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How to Fix the MTA

A five-point plan for saving the subway.


Go ahead, blink. The recent headlines about the transit system are worthy of disbelief. At the very moment that the MTA was poised to hike fares for the second time in two years, it had been fully prepared to accept $300 million from the Jets to build a new stadium over the West Side rail yards, even as its own appraiser put the value of the property at $923 million.

As transit worker J. P. Patafio told MTA chairman Peter Kalikow at a December board meeting, the agency is now “the most disliked and most dissed public authority in New York.” It can’t even deliver good news anymore: When the agency got the A and C trains back on track February 2, just ten days after a devastating fire, many commuters reacted with scorn for New York City Transit chief Lawrence Reuter, who had suggested that repairs might take five years. “How come it went from years to weeks?” asked Public Advocate Betsy Gotbaum. “Are they gluing it together?”

Yet for all the popular antipathy toward the MTA, the transit system’s financial situation truly has become desperate. The new fare increases—on February 27, 30-day MetroCards will rise in price from $70 to $76, seven-day MetroCards from $21 to $24, and express buses from $4 to $5—will plug the MTA’s budget gap for just about a year. If current trends hold, the agency will start to pile up operating deficits all over again in 2006, which will swell into hundreds of millions of dollars annually and force further combinations of fare hikes and service cuts. The MTA also needs a new capital plan, but has no way to pay its long-term bills.

As the MTA’s financial crisis deepens, one thing is clear: Albany won’t be sending its cavalry to the rescue. Governor Pataki has been starving the MTA for a decade now, and has shown no inclination to change his priorities. In his latest budget proposal, the one that’s supposed to fund the MTA’s new capital program, the governor didn’t even pretend to find the money to pay for the last two years of his five-year transportation plan. Pataki’s leaving that, he said, to “innovative financing mechanisms” and “public-private partnerships” yet to be discovered.

If the MTA were a private company in need of restructuring, it’s clear what a ruthless turnaround specialist would do. He would start with the 55,000 people who work for the MTA, slashing the agency’s generous pension contributions, which mushroomed 158 percent from 2002 to 2005. He would also demand cost savings and productivity increases from them and basically threaten to bust their union. Then he would turn his attention to the customers and wipe out the least popular bus and subway routes, mostly in the outer boroughs.

In the public sector, however, little of this is possible politically. The transit system is not like an airline, which can threaten to go out of business if employees refuse to take their lumps. Transit workers perform services vital to the daily lives of New Yorkers, and they also form a potent voting bloc. More than that, they have the ability to terminate political careers with a strike.

The MTA is a vast organization that oversees not only the city subway system but the Long Island Rail Road and the Metro-North lines, as well as seven bridges, two tunnels, and some buses. In the not so distant past, the agency had chairmen who were powerful, creative advocates for mass transit, such as Richard Ravitch (1979–1983), Robert Kiley (1983–1991), and Peter Stangl (1991–1995). Under their leadership, the MTA obtained city, state, and federal money for track repairs, vehicle refurbishments, and graffiti removal. Since 1982, government at all levels has invested a combined $48 billion in the subways, buses, and commuter railroads, and the results have mostly been astounding. Transit crime has plunged, graffiti is essentially gone from the system, subway derailments are way down, and bus ridership has jumped 50 percent in eight years.

But over the past decade, the MTA has lost its political independence, which has led directly to its abandonment of fiscal discipline. In 1995, Pataki appointed Virgil Conway, a Republican crony, to head the Authority, beginning the transformation of its chairmanship into what former City Parks commissioner Henry Stern calls “a plum to be given to a rich man who supports the governor.” Conway dutifully held his tongue as Pataki wiped out state grants to the MTA, forcing riders to assume its capital costs and leading the agency to borrow heavily. The commuter lines were mostly spared the pain, while the subway bore the brunt of it.

In 2001, Kalikow, a public-spirited developer who is tight with Pataki and Al D’Amato, replaced Conway, and in 2002, Katherine Lapp, who had been director of the state’s criminal-justice system, became executive director of the MTA. Insiders praise both for their professionalism. But now the bills run up by their predecessors are coming due. The costs of the MTA’s debt service will rise from $916 million last year to $1.3 billion this year to a projected $1.7 billion in 2008, at which point interest charges will be gobbling up more than one of every three fare dollars. Wages, meanwhile, have spun out of control, and here’s one sign of how bad they are: The average MTA bus driver earns more than the highest pay scale provided for in the transit workers’ collective-bargaining agreement. How did that happen?

The bottom line is that the MTA is under severe constraints: It’s being crushed by debt and labor costs, but it can’t do much to reduce either one. Indeed, its operating budget now suffers from what State Comptroller Alan Hevesi calls a “serious structural imbalance”—revenues are rising 1.5 percent a year, while expenses are growing 5.5 percent a year. “It’s like buying a $2 million house and then, lo and behold, you can’t make the mortgage payment,” says a state official who has examined the MTA’s borrowing and spending. “No shit.” So how does the MTA dig out?

Empty some cubicles. It shouldn’t be that hard to find candidates for pink slips: The MTA employs 444 people in marketing and public relations, as well as 698 people in human resources; 443 in legal departments, despite spending $10 million a year on outside law firms; 359 in budgeting and accounting; and 166 in labor relations, according to a report Hevesi issued in October. Attacking government waste is often nothing more than cheap sound-bite politics, but not in this case. The situation is summed up by the comments of a former senior executive at the MTA, who had originally agreed to speak on the record. “I don’t think the agency is inefficient,” he started, diplomatically. “There are always ways to cut costs.” Then he asked if he could speak without attribution, and continued: “It’s a total fucking disaster. I don’t know how else to describe it.”

The MTA is a maze of gigantic, overlapping bureaucracies. To take just one example, each of the MTA’s subsidiary agencies has its own payroll system, and New York City Transit by itself has more than one. Only the MTA knows just how much it could slice by making a serious attempt to eliminate unnecessary and duplicative systems, but there’s little doubt it’s more than the $69 million in administrative savings the Authority has announced for 2005.

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