Cuomo’s Budget — And Likely Transit Raids — Coming Tomorrow

Cuomo releases his first budget tomorrow. The Daily New reports that, like last year's budget, it will take dedicated transit funds out of the MTA's hands. Photo: ##

With Governor Cuomo’s first executive budget set to be released, tomorrow is an important day for transit riders. We’ll find out whether the new governor will continue Albany’s practice of stealing dedicated transit funds to plug budget holes elsewhere, try again to reduce the state’s meager contribution to student MetroCards to nothing, or decide instead to balance the state’s enormous deficit without putting that burden on the still-struggling MTA.

Tomorrow’s budget is expected by all to be brutal. With the state facing a $10 billion budget shortfall, cuts will be both broad and deep — especially since Cuomo is expected to shun $5 billion in revenue by allowing the state’s current higher-income tax bracket to expire. Part of the gap is expected to be bridged by re-purposing revenue from transit taxes, in what state comptroller Tom DiNapoli has referred to as a “fiscal shell game.”

The Daily News’ Pete Donohue is reporting that Cuomo will again take funds specifically dedicated for transit and use them to pay for other pieces of the state budget. Previous raids stole enough from transit riders to pay for all of last year’s once-in-a-generation subway and bus cuts.

(One quibble with Donohue’s otherwise excellent piece: What Cuomo’s likely to do won’t really be a “reduction in MTA funding.” That would be the case if these were discretionary funds like the state once provided, but those have almost been cut back to almost nothing, replaced with money from dedicated revenue streams. Albany isn’t giving less of its money to the MTA, but taking the MTA’s money away from it.)

Donohue’s source suggests that Cuomo’s raids will be small enough that neither further fare hikes nor service cuts will be necessary. It’s not entirely clear how that’s possible, however. Every time Albany reaches into the MTA’s pocket, the money has to come from somewhere. Further layoffs? A new kind of fiscal sleight-of-hand? One way or another, transit riders will have to pay.

  • Larry Littlefield

    Perhaps Cuomo will want the MTA to do what Pataki wanted it to do — go further and further into debt while not investing.

    This invites an equal protection lawsuit. Taxes only collected downstate are being spent statewide, which means there is in effect a separate, higher state tax in the MTA service area. And, those affected are disproportionately minorities.

  • eliot

    What a disaster. It’s unbelievable that as a society we’d rather cut essential public services for millions of people than impose a modest progressive tax on the most affluent. How far we’ve fallen since Oliver Wendell Holmes acknowledged that “Taxes are the price we pay for civilization.”

  • JK

    Larry, do you know of any dedicated fund suits that have succeeded on equal protection grounds? That’s interesting.

    Separately, how the MTA can “absorb” another dedicated fund raid without cutting service or raising fares should be closely scrutinized, will the MTA:
    > Cut maintenance?
    > Stretch out procurement?
    > Cut capital spending by shifting Pay As You Go into operating?
    > Not pay into the pension fund?
    > Raise fares by more than 7.5% in 2012?
    > Borrow? (Issue debt for “capital maintenance” that most accounting criteria would consider operating expenses.)

  • J

    I love how everyone accuses MTA of mismanagement, while at the same time cutting funding and then slamming fare hikes. It’s starting to look like the 1970s all over again with delayed maintenance propping up an increasingly underfunded system. This is doubly sad, since the system is experiencing record ridership and has a plethora of positive side-effects.

  • Larry Littlefield

    “Larry, do you know of any dedicated fund suits that have succeeded on equal protection grounds? That’s interesting.”

    This is different than, say, raiding the environmental trusts fund collected in the whole state and using it for other purposes in the whole state. This is taking taxes collected only in one part of the state and spending it elsewhere.

    What’s next? Using the New York City personal income tax for the rest of the state, too?

  • Hilary

    Where are MTA bondholders in this? In the old days Robert Moses always fell back on TBTA’s obligation to its bondholders to protect the authority from financial raids. Did MTA change to general obligation bonds at some point so that it no longer is material?

  • J:Lai

    “Where are MTA bondholders in this?”

    The fare revenue is what has been bonded. I am fairly certain that any attempt to divert fare revenue away from the MTA would violate the bond indentures. The various contributions from the city and state government, however, are not bonded.
    (Imagine the amount of leverage that would create — the state could issue GO bonds and use the proceeds to fund the MTA, which could then issue its own bonds based on the payments from the state! You could in theory create a chain of agencies that could borrow indefinitely off the same underlying revenue stream. I’m sure Goldman Sachs would underwrite it.)


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