MTA's 'risk-laden plan' to avoid deeper deficits

MTA transit riders, including those on the Long Island Rail Road, could face steeper fare hikes in the future if efforts to balance the agency's books fall through.

The Metropolitan Transportation Authority is counting on a 7.5 percent fare increase next year, union givebacks and steady aid from the state to bridge budget gaps for the next several years, officials said Wednesday when releasing their adjusted midyear budget for 2012 and preliminary draft of the agency's 2013 budget.

"I have to emphasize this is a risk-laden plan," said MTA chief financial officer Robert Foran, who noted that if labor givebacks don't materialize, the agency would end this year with a $153 million deficit and that gap would grow to more than $500 million by 2016. "We can't let up. We have to continue to reduce costs."

If the MTA doesn't get everything it's asking for, board member Mitchell Pally said the agency may have little choice but to consider fare hikes greater than the planned 7.5 percent increases in 2013 and 2015.

The agency, which transports more than 5 million people each weekday on trains, subways and buses, expects to close out 2012 and 2013 with cash balances of about $46 million, which would be carried over to help balance the following year's budget.

MTA officials said they've climbed out of a budget hole that reached nearly $1 billion in 2010, through unprecedented belt-tightening. They have already achieved annual savings of nearly $700 million and expect that number to grow to $1.13 billion by 2016.

But Foran said a lot of things have to go right for the agency's predictions to become reality -- the biggest being an agreement by MTA unions to have labor costs frozen for three years. The agency is willing to give workers raises, but only if they are paid for through givebacks such as abolishing expensive work rules.

Anthony Simon, general chairman of United Transportation Union, which represents LIRR conductors, said the agency "should not hold MTA employees responsible if the financial plan is fragile."

"Our organization is well aware of what the MTA is hoping for," he said in a statement. "Our membership has been working hard and with great patience through hard times and deserves a fair contract."

Even if everything goes the MTA's way, the agency is looking at a $231 million budget gap by 2016, Foran said. But he said it is an amount that the MTA "can manage if everything falls into place."

Foran said the ballooning budget over the next few years is the result of uncontrollable costs, such as fuel and employee health insurance, growing faster than the rate of inflation.

Still, the MTA has caught some breaks this year, including growing ridership throughout its agencies, and lower-than-expected energy costs.

Those improvements helped the agency make some important investments, including the restoration of $29 million in service cuts made in 2010, and the extension of validity periods for LIRR tickets, which the board approved Wednesday.

Several transit advocates who attended the Manhattan meeting encouraged chairman Joseph Lhota and board members to push the State Legislature for increased aid.

"We definitely need to look at how the MTA is funded," said William Henderson, executive director of the MTA's Permanent Citizens Advisory Committee, which has pushed for new funding streams. "We can't keep going on like this, jumping from crisis to crisis. There has to be a permanent solution."

State Sen. Charles Fuschillo (R-Merrick), who chairs the Senate Transportation Committee, said he'd like to see the MTA come up with additional internal savings before looking for more help from Albany.

"The board should start looking within instead of continuing to look for outside help and balance its books on the backs of riders," Fuschillo said. "They have a long way to go to repair their reputation for not spending taxpayer dollars as efficiently as possible."