M.T.A. director says coming toll hikes will pay for pension costs, barely

Hilary Ring. (Dan Rosenblum)
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If the Metropolitan Transportation Authority votes to raise fares and tolls for a 7.5 percent revenue increase, as currently planned, nearly all of the resulting revenue will go toward covering the rising costs for employee health care and pensions.

That’s what the agency’s director of government affairs Hilary Ring told the City Council’s transportation committee this afternoon.

“Essentially the fare increase and the toll increase is almost dollar-for-dollar being eaten up by our increase in pension and retiree health care costs,” Ring said.

The increases, proposed for 2013 and 2015, are expected to bring the agency $900 million in additional revenue by 2015, against an estimated $810 million in additional employee costs. The planned increases follow service cuts and toll hikes instituted early last year.

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(In a recent meeting with the authority's citizens’ advisory committee, M.T.A. head Joe Lhota said there would be no more service cuts to tie together the $12 billion budget.)

“It’s hard for me to believe that we’re going to have that type of an increase and we’re going to have no restoration and no improvements in services,” said Council transportation chair James Vacca.

Though the board still has to go through a final draft and public hearings before a vote on the toll hikes in December, the increase is likely to pass unless the agency gets an unexpected windfall.

When Vacca asked Ring if the plan could be avoided, Ring said, “No, I mean that’s the plan. The board obviously has to make that determination, the M.T.A. board, but right now, I don’t see any way to avoid that. We need that revenue.”

Along with the rising costs, the hikes are made necessary by lower-than-expected tax revenue, according to M.T.A. budget director Douglas Johnson. He said falling Wall Street bonuses could could cause a “modest reduction” of agency revenue. 

The M.T.A. has looked at other revenue streams and cost savings. It expects $250 million for leasing or selling off real-estate assets like its offices on Madison Avenue near Grand Central Terminal.

The only bright spot, amid the red ink, came when Ring commended House Republicans for appearing to back off of a federal transportation bill that would threaten approximately $1 billion in federal money for local capital projects.

Staten Island Councilwoman Debi Rose asked Ring about cash tolls on the Verrazano-Narrows Bridge which she said were already too high at $13.

“I would imagine it’ll be in the mix like all of everything else, but I can’t tell you how much,” Ring said.

He pointed out that EZ-Pass tolls cost less than cash tolls and could potentially be raised in parity with the others.

“I want the record to reflect that I think that’s ridiculous and I would not be supporting any toll raise for the Verrazano Bridge,” Rose said.

Flushing councilman Peter Koo congratulated the M.T.A. for keeping service running all night, but said many stops looked like third-world stations in their current form. He said the nearby Park Place station had peeling paint.

“I mean this is a first-world city and we cannot even do basic maintenance," Koo said. "When you walk on the platforms, they’re dirty."

Ring said some were cleaner than others.

“The station I go through every day at Times Square, I mean you could practically eat off the floor there," Ring said. "It’s just amazing.”

The Council has little more than advisory power over the M.T.A.’s budget, but Vacca asked the four agency representatives to at least think carefully before they vote. He said afterward the agency hasn’t taken into account state dedicated revenues or potentially increasing ridership.

In 2012, New York City is expected to contribute $782 million to New York City Transit for operating expenses and $100 million in capital funds to build projects.

Asked by a reporter during a break in the hearing whether he would be open to using more city money to aid the M.T.A., Vacca said he could be open to it, but things hadn't yet gotten to that point.

“I think this year the city may have an opportunity to look at that,” he said. “I think that we’re in a little better financial situation than we have in the past, but then of course we want assurance from the M.T.A. that if we do do that, what does that mean, and what are they coming to the table with in so much as their resources and their revenue.”

Separately, the hearing addressed two other budget matters. Prior to the M.T.A. testimony, Taxi and Limousine chairman David Yassky asked for the Council's help to extend the city's authority to collect more than $20 million in outstanding fines. And Department of Transportation commissioner Janette Sadik-Khan testified to cost savings within her department, including some achieved by installing Muni-meters.