NEW YORK — As the Metropolitan Transportation Authority enters the final, tense days of negotiations with its union over a new contract, it has repeatedly pleaded poverty. Like New York City, the state and governments across the country, the authority says, it is struggling to make ends meet in a bad economy, according to the New York Times.
But in many ways, the authority — the largest transit provider in the Western hemisphere — is completely unlike those counterparts.
While the city’s fortunes plummeted along with Wall Street’s, the revenues of the subway and bus system have actually remained steady. While jobs have disappeared and hotel rooms have gone empty, depriving the city of revenues, ridership on the subways and buses has increased, a historical anomaly. In addition, the authority has taken advantage of low interest rates to save hundred of millions of dollars on its debt payments, and it has collected more than it expected in dedicated real estate taxes because the real estate market has remained strong.
All of which causes many people, and not just the 34,000 transit workers who are demanding a raise, to ask: how could the agency end last year with a surplus as high as $300 million and yet now find itself warning of a deficit next year of more than $1 billion, a gap so large that fares could rise to $2?
The agency says that the answer is simple — in many ways, it is a victim of its own success. It greatly improved subways and buses, offered discounts to ride them, watched as millions more riders flooded in and then had to add more subways and buses to accommodate the flood. But the discounts and the cost of the extra trains, buses and workers have finally caught up with the system, officials say.
It is an explanation that some monitors of the agency’s finances, including its bond-rating agencies and the city’s Independent Budget Office, accept as valid, though they disagree about the size of the deficit.
Others, including some city officials, the transport workers’ union and the Straphangers Campaign, an advocacy group, believe that the agency may be exaggerating its problems as a way to justify a bigger fare increase and smaller raises for its workers. Or, they say, it has been less than honest in the past about the true nature of its finances, in part so that Gov. George E. Pataki, who controls the authority, could avoid having to make difficult financial choices until after his re-election.
Complicating matters for both sides is that the agency’s budgets are often short on details and explanation, leading to widely differing interpretations and widespread calls for more transparency. Of course, such criticism is far from new. Public authorities were set up in part to insulate themselves from the scrutiny of lawmakers and others. In essence, they are arms of the state government without actually being a part of it and are less answerable to outside auditors than, say, the city is.
But Katherine N. Lapp, the M.T.A.’s executive director, strongly disputes that the authority is trying to hide anything. “It’s a perception that I think is an unfair one,” she said yesterday, adding, “I get really annoyed when people say, `How did this deficit happen?’ ”
While ridership has risen to 2.1 billion projected for this year from 1.6 billion trips in 1996, she said, the fare has actually decreased because of the MetroCard. While the base fare is $1.50, the average fare now is $1.04, because riders have become more savvy at taking advantage of card discounts.
At the same time, the agency says it has spent $250 million to add extra service to accommodate all those new riders — not nearly enough to keep pace with the crowds, critics say, but still an increase in expenses during a time that revenues remained flat. “You can’t look at it as simply that one more person gets on the train and we get more money,” Ms. Lapp said. “The costs far outstrip the revenues from those increased riders.”
M.T.A. officials also contend that to a large extent, the rosier figures contained in this year’s budget are a kind of mirage made possible by Mr. Pataki, who provided $367 million in extra state aid to the agency to ensure that there would be no fare increase this year.
Ms. Lapp said the governor believed that a fare increase would be too damaging to the city so soon after the Sept. 11 attack. Mr. Pataki’s critics, of course, contend that the money was provided to avoid even the possibility of fares rising during this year’s campaign.
But even with that aid and other one-time budget mending measures, some other monitors of the agency’s finances say they find it hard to believe that its fortunes have reversed so rapidly in such a short time. “I question the sheer size of their deficit,” said Gene Russianoff, the staff lawyer for the Straphangers Campaign, which has called on the city comptroller’s office to audit the finances of New York City Transit, the arm of the M.T.A. that runs subways and buses.
Mr. Russianoff said that when the agency began offering MetroCard discounts in the mid-1990’s, it made very conservative projections about how much money it would lose as riders began to take advantage of them. But those losses never materialized to the extent officials feared. He added that while service has been added to deal with new riders, it comes nowhere close to matching the 50 percent increase in bus ridership and 25 percent increase in subway ridership since 1996, causing him to wonder how the system is losing so much money on new riders.
One of his fears, he said, is that the financial problems have been exaggerated to push fares higher and keep labor costs down in part because the M.T.A. would like to find a way to help Mayor Michael R. Bloomberg reduce the city’s $158 million annual aid to the agency. The mayor says the city can no longer afford the aid and would like the M.T.A. and Mr. Pataki to help him mend the city’s budget by releasing the city from the requirement.
“Roger Toussaint is not the only one looking for money from the M.T.A.,” Mr. Russianoff said, referring to the transit union leader.
“Michael Bloomberg is, too.” M.T.A. officials say that the allegation is false. Preston Niblack, deputy director of the city’s Independent Budget Office, said he believed the basic imbalance described by Ms. Lapp — increasing expenses, flat revenues — was valid. But his office says that with savings from bond refinancing, the agency’s deficit should be lower next year, about $770 million, and other calculations show that it could be even lower than that, though Mr. Niblack said the figures were difficult to reconcile.
Other city budget officials who have spent the last few months poring over the M.T.A.’s budget say they are still unsatisfied by the agency’s explanations and believe the financial problems may be exaggerated.
Of course, a very big question mark remaining is how much of the projected budget deficit assumes raises for transit workers over the next three years.
Ms. Lapp agreed that the labor costs were a question mark and said that as long as the bargaining continued, they would remain that way.
“Of course, there is some labor reserve in there,” she said, “but I’m not going to comment about what level is in there. Obviously, it would be totally inappropriate for me to talk about that.”