Saturday, December 10, 2005

New York's MTA: A Past and Future Deficit at the Authority

The Metropolitan Transportation Authority (MTA) of New York is the main transportation agency for New York City and Long Island, with service through southeastern New York and Connecticut, since becoming chartered by New York State in 1965. (1) The MTA has expanded little since its inception, with much of the infrastructure already in place by 1965. However, it has taken on some additional responsibilities and services. In 1973, through the combination of ten private bus carriers, the MTA formed Long Island Bus. (2) Also, two small expansions to the subway system were completed in the 1980s, with the construction of a tunnel between Manhattan and Queens and an extension to a subway line in the Jamaica section of Queens. (3) Much of the responsibility for the MTA during its four decade history rests with the maitenance of the existing system, from the infrastructure to its employees.



The MTA has certainly improved the image of its system since the dark days of the 1970s and 1980s (4), however, the agency has still be accused of ethical lapses over the years, even to this day. This was especially true in the early 80s:

"Many residents living near the West End El complained that noise from the trains was increasing. While a multimillion-dollar noise abatement program was underway in 1980, most of the funds were spent on underground stations, leaving the West End El unaffected. Sound studies performed by a Federal team measuring elevated railway noise throughout the country measured the 18th Avenue station between 98 and 106 decibels. (A jackhammer is rated at 95 decibels). Any sound above 85 dB can cause hearing loss; you know that you are listening to an 85-dB sound if you have to raise your voice to be heard by somebody else." (5)

The system was in disrepair at the beginning of the 1980s, due to the fact that the 1970s were a time of financial crisis for New York City and the MTA had put off maitenance on the infrastructure and equipment in the 1960s and 1970s as a "deferred maitenance" program. (6) This program directly led to the poor condition of the subway system by 1980.

"The Transit Authority always claimed that lack of funding is what led to the deplorable condition of the subway in 1981. There were also accusations of mismanagement cited by the press. One example cited was $300 million spent on subway cars only to find out that they didn't fit properly in the repair shops. Millions more were spent on spare parts that were stored in leaky warehouses and forgotten, while maintainers lacked the necessary spare parts to keep subway cars running.24 The subway car shortage became so acute at one point that vacations were cancelled and overtime for car maintainers shot through the roof." (7)

A further pressure on the MTA, in addition to this claim of a lack of funding, was the poor relations it had with the union of its employees, called the Transit Workers Union (TWU) Local 100. (8) A crippling strike by the TWU Local 100 started on April 1, 1980 and did not end until the 11th of that month. (9) The strike cost New York City many millions of dollars (10) and left another black mark on the record of the MTA.

At the time of another strike threat, this time in late 2002, the MTA once again stated that its finances were on shaky ground. (11) Not long after the labor situation was finally settled and a strike averted, accusations of mismanagement were thrown once more. (12) By the spring of 2003, the MTA was under investigation by the State and City Comptroller. The State Controller, Alan G. Hevesi, stated that the MTA misled the public about its financial situation. (13)

"It is no secret that there are serious and wide-ranging questions about the finances of the Metropolitan Transportation Authority (MTA). The agency misled the public by moving resources without disclosure and misstating its financial status. As a result, the MTA has lost the public’s trust – a situation that is unacceptable for an agency that plays a vital role in the daily lives of millions of New Yorkers. Major changes are needed to re-establish the MTA’s fiscal credibility and restore public confidence." (14)

The City Controller also had harsh words to say about the MTA's practices:

"After three months of analyzing the New York City Transit Authority’s finances, I have concluded that the MTA has broken its public trust and misled New Yorkers with unclear and inaccurate reporting of its financial position." (15)

The issue was finally put to rest on October 1, 2003, when the Court of Appeals refused to hear the lawsuit by the NYPIRG Straphangers Campaign,(16) a transit watchdog agency, against the MTA over the fare hike placed in 2003, citing questionable finances and records. The campaign hoped to reverse the decision to implement a fare hike on MTA customers until the MTA could prove that there were large deficits to come for the agency. Although the Comptrollers found many flaws in the MTA's finances and public reporting, the Court of Appeals essentially ruled in favor of the MTA when it refused to hear the Straphangers Campaign suit. In effect, the fare hike was in place and the MTA was not forced to change its practices on its finances. Thus, the solution was that there was no change at all.



Now, with the MTA reporting a large surplus, (17) the issue over the MTA's accounting and financial practices may pick up where the Court of Appeals settled it in 2003.

