mass transit for years: ridiculous levels of politically driven state and city spending on Medicaid and education. If the city and state set a goal of cutting this spending by just 10 percent, they'd have $5 billion in savings every year.
Starting this year, even a portion of such future, long-term savings could help close state, city and MTA deficits—and make sure that the inevitable tax hikes and cuts in basic services are smaller and shorter-lived.
This piece originally appeared in New York Post
This piece originally appeared in New York Post