Based on the congestion pricing debate, it looks like Bruno and Silver are looking for someone to blame for the transportation-related consequences of the debts and pension enhancements they enacted from 1990 to 2006 in order to pander to interests, hand out benefits, and make themselves popular, all the expense of a future no one cared about. Having apparently turned down Bloomberg's political gift, a funding source that he would have taken the heat for, they seem to have decided on Eliot Spitzer, who is the one person now in office who was not involved. And if Spitzer decides to bury his head in the sand rather than making the pain felt in 2008, when the legislature is up for re-election and he is not, they will succeed.
The next MTA capital plan is due by 2010, right when Spitzer is running for re-election. He will have to propose painful step after painful step to prevent a 1970s-like fiscal and infrastructure meltdown, something he has thus far elected not to do. Silver and Bruno (if he is still there) will (based on the congestion pricing experience) sit back and blast him for every proposal without making any themselves. Raise New York City’s business taxes, already double the national average? That’s costing us jobs! Raise sales taxes again? (We will be paying an extra 1/8 percent forever just to fund the MTA Capital Plan that is about to end). Unfair to the poor! Raise tolls. Cheating the hard working middle class! Raise fares by more than inflation? Bad for the environment! If Silver and Bruno don’t do it, Brodsky and Skelos will. While blasting every proposal, the legislature will demand concessions for its supporters in exchange for merely allowing Spitzer to ward off disaster. And if no deal is reached and disaster occurs, they'll blame him for that too. They don’t care. They don’t have to. They are a political monopoly.
So what should Eliot Spitzer do? He should make sure any painful steps he can impose unilaterally are in place on January 1, 2008. He should take measures to ensure all of these steps are associated in the public minds with the debts run up from 1990 to today, imposing a specific surcharge on tolls, EZ-Pass bills and Metrocard purchases rather than a straight fare and toll increase. Ads, handouts and announcements on the subways and buses, billboards in the toll plazas, and notes on the EZ-Pass bills, should specify the share of the service reductions and fare increases that have resulted from decisions made by the MTA Board and New York State Legislature in the past.
What should the budget look like on January 1, 2008? The MTA should stop borrowing money to fund what are arguably operating costs, including TA Labor Services and CPM staff and consulants for New York City Transit capital projects and their equivalents in other transportation agencies across the board. That is going back to the pre-1990 practice. (The reader may not know what these things are, but Spitzer should certainly find out). Track work on signal projects should similarly be designated an operating costs, because that is less maintenance track work that will need to be done. Painting should no longer be a capital budget item – all painting projects should shift to current dollars immediately. More conservative assumptions should be applied to the pension system, and more funds set aside. The budget should assume a normal level of real estate transfer taxes rather than a gusher. Given the building crisis in the debt market this may be the last big year for big deals anyway – the 7/18/07 Wall Street Journal reports that Moody’s has suffered a loss of business by raising credit support standards for high-righted commercial real estate debt, but the other agencies are sure to follow. No projects in the current capital plan should be deferred, at the expense of the future. Not one.
All this should be paid for by service reductions, fare surcharges and toll surcharges. And if extra money is collected, because the real estate boom goes on a little longer, it should be set aside for the 2010 to 2014 MTA Capital Plan.
Moreover, Spitzer should direct the MTA to pre-approve a 2010-2014 MTA Capital Plan with two alternative funding streams. One would be additional fare surcharges, toll surcharges, service reductions, and investment cancellations similar to those enacted at the start of 2008. The other would be “alternative revenues included by the New York State legislature.” If the latter do not materialize by June 30th, 2008, the former would take effect.
In the past, whenever hard choices were required, the future, new public employees, and New York City’s children were sacrificed. Spitzer should draw a number of lines in the sand – no cuts in New York City school aid or the share of school aid going to New York City, no increase in state taxes, no increase in the contribution demanded by New York City since other parts of the MTA service area have cut off funding for the MTA, and no more shifting burdens to the future through additional debt or deferred maintenance. He should make clear that no matter what the legislature enacts, the MTA will not issue more debt after 2009. Neither will it award capital projects based on additional debts passed over his veto. No matter what happened as a consequence, at least that will make it possible for a recovery to occur in some more enlightened time.
