NY's transportation agency projects deficits from 2014

Reuters News
Posted: Jul 25, 2012 3:09 PM
NY's transportation agency projects deficits from 2014

By Joan Gralla

NEW YORK (Reuters) - New York's Metropolitan Transportation Authority expects to end 2012 with a $46 million cash surplus, officials said on Wednesday, as they unveiled a "risk-laden" financial plan that projects deficits for 2014 through 2016.

MTA's budget status will depend on negotiating a three-year contract with unionized transit workers that has no wage hikes unless current restrictive work rules are amended or workers would pay more for healthcare.

"Our budget is fragile; I prioritize it probably as our No. One risk," Chairman Joseph Lhota told reporters after a board meeting. "Layoffs are not on the table," he said, adding he hoped the new labor agreement would be reached by year-end.

Such an accord would save the MTA $307 million, officials said, noting managers have not had a pay increase since 2008.

A precedent, however, could make MTA's negotiation more difficult. Chief Financial Officer Robert Foran said another city's transit union won a series of raises of 4 percent in each of the first two years, followed by a 3 percent increase in the third year.

The MTA, which runs New York City's buses, subways, commuter railroads and some major bridges and tunnels, said in a statement that after another positive balance of approximately $46 million in 2013 it was projecting a $129 million deficit in 2014, a $14 million deficit in 2015 and a $231 million gap in 2016.

Those estimates include the $450 million the MTA expects to raise from toll and fare hikes it plans to start on March 1, 2013 - 60 days later than initially scheduled. It also plans another toll and fare increase in 2015 to raise $500 million.

The MTA's current budget is nearly $13 billion, and Foran said non-discretionary costs are the main factors creating the outyear budget gaps. Those expenses include pensions, healthcare, energy, debt service and paratransit - all of which have been rising at multiples of the 1.8 percent inflation rate.

Paratransit provides transportation for disabled individuals.

From 2011 to 2013 the cost of those five items is projected to rise by $1 billion, and by another $1.5 billion by 2014, Foran said.

The MTA expects to save nearly $700 million this year through a variety of measures, including a 20 percent cut in the number of managers working at its midtown Manhattan headquarters.

From 2013 to 2015 the total savings target is $2.33 billion, which partly will be achieved by getting rid of 3,000 cell phones, 2,100 computers, 2,100 servers and 325 fleet cars.

(Editing by M.D. Golan)