There are several ways to try to fix future accounting and funding problems at the MTA as well as restore the integrity and trust in the MTA. The first would be to establish an independent accounting agency. Another option would be to give more power to the Mayor of New York City in the 17-member Board that governs the MTA. (18) A third option would be to secure more funding for the MTA from the State of New York. Finally, there are the ideas set forth by Assemblyman Jonathan Bing (Democrat-73rd District). (19) All of these plans have its pros and its cons.


Jonathan Bing outlines a vision on his campaign website.

An independent accounting agency would not be under the leadership of the MTA, but would instead be a separate entity that, in theory, would report the financial situation of the MTA without bias. There are definite pros to such a solution. First, it would take away the claim by the TWU Local 100 that the MTA is falsely reporting their financial situation as a reason not to give the union more money in the next contract. An independent report may actually build trust between the MTA and the TWU Local 100 and may put the brutal contract negotiations of the past to rest. Additionally, an independent report would also give numbers that everyone interested in the MTA's future plans could agree upon. Though the Mayor of New York City, the Governor of New York State, the county executives of the other counties served by the MTA, and the New York State Legislature would still constantly dispute one another over funding, the independent reports would guarantee that none of those entities could bolster their argument or counter another's argument by stating that the numbers are biased or are not real in some fashion.

There are a few troubles for establishing such an agency. The overarching problem would be control. An independent agency cannot exist in a vacuum. It would need to be governed by some authority. The instant solution would be to govern the agency through a joint venture by the Governor, the Legislature, the Mayor, the country executives, the MTA, and the labor union. That is already six entities (if all county executives outside New York City are counted as one) to govern over the independent accounting agency. This is not including the possibility that the major public accounting firms would not be invited to verify the numbers. Each of these entites have competing interests. It will not be easy to reconcile those differences and come to an agreement.

While the areas served by the MTA are all interested in having the MTA in solid financial standing, each of those entities would still have differing interests over where the money would be invested. Figuring out how much each entity would be worth when governing the independent agency (assuming that they won't all be equal to each other) would take much fighting and posturing and perhaps some dealmaking as well. There will also be separate factions within each of some of these entities. The New York State Legislature is split between the Assembly and the Senate. The Democratic Party controls the Assembly and the Republican Party controls the Senate. (20) There may also be factions within each house of the Legislature that would disagree with many proposals put before them. The New York City Council will definitely want a voice, especially one that can be a counterweight against the Mayor. County legislatures may also want to exert some influence in the system. Other statewide leaders such as the Attorney General would definitely want a hand. Lastly, the MTA and the TWU Local 100 may not want to enter into such an agreement together. Relations between the MTA and the union are not much better than they were since the last contract battle in 2002. A lot of negotiations between all parties involved have to be done before such an agency is started.

Assemblyman Bing favors the creation of an "Authority Budget Office" to "increase scrutiny of authority's financial activity." There are no plans for how such an office would be formed, but it is a part of the independent accounting agency that could be the solution to many problems of the MTA's financial problems.

The Board that governs the MTA has 17 members, however, most of the members are appointed by the Governor. (21) This creates an imbalance of power in favor of the Governor. Thus, the Governor is free to appoint people that will govern the MTA as the Governor wishes. This includes labor relations and the allocation of resources. Only 14 votes are counted when the MTA's Board makes decisions and of those, four of them are recommended by the Mayor of New York City. The Board is balanced in a way that Governor George Pataki has a strangehold of influence when it comes to setting MTA policy. Mayor Michael Bloomberg is the leader of the city that uses the MTA's system more than any other city or county. Giving the Mayor more influence over the MTA Board would likely ensure more scrutiny over MTA activities, given that the elected representative of the largest MTA customer base can exert influence over the Board.

The problem is one of control. Even if the Governor wanted to hand the reigns of power to the Mayor, there is still the issue of who is actually in charge. The MTA is a state agency and having a New York City representative in charge would create a power struggle between state lawmakers in Albany, the county executives, and the Mayor of New York City. It would take lots of sacrificing by each party involved to make such a thing work. With all the fighting that takes place currently, it is highly unlikely that such an agreement could ever be formed.

Increased state funding does not sound like a fix to an ethical issue at first. In fact, it sounds like the tired method of politicians to merely throw money at the problem. However, this method could reap benefits.

An increase of funding can put many of the conflicts that plague the MTA to rest. Increased funding will also bring increased scrutiny. The Legislature and the Governor have the power to tell the MTA how to spend the money. Also, there will be increased risk to anyone at the MTA seeking to claim poverty as the government and all interested parties will know that the funding was provided. Also, the battles between New York City and the state government in Albany as well as the charges of hiding money will decrease.

