The Metropolitan Transportation Authority (MTA) is on stronger financial footing than seven months ago with $1.9 billion in unanticipated resources now expected to be available over the course of the financial plan period, yet it still plans to raise fares and tolls by 15 percent over a three-year period, according to an analysis of the MTA’s financial plan released today by New York State Comptroller Thomas P. DiNapoli. The MTA plans to use the bulk of the unanticipated resources to improve service and maintenance, reduce the size of projected budget gaps and help fund the next capital program.

“The MTA’s financial outlook is much improved. While funding the next capital program and improving services are critically important, reducing the size of planned fare and toll hikes must also be considered,”DiNapoli said. “There is plenty of time before the next scheduled fare increase for the MTA to refocus its efforts on reducing waste, which could go a long way toward easing the financial burden on commuters.”

Since February, the MTA has eliminated the 2014 budget gap and reduced out-year gaps to a cumulative total of $240 million from $638 million. The $1.9 billion in unanticipated resources during the financial plan period came from higher tax revenues ($482 million), lower pension contributions ($404 million), lower energy costs ($372 million), lower debt service ($317 million), and lower health insurance costs for active employees and retirees ($218 million) compared to the MTA’s previous forecasts.

DiNapoli cautions the MTA still faces budget risks, including the pace of the economic recovery and the impact of the next round of collective bargaining.

Other findings of the analysis include:

• Fares and tolls have risen much faster than inflation over the past six years. For instance, since 2007, the cost of a 30-day MetroCard rose by 47 percent, fares on commuter railroads have increased by 32 percent and E-ZPass tolls on the MTA’s major bridges and tunnels have risen by 33 percent. The MTA plans to raise fares and tolls again by 7.5 percent in 2015 and by another 7.5 percent in 2017 -- more than twice the projected inflation rate.
• Spending is expected to grow at an average annual rate of 4 percent through 2017, driven by higher debt service and fringe benefit costs. Debt service is expected to reach $3 billion by 2018, 45 percent higher than in 2012 and nearly double the amount from ten years earlier. These estimates exclude the cost of the next capital program.
• The MTA estimates that it would need to invest $26.6 billion during the 2015-2019 time frame to maintain and modernize the existing system, but financing these investments will be difficult in the current economic and budgetary environment. Additional funding would be needed to finish the East Side Access project and to begin new expansion projects, such as the next phase of the Second Avenue Subway.
• In an effort to reduce the impact of borrowing on the operating budget, the MTA has been taking steps to partly fund its capital needs with non-bond proceeds. The MTA plans to allocate $2.7 billion in operating budget resources to fund capital projects on a pay-as-you-go basis through 2020, which is $675 million more than seven months ago.
• The MTA expects cost-savings initiatives to generate $1.3 billion annually by 2017. Of this amount, $629 million would come from the paratransit program and $517 million from other initiatives proposed in 2009 and 2010 during the height of the MTA’s fiscal crisis. Since then, cost-reduction initiatives outside of the paratransit program have been modest, generating only $67 million annually by 2017. The MTA also anticipates savings of $95 million from unspecified actions.
• The capital financing strategy for the 2010-2014 capital program anticipated savings of $2 billion from efficiencies. The MTA reports that so far efficiencies have saved $825 million, but that it will not meet its $2 billion target from efficiencies alone and some projects will be deferred to the next capital program. OSC estimates that more than $700 million in projects could be deferred.
• The use of the MTA’s mass transit services will likely exceed pre-recession levels in 2013. Last year, ridership on the city’s subways reached the highest level since 1950 and ridership on Metro-North Railroad is on track to set a new record in 2013. Ridership on the Long Island Rail Road is not expected to return to pre-recession levels for some time and crossings on the MTA’s bridges and tunnels are still declining.
• Overtime costs set a new record of $681 million in 2012, which was $128 million more than planned. Of this, $42 million was attributable to weather-related events, including Superstorm Sandy. Overtime was $70 million more than budgeted during the first half of 2013 and could exceed last year’s record level.

For a copy of the analysis visit: http://www.osc.state.ny.us/osdc/mta6-2014.pdf