Tuesday, December 08, 2009

MTA Budget In Jeopardy Once Again

Just days after the MTA Chairman said that the MTA will not require fare hikes by 2011, word comes that the MTA is facing a $200 million hole in its budget because the newly enacted payroll taxes fell short of projections.

The tax was very unpopular in the counties where the tax was imposed, and it shouldn't have been surprising that the revenue projections fell short.

Indeed, the budget shortfall is now $343 million.
Now, on the eve of adopting a 2010 budget with no increases in fares and tolls, and no cuts in transit services, the agency is suddenly confronting a stunning $343 million shortfall.

"Obviously, it is too late in the year to deal with losses of this size," said Gary Dellaverson, the MTA's chief financial officer, in a memo to the board Monday. "As a consequence ... we will roll this problem into 2010 ... (and) the proposed budget that you will see (next week) will require very difficult choices."

Dellaverson said the first blow came from Gov. David Paterson and the state Legislature in the form of a $143 million cut in the agency's 2009 aid package — the first time that an existing appropriation has been reduced.

The cut, part of the deficit reduction plan that lawmakers passed last week, comes seven months after they fashioned a bailout to keep the MTA in the black. In addition, it represents the proceeds from an MTA-dedicated tax that has already been collected.

Then, Dellaverson reported that revenue from the new payroll tax that was the centerpiece of the bailout is under-running state projections by about $200 million for this year for as-yet undetermined reasons.

"This is a shocking development both because of the magnitude of the under-run — about 20 percent — and the late date of its discovery," he said, pointing out the state was confident about its forecast as late as last week.
In a recessionary economic climate, rosy revenue projections are going to fall well short of what was required. Yet, everyone seems to have a blind eye to that possibility as they look to taxpayers for a bailout at every opportunity. There just isn't the job creation and payroll to be had to provide a stable source of income.

Therein lies the big problem with funding infrastructure; tax revenues fluctuate with the economic climate and higher taxes all too frequently stifle economic growth while the infrastructure needs remain omnipresent. Mass transit costs aren't getting any cheaper, and yet the tax revenues are anything but dedicated funds, and states often skimp on infrastructure by deferring maintenance and that only leads to more expenses down the road.

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