The obvious downside is that it is throwing money at the problem. There is no incentive for the Majority Leader of the State Senate, Joseph Bruno (Republican-43rd District), (22) who represents a district not served by the MTA, and the current Governor, who has been dependent on the upstate votes to win three terms as Governor, to support additional funding for a massive transit system that does not directly benefit their political bases. Also, there is no guarantee that the money will go to where it was intended to go. The largest example is provided by the Second Avenue Subway. This subway line, under Second Avenue in Manhattan, has been in progress for decades yet it is far from completion. Many times, the funding to build at least part of the line has not been directed to that particular project.

"Money from the 1951 bond measure was diverted to buy new cars, lengthen platforms and maintain the aging system. The proceeds of the 1967 bond act were partly used to begin tunneling under Second Avenue. Digging began in 1972; a few years later, the city became insolvent." (23)

Assemblyman Bing suggests proposals similar to the first proposal here but adds a proposal to implement new rules on the MTA regarding the sale of Authority property. (24) While the likelyhood of such rules embedded into law are not discussed, this idea has the same potential benefit as the first proposal had: to increase the scrutiny of the MTA's financial activities.

The catch that this proposal will take is that it will require the use of experts to determine what the fair market value of the properties will be and to deny the MTA the right to sell the property below market-value. Such a proposal will also require an agreement between various government officials to come to an agreement over how to implement such an idea and how to choose which experts will determine the value of the MTA's properties.

There are definite downsides to all of these proposals. In truth, many of these proposals would be quite hard to implement, due to political realities. However, I suggest that those in charge do not pick the one proposal that has the greatest chance of actually passing. I suggest that each and every proposal be given the light of day. All of these proposals at once form a strong package that can reform the MTA for years to come. If one proposal does not work as hoped, then it can be dropped and the rest can carry forward on their paths, instead of forming yet another committee to find ideas of what to do next or waiting for the next scandal to erupt in the faces of lawmakers and executives across the city and state.

This will take a massive public campaign. The only way many of these politicians would try to implement these plans would be if there were increaed public awareness of the situation. As it is right now, awareness isn't reached until there are situations like the near-strike in late 2002 or the breakdown of the system in the 1980s. Transit and passenger advocacy groups as well as those politicians already seeking change at the MTA, such as Assemblyman Bing and Congressman and former candidate for Mayor of New York City Anthony Weiner (Democrat-9th District). (25)

The package of proposals will also show the MTA that this isn't a minor attempt to win more votes for the next election and that everything will pass in due time. This would not be like the solution that was agreed upon last time, which left everything more or less at the status quo. These proposals will not be a magical fix for the short term problems. It could not be given all the negotiating between various government officials. However, once it is in place, the chances of having a solvent and trusted Metropolitan Transportation Authority are increased. Instead of maintaining the status quo and hoping the next generation can fix the problem, the leaders of New York should change course and implement this plan.





Footnotes:

1. Metropolitan Transportation Authority. The MTA Network.

2. Ibid.

3. Mark S. Feinman. "The New York City Transit Authority in the 1980s."

4. Ibid.

5. Ibid.

6. Mark S. Feinman. "The New York City Transit Authority in the 1970s."

7. Mark S. Feinman. "The New York City Transit Authority in the 1980s."

8. Ibid.

9. Ibid.

10. Ibid.

11. Greg Tarpinian. "New York City Transit Workers Are Fighting for All Workers."

12. New York Daily News. "Fare-Happy MTA Stashed Half a Bill."

13. Alan G. Hevesi. "Testimony by Comptroller Hevesi To New York City Council Transportation Committee on May 1 Regarding Metropolitan Transportation Authority Finances."

14. Ibid.

15. William C. Thompson, Jr. "The MTA's Numbers Don't Add Up."

16. NYPIRG Straphangers Campaign. "Court of Appeal Denies Fare Hike Case."

17. Pete Donohue. "Whopping MTA Surplus Seen."

18. Metropolitan Transportation Authority. MTA - Leadership.

19. Jonathan Bing. "About the Issues."

20. Project Vote Smart. New York Legislative Leadership.

21. Metropolitan Transportation Authority. MTA - Leadership.

22. Project Vote Smart. Senator Bruno - Biography.

23. Sewell Chan. "The Bond Passed. Now Comes the Hard Part: Actually Building a 2nd Avenue Subway."

24. Jonathan Bing.

25. Anthony Weiner. "Solution 2: Protecting and Improving Our Subways."

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