NEW YORK — According to the New York Times, the financial problems of the city’s subway and bus system over the next two years do not appear nearly as dire as transit officials have portrayed them, according to an analysis released yesterday by the city’s Independent Budget Office.
The findings raise questions about whether a proposed fare increase to as much as $2 by this spring is needed. But the report adds that there are big storm clouds on the horizon, ones thatcritics of the transit agency say could explain the need for the increase and more soon after: decisions by Gov. George E. Pataki and top transit officials over the past several years to borrow extensively for repairs and capital projects.
That borrowing will drive debt costs sharply higher by the end of next year, the analysis found. And — like a rapidly rising payment on a credit card balance — those costs threaten to put pressure on the agency to raise fares much more over the coming years.
“Debt service will become an increasing burden on New York City Transit’s operating budget and absorb a growing portion of fare and other revenues,” said Doug Turetsky, a spokesman for the budget office, a nonpartisan city agency.
According to the analysis, debt payments will grow so rapidly by next year — to $436 million, from $294 million this year — that they will eat up all of the excess money from bridge and tunnel tolls traditionally used to support subway and bus operations and keep fares low. Those toll surpluses were dedicated to mass transit operations in the late 1960’s when the Triborough Bridge and Tunnel Authority was wrested from Robert Moses, whose policies favored cars over transit.
Officials with the Metropolitan Transportation Authority, the parent agency that runs subways, buses and the commuter railroads, said they did not disagree with the Independent Budget Office’s analysis, which used the authority’s own public financial disclosures. But transit officials took exception yesterday to accusations that they have exaggerated or distorted their budget problems to build a better case for a fare increase.
The independent analysis found that the M.T.A.’s total budget gap over the next two years is $951 million. But in notices that began running in city newspapers this week to announce a series of public hearings on a fare increase, the authority reports that its budget shortfall over the next two years is $2.8 billion, or nearly three times as much as the figure from the analysis.
Gary G. Caplan, the authority’s budget director, said yesterday that the $2.8 billion estimate was not inaccurate. It simply did not take into account a series of cost-cutting measures and a corporate restructuring plan that officials hope will result in significant savings over the next two years.
He added, however, that the lower estimates were made public last month as part of a budget document. “It shows you the whole megillah,” he said of that document.
Critics such as the Straphangers Campaign, an advocacy group, have contended repeatedly over the last several months that while those numbers may have been publicly released, they were confusing and difficult to find and that the authority has highlighted the higher numbers.
In its analysis, the Independent Budget Office said that it found serious deficiencies in the way that the authority discloses its finances. The city comptroller’s office has said it has similar concerns and last month ordered an audit of New York City Transit.
While continuing to defend their practices, M.T.A. officials said yesterday that Katherine N. Lapp, the authority’s executive director, would announce today at a City Council transportation hearing that she plans to make some changes in the way budget numbers are reported, to make them more clear to the public.
The independent analysis found that rising labor costs and stagnant revenues from riders have contributed to the M.T.A.’s rapidly mounting financial problems over the last two years, as the city’s economy has suffered. But debt costs could represent a much larger threat to the authority’s budgets over the coming years.
The authority had $10 billion in debt seven years ago, from borrowing that helped it to buy new trains, rebuild stations and draw riders back to the system. That debt has climbed to nearly $16 billion now, and the total is projected to rise to $25 billion over the next few years. In large part, this is because direct state and city aid for capital projects has evaporated over recent years.
While the transit operating budget keeps trains and buses running and pays employees, much of the service payments on transit debt also come out of the operating budget, and the share of operating funds being consumed by those payments is growing.
The situation places pressure on the authority to raise fares not only to maintain operations but also to assure bond-rating agencies that the outstanding debt is backed by revenues.
Mr. Caplan said yesterday that it was too early to say exactly how much debt-service payments would rise by 2005 and the following years. But the payments will continue to increase, he said. When asked whether this would create pressure for more frequent fare increases, he answered by saying that the borrowing plan has been responsible for reviving the transit system.
“The alternative,” he said, “is to go back to 1980.”
But Gene Russianoff, staff lawyer for the Straphangers Campaign, contends that another alternative is for the state and the city to find ways to offer more support to mass transit.
“This is what business and civic leaders feared when the M.T.A. began its massive borrowing program — that debt would explode and swallow up a huge chunk of the money that goes to operations,” Mr. Russianoff said.