NY transit riders still risk more hikes

NEW YORK CITY Thu May 7, 2009 12:45pm EDT

1 of 2. Elliot 'Lee' Sander, Executive Director and Chief Executive Officer of the Metropolitan Transportation Authority, speaks at the Reuters Infrastructure Summit in New York, May 7, 2009.

Credit: Reuters/Brendan McDermid

NEW YORK CITY (Reuters) - New York's Metropolitan Transportation Authority finally got a state bail-out but the nearly 9 million people who rely on it still could have to pay even higher fares than those now planned.

MTA Executive Director Lee Sander, speaking at the Reuters Infrastructure Summit on Thursday, explained that his agency's finances mirror the real estate market's performance.

Property prices, which started declining last year, do not have to match the extraordinary gains seen earlier this decade -- they just have to recover. If they do, "One could see that we might be OK," Sander said, noting his outlook also hinges on whether bridge and tunnel collections rise.

The MTA runs New York City's buses, subways and commuter rail roads, and several bridges and tunnels.

Fares and tolls will only rise about 10 percent this year, under the plan approved late Wednesday by state Senate Democrats. These are much smaller increases than the 20 percent to 30 percent range riders and drivers were warned to expect because the recession has cratered the agency's budget.

But instead of curbing fare and toll hikes at around the inflation rate in 2011 and 2013, as Sander had planned, there will be 7.5 percent hikes in each of those two years, he said.

And the new state plan only gives the authority enough money for capital projects for two years -- not the usual five years -- which means big-ticket expansions might be postponed.

"We have sidelined talks to add capacity until we get past next two years," Sander said, explaining this means focusing on just the so-called core program -- required upkeep, Manhattan's new Second Avenue subway, and connecting the Long Island Rail Road with midtown's Grand Central Station.

The list of projects left out includes a new Hudson River tunnel for New Jersey commuters, which that state has committed cash for, but which will later require dollars from New York.

The New York senate plan, which Governor David Paterson and Assembly Speaker Sheldon Silver have promised to back, creates a new payroll tax of 34 cents per $100 for the 12 counties that rely on the nation's biggest mass transit agency.

A 50-cent surcharge will be added to taxi trips, along with other driver-related fees. Raising fares and tolls next month by 10 percent, instead of the 8 percent first planned, will help the agency pay for its new capital program with $6.8 billion of bonds over the next two years.

Senate Democrats also won more oversight over the agency, which is still haunted by a former comptroller's accusation that it kept two sets of books -- only one of which was public.

Sander returned to the agency in 2007 after a mid-1980s stint running its bus arm. His emphasis on keeping the system in good repair reflects that first role, when he dealt with near-collapsing floors at two bus depots, legacies of the city's 1970's fiscal crisis that starved the MTA's budget.

Though the state must approve the MTA's plans to further merge its different arms, Sander said he had already axed two management layers. "You had an organizational structure, you know, that would probably make the Kremlin proud," he said.

Asked whether the MTA's rail yards in Brooklyn would see a basketball arena next year, part of a residential-office complex planned by developer Forest City Ratner, Sander said only: "I'm not in the arena business."

(For summit blog: blogs.reuters.com/summits/)