With this choice in place, Spitzer should sit back and wait for the legislature to make proposals. And he should blast the negative consequences of whatever proposals are made, making pains to reach out to whoever would be negatively affected. If criticized for lack of leadership, Spitzer should say that he wouldn’t insult Silver and Bruno by assuming they could be led. If asked to negotiate, he should say negotiations are not necessary since he has surrendered – the reality is the legislature has won, the money is gone, and he – and the rest of us – just have to await our fate. If criticized for raising money for 2010 in late 2008 and 2009, that than just spending it to keep fares down, he should say that he will not allow a 1970s-like collapse on his watch, and there is no guarantee the legislature will pass any alternatives. If they do, and do not violate his few principles, the automatic fare increases and service cuts need not take place. If the state legislature tries to put the blame solely on former Governor Pataki, Governor Spitzer should say that the legislature had not problem voting down congestions pricing and could have voted down the 2000-04 and 2005-09 MTA Capital Plans. The pension enhancements, of course, are primarily the legislature’s doing. From what I read, they still continue.
Spitzer may be tempted to sweep problems under the rug until some disaster on someone else’s watch, like Pataki, but it appears that by 2010 it will be too late for that, especially if there is a recession. If Spitzer waits longer, then his “mismanagement” of the MTA over two years, not decisions by the legislature for nearly two decades, will be blamed. The state legislature loves the practice of handing out benefits to small numbers of well connected constituents, sacrificing the future, and leaving others to take the blame whenever the bills come due. That has been the game plan for nearly 20 years. Eliot Spitzer should ask himself – does he want to deceive the public in the short run, so that he can be the fall guy in the future?
Based on his Wall Street experience Eliot Spitzer is apparently a man who believes that if people are told the truth, even if the truth is an additional 10 pages in a 450-page small print document, correct decisions should be made and everything should work out. So what should the MTA pamphlets, announcements, and billboards say on January 1, 2008, when fare and toll surcharges are imposed? The truth. I recommend the following:
“From 1991 to 2007 New York State and its local governments cut support for the MTA, allowing them to cut taxes and increase spending on other things; Metrocard discounts were added, meaning the fare has gotten much cheaper relative to inflation; the state legislature enriched pensions for transit workers and reduced the worker’s contribution to their retirement; and the health care industry charged the MTA more and more for enhanced health care for its employees and retirees. These were great deals for everyone who mattered at the time, and were very popular.”
“The MTA paid for this by borrowing billions of dollars and, until recently, not contributing enough to the pension funds. More recently, some maintenance has been cut back and the MTA has tried to convince its unions to pay for enriched benefits for prior employees and retirees with lower benefits for new hires.”
“Now all this money must be paid back, so a fare (toll) surcharge and additional service cuts are required. More such steps may have to be taken if repairs and improvements to the transit system are to continue, and a 1970s-like collapse is to be avoided.”
“Former Governor Cuomo and, in New York City Mayor Dinkins, initiated these policies during the fiscal crisis of the early 1990s. Former Governor Pataki and subsequent Mayors and county executives continued these policies in good times and bad. The New York State legislature approved the debts, and the pension improvements, without a single ‘no’ vote.”
“The legislature presumably believed it was doing what its constituents, many of whom were older or would end up moving away before the bills came due, wanted. Although many analysts and journalists were critical, the people re-elected almost all of the state legislators, many of whom ran unopposed. This indicates the people approved of taking the benefits in the past, and paying the price today. Similar decisions have been made in other cases. For example, the trust fund that was intended to maintain the state’s roads was diverted to other things, and much of the state’s motor vehicle revenues now goes to pay debts and not maintain the roads. The State of New Jersey and its transportation system are also in dire straights.”
“The MTA staff is committed to the future of the transportation system and the Downstate Region, and will do its best to preserve its future regardless of the short tern consequences. It will continue to look for ways to cut costs and corners. But it must abide by the decisions of the elected state legislature, the legislature you elected.”
There you have it. A much fairer statement of what the situation is than member of the state legislature is likely to make. It shouldn’t be put in a press release intended to form the basis of a newspaper article no one will read. It should be handed out with every Metrocard or commuter rail receipt, be printed on every EZ-Pass bill, be placed in the ad spots on subway cars, and be listened to in announcements as trains or buses, or on radios as motor vehicles pass through MTA tunnels. On January 1, 2008. No matter that. I do not want to pay an additional exorbitant price to defer the crisis until 2010, or (if Spitzer decides to play the same game) 2011.