On Wednesday, the Metropolitan Transportation Authority (MTA) released its 2011 Preliminary Budget and proposed Four-Year Financial Plan for 2011-2014. The proposed plan reflects unprecedented internal cost cutting initiatives undertaken in response to a $900 million shortfall for 2010 resulting from cuts to State assistance and downturns in tax revenue. These shortfalls amount to more than $2.5 billion over the plan period.
As a result of its cost-cutting actions, the MTA was able to limit the fare revenue increase to 7.5 percent in 2011, as agreed to with the Governor and Legislature in May 2009 as part of the MTA rescue package. The Plan faces many risks, however, including the need for labor participation to control wage and benefit costs, according to the MTA. The July Plan is preliminary; the MTA Board will consider a final Plan in December.
The Plan relies on three key components. The first is the continuation and expansion of the MTA's cost-cutting initiatives, which have saved more than $380 million in 2010, translating into more than $500 million in annual recurring savings and growing to more than $700 million by 2014.
The second key to the Plan is controlling labor costs, which make up two-thirds of the MTA's operating expenses. The Plan acknowledges that in the current economic situation wage increases must be tied to productivity gains or other cost savings. The Plan assumes that all employees — both represented and non-represented — would receive a "net-zero" wage increase for two years.
Finally, the Plan includes the 7.5 percent increases in fare and toll revenue in 2011 and 2013 agreed upon with the Governor and Legislature as part of the MTA rescue package approved last spring, which also included a series of new taxes to support the MTA and funding for the first two years of the MTA's 2010-2014 Capital Program.
"The foundation of this Plan is the most aggressive and comprehensive overhaul in the history of the MTA," said MTA's Chairman/CEO Jay H. Walder. "These actions have allowed us to hold true to our commitment regarding fare increases while maintaining the quantity and quality of service that New Yorkers rely on every day. The State's ongoing fiscal crisis is one of many risks to the Plan, but with continued hard work and the participation of our labor unions I believe that this Plan can be achieved."
The MTA proposed budget assumes that Nassau County will fully fund its obligation to support Long Island Bus. Under a 1973 lease agreement, the MTA operates the system as a contractor working on behalf of the County, which owns the bus system.
Through 1999, the County made up 100 percent of its funding obligation. Since 2000, however, when the County dramatically cut back its assistance for this service, the MTA has been forced to shoulder an increasing share of this cost, totaling $140 million. The MTA can no longer afford to subsidize this service, which would cost the MTA more than $25 million in 2011.
Full details of the Financial Plan and fare increase proposal are available, here.