MESSAGE
| DATE | 2009-03-19 |
| FROM | Ruben Safir
|
| SUBJECT | Subject: [NYLXS - HANGOUT] The MTA press agentat the NY Times
|
In reference to:
http://www.nytimes.com/2009/03/20/nyregion/20mta.html?ref=nyregion
Math Appears Faulty in Senate M.T.A. Plan
Article Tools Sponsored By
By WILLIAM NEUMAN
Published: March 19, 2009
For weeks, Democrats in the State Senate have raised questions about a
financial rescue plan for the Metropolitan Transportation Authority by
repeatedly sounding a central theme: The authority’s numbers cannot be
trusted.
But when the Senate majority leader, Malcolm A. Smith, proposed a scaled
back, short-term bailout plan this week, he was met with a similar
complaint from the transportation authority and its supporters: Mr.
Smith’s plan, they said, would not work because he had the math wrong.
A review of the charges and countercharges shows that on several major
points, Mr. Smith’s critics are right.
At issue is a plan developed by Richard Ravitch and supported by Gov.
David A. Paterson that calls for imposing tolls on the East River and
Harlem River bridges, taxing payrolls in the 12 counties served by the
authority and increasing fare revenues by 8 percent.
Doing those things would close the authority’s budget shortfall, $1.2
billion this year, and provide money for a capital program for years to
come. Without those measures, the authority says it will have to slash
services and raise revenues from fares by 23 percent.
The Senate Democrats, who hold a 32-to-30 majority, have rejected the
idea of bridge tolls.
As an alternative, they propose imposing a smaller payroll tax than the
one in Mr. Ravitch’s plan and increasing fare revenues by 4 percent. Mr.
Smith says that his plan would provide the authority enough money to
operate through next year and buy time for a longer-term solution.
But aides to the governor say that the Senate plan contains at least two
basic errors — and a review of the data backs up their critique: the
Senate plan overstates the amount of money it would raise over the next
two years by more than $700 million. The governor’s office said that to
make up for the shortfall, the Senate would have to increase fare
revenues by 13 percent.
Marc Shaw, a senior adviser to the governor, said the Senate plan
miscalculated the amount of payroll tax that could be collected this
year, overstating the amount by about $300 million.
The reason is based in the way the state collects taxes and the way the
authority does its bookkeeping.
The Senate plan assumes that a full year’s worth of tax receipts would
pour into the authority’s coffers this year.
But Mr. Shaw said that because the tax, like other similar taxes, is
collected quarterly (in part this is meant to make it easier for
employers), money from the final three months of this year would not
reach the authority until January 2010. That means that the authority,
which uses what is known as a cash method of accounting, cannot show the
final quarter’s tax revenues on this year’s books.
The Senate plan gets that wrong, projecting four quarters of tax
receipts this year.
Mr. Shaw said that in working to develop the Ravitch plan, the
governor’s office had tried to find a way around the collection and
accounting obstacles but was told by the state budget office and the
finance department that it could not be done.
The second error in the Senate’s plan is one of simple math: the Senate
mistakenly turned a series of expenses into income.
Under the Ravitch plan, the authority would use hundreds of millions of
dollars from the payroll tax to finance bus costs that had previously
been paid for by New York City and the surrounding counties.
The Senate plan eliminates that provision. But in its proposal, it makes
a mistake in accounting for those bus costs. Instead of simply removing
them from the transportation authority’s balance sheet, it turned them
into income.
The mistake adds up to $409 million over the two years of the Senate
plan.
Initially, Senate officials denied that they had made any mistakes, but
later they blamed the authority for the errors.
“The blatantly ambiguous manner in which they categorized their numbers
clouded the picture of their finances,†said Austin Shafran, a spokesman
for Mr. Smith.
“If the math was wrong,†he said, “it was wrong based on the way they
gave us the numbers.â€
But Mr. Shafran said that Senate staff members had not checked their
numbers with the authority or sought clarification.
He also said that Senate staff members were not aware of the bookkeeping
issues related to the payroll tax and that the Senate believed it could
find a way to allow the authority to show a full year’s tax receipts
this year.
Mr. Smith has made other assertions about the authority that do not seem
to hold up.
On Tuesday he questioned how the authority could say that it needed to
increase its fare revenues by 23 percent at the same time that it
supported the Ravitch plan, which calls for an 8 percent rise in fares.
What Mr. Smith failed to acknowledge is that the lower fare increase in
the Ravitch plan is possible because the plan creates other revenue
sources for the authority — namely the payroll tax and the bridge tolls.
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Your article about the Senates plan for the MTA is hogwash. You accept
the MTA's numbers are real when factually, the MTA is wasting money at
record levels. You also accept at face value that the MTA Capital
budget is somehow separate from its operating budgets which is also
hogwash. The fares guarantee the bonds that the MTA has. The MTA can
do with the Senate proposition and if the State Mandated a fare freeze
and did nothing else the MTA would just end the 15.2 BILLION dollar LIRR
extension to Grand Central and their books would magically balance. And
if they fired 10% of all non-operations personel, even more so. And if
they didn't buy Subway Cars at 10X the necessary price, we wouldn't even
be having this conversation.
I will leave New York if the bridges are tolled or if the MTA is given a
self-sustaining fund of tax revenues. I want them to grovel back to the
Senate every time they need toilet paper.
How else are you going to control them. You reporters are so gullible.
Ruben
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