MTA Board Must Not Approve Fare Hikes if Governor Raiding Dedicated Funds

Good morning. I am Rachael Fauss, Senior Research Analyst for Reinvent Albany. We advocate for more transparent and accountable New York government, including for state authorities like the MTA.

I’m here to sum up our message today as follows: the MTA board must not approve $148M in fare hikes for 2021 while Governor Cuomo is planning to raid at least $600M in MTA dedicated funds.

As the MTA said in July, it is asking for $12B in federal emergency funding, including $600M to compensate for the loss of “state subsidies.” (“Subsidies are a euphemism for dedicated taxes, in this case primarily Metro Mass Transportation Operating Assistance “MMTOA” funding.) This $600M was added on top of its spring deficit of $10.3B which already accounted for COVID-19 revenue losses from ridership and its economic impact on MTA dedicated taxes.

To be clear, we fully support the MTA getting billions in much-needed federal COVID emergency aid, but at the same time more federal aid is not a license for the Governor to raid at least $600M of MTA funds.

Members of the MTA board are legally fiduciaries of the authority. Essentially, in law the Board “owns” the MTA. It would make sense that the MTA Board understands the assumptions made by staff in its 2021 budget proposal. Unfortunately, it is not clear in MTA budget documents that staff are assuming that the state of New York will be raiding at least MTA dedicated funds to prop up its own budget shortfalls. This is before the State Legislature — which by law passes the state budget — has been able to weigh in on formal cuts to this year’s budget, or pass next year’s.

MTA budget documents do not show exactly how much has been lost in tax receipts for its dedicated funds, and how much additional the state is skimming off the top to balance its own budget. The MTA is budgeting for MMTOA to drop from $2.1B to $1.4B in 2020, and down to $1.3B in 2021. These drops of $700-$800M represent a loss of a third of the expected revenue for 2020, and 37% for 2021. State across-the-board cuts are being applied at a 20% level. So why is MMTOA — the MTA’s largest single source of dedicated revenue — being cut by much more than this? And where is the data to show how much of this loss is due to tax receipt shortfalls? It’s not in the MTA’s or NYS’s public financial plans. A jump from 20% to over 33% is roughly $300M more for 2020, and $375M more for 2021. For the state to cut beyond tax receipt shortfalls makes a mockery of the whole idea of dedicated funds, which were created by the Legislature for good times and bad.

Again, it is unacceptable that the MTA is considering fare increases on riders to raise $148M in 2021 when its own state plans to raid at least $600M of MTA dedicated funds. The MTA is in much worse shape relative to NYS, and riders deserve to have 100% of the MTA’s dedicated tax receipts that come in delivered to the MTA at its time of greatest need.

Thank you for your consideration.