(The New York Times posted the following article by Andy Newman on its website on November 13.)
NEW YORK — Top officials of the Metropolitan Transportation Authority defended their proposed fare increases yesterday after a state legislator questioned their recent decision to put a $200 million windfall into a rainy-day fund.
The legislator, Assemblyman Richard L. Brodsky, the chairman of the Assembly’s Standing Committee on Corporations, Authorities and Commissions, said the authority had not made its case that a fare increase in 2005 was absolutely necessary. The authority seeks to increase the price of unlimited-ride MetroCards, train tickets and bridge tolls to help close a $436 million gap in its operating budget for next year.
“I do not think you have justified the need for a 5 percent fare hike, based on the events of the last week,” Mr. Brodsky told Peter S. Kalikow, the chairman of the authority’s board, and Katherine N. Lapp, the authority’s executive director, during a hearing at the Assembly’s office in Lower Manhattan.
Mr. Brodsky was referring to published reports last week that between cost-saving measures and higher-than-expected proceeds from real estate taxes dedicated to the authority, the M.T.A. had an extra $300 million on hand.
Ms. Lapp had recommended using $90 million of the extra money to prevent layoffs and service cuts and $200 million to set up a “stabilization fund,” which could either serve as a hedge against future revenue drops or give the authority a head start on closing its projected 2006 operating deficit.
Mr. Kalikow and Ms. Lapp told Mr. Brodsky they thought the fare increases were the best course of action. The agency’s most recent proposal calls for the price of a seven-day MetroCard to rise to $24 from $21; the price of a 30-day card to rise to $76, up from $70; fares on the commuter railroads to rise around 5 percent; and bridge and tunnel tolls to go up by 50 cents.
After the meeting, Ms. Lapp and Mr. Kalikow said, in essence, that a rainy-day fund was a necessity given that the agency’s long-range budget forecast calls for a 100 percent chance of a deluge of debt. Because of delayed debt-service payments coming due, the projected deficit in the operating budget for 2006 is more than $1 billion, and is set to grow in the years that follow.
“Basically what I’ve been charged by the M.T.A. board is to come up with a good fiscal plan that will see this agency through its next couple of years when these fiscal problems are looming,” Ms. Lapp said.
Mr. Brodsky, who has held a series of hearings on the authority’s finances, noted that $200 million was about the amount the fare increase was expected to bring in.
“They have enough revenues to go forward without a fare increase,” he said. “Whether that’s good long-term policy is a second issue. But they came to us with a model for how you raise fares, that it’s used to close an operating gap and it’s a last-resort deal. Then they find additional revenue that means they don’t have an operating gap, but they want to raise the fare anyway. I have a problem with that.”
At least once in the past, the authority tried to put away money in reserve and the savings were raided to help balance the state budget.
Mr. Brodsky, a Democrat, also tried to prod Mr. Kalikow to hold Gov. George E. Pataki responsible for the authority’s fiscal problems, which include an $11 billion shortfall in financing for the authority’s new five-year capital plan. The governor sets the state’s transit policy and appoints more members to the authority’s board than any other official, and the agency is generally seen as under his control.
Mr. Kalikow would only say that it would take a coordinated effort by all branches of government to come up with a way to finance the capital program, which pays for long-range maintenance and system expansion. He said the authority would propose a financing plan for the program within a few weeks.