In my last post I mentioned two significant economic reports for New York City and wrote about one of them. Now I'll take on the other: The analysts at ratings agency Moody’s Investors Services, of all people, suggested that because of income inequality the Metropolitan Transportation Authority should get future revenue increases from tax hikes on the wealthy instead of from fare increases.

The Citizens Budget Commission last week spotlighted just how much the richest New Yorkers pay. Those making more than $1 million in 2016 accounted for 37% of all state income-tax collections and paid an average of $276,000. Add in those making more than $500,000 and the figure nears 50%. Ditto for the city.

The CBC has long advocated that from 45% to 50% of MTA revenue come from fares, 25% to 30% from tax subsidies and the rest from tolls and fees. The group is right.

It was Glen who thought of launching the city’s new ferry service, which now connects a variety of stops on several routes around the city’s waterfront, from Rockaway in Queens all the way to Soundview in the Bronx. It’s been popular, and is, as de Blasio likes to say, largely a whole new system of moving groups of people, but it has its fair share of criticism.

Though the mayor has pitched it as a “mass transit” alternative, it has relatively low ridership numbers and, according to estimates from the nonpartisan Citizens Budget Commission, the subsidy for each rider fare is currently $10.73, and could be as much as $24.75 for a new route between Downtown Manhattan and Coney Island. There are also concerns that the system is a vehicle for economic development along waterfront communities – notably, it is run by the Economic Development Corporation rather than the Department of Transportation – that will be a government-funded boon for real estate developers friendly with de Blasio and Glen.

While there are questions about the choice to focus on a ferry network, the subsidies, and the beneficiaries, there is no doubt that the system is also a key part of the Glen legacy on the physical landscape of the city.

Few if any of the requirements in the HUD deal or any of the many essential renovations at NYCHA complexes and apartments will be completed without significant financial investment. As of 2017, NYCHA projected that $32 billion is needed to properly fund the capital needs of its housing stock. Incoming Chair Russ has said it’s probably up to $45 billion now, but in his initial open letter to NYCHA employees, Russ wrote $32 billion.



“Without dramatic action, up to 90 percent of NYCHA’s 176,000 units of public housing could deteriorate to the point at which they are no longer cost-effective to repair by 2027,” according to Sean Campion, a researcher at the nonprofit Citizens Budget Commission (CBC), in testimony to the City Council’s Committee on Public Housing on November 15 of last year.



According to a CBC report, the average cost to repair a single NYCHA apartment is $181,000. If NYCHA apartments were to deteriorate at the same rate they have been, by 2027 90% of the authority’s housing stock could be designated as “very high cost” to repair, around $250,000- $300,000 each; and 8,000 units could need repairs exceeding the cost to replace the unit outright with brand new construction.

It might soon become even more attractive for New York's public sector retirees to collect their entire pension and come back to work.

A proposal that unanimously passed both house of the state Legislature would enable early retirees to return to work and earn up to $35,000 a year — an increase of $5,000 from the cap set in 2007 — without any diminution of their pensions. Retired school and government employees have no restrictions on their public employment income once they hit age 65.

Public sector retirees can earn salaries above the cap if they receive a waiver or have their pension temporarily reduced — and there are no restrictions if they enter the private sector.

It's not clear to the fiscal watchdogs at the Citizens Budget Commission or the Empire Center for Public Policy that the math always adds up to be a net positive for everyone involved, but they acknowledge it would save money in certain situations if positions needed to be filled.

"This is sold as not penalizing people, but in reality it's about increasing the bonus that early retirees enjoy," Empire Center policy analyst Ken Girardin said.

The Long Island Rail Road awards overtime at nearly double the rate of its sister commuter system, Metro-North — in part because of antiquated pay rules that persist despite having “little to no modern justification,” a scorching new report has found.

The LIRR’s engineering division also has more “high earners” than any other division at the MTA, including the far-larger city subway and bus systems, the study found.

ll told, the LIRR shelled out $225 million in overtime last year.

“The Long Island Rail Road long ago was identified as the problem child of the MTA when it comes to overtime and work rules,” said John Kaehny of good government group Reinvent Albany.

A recent study by the Citizens Budget Commission found the MTA could save $86 million a year if it could just run the LIRR as efficiently as Metro-North.

The commuter railroad’s contract with its major union — Sheet Metal, Air, Rail and Transportation — is up for renegotiation and the MTA has signaled it is seeking major changes.

New York balances its budget on the greenbacks of its 1%—making the state's cash intake especially susceptible to economic disruption.

A study by the Citizens Budget Commission released Tuesday determined that individuals and entities earning $1 million or more per year account for just 1 in 100 state income-tax payers but 37% of revenues from the levy.

Albany has various revenue sources and pays its bills out of a number of other pots, but $1 out of every $6 the state spends on government operations comes out of the deepest pockets: a total of $15.7 billion every year.

This, the spending hawk warned, makes the state's financial stability vulnerable to reversals in the capital gains market because such earnings make up 21% to 44% of millionaire and billionaire incomes. The CBC report follows on the heels of a Moody's analysis arguing that future taxes to support the transit system should come largely from the wealthy, not straphangers.

According to Transport Workers Union chief John Samuelson, the MTA’s efforts to rein in overtime and pension abuse amount to “creating a hostile [work] environment.”

Wow. Check your privilege, John. The reason your members — and workers represented by other MTA unions — face treatment as if they might be criminals is that some of them clearly are defrauding the public.

Sure, the very worst seem to be certain employees of the Long Island Rail Road, not the subway and bus workers repped by the TWU. But it wasn’t LIRR workers who cut the cables on new subway timeclocks meant to replace honor-system timesheets.

And kudos to MTA boss Pat Foye for requesting contract changes to let the agency deny and even revoke pension benefits for workers who commit overtime fraud — which regularly inflates pensions.

It’s not remotely guaranteed that the MTA will get those fixes. Samuelson is already threatening “strikes across the entire MTA system” over the issue, even though most of those strikes would be illegal.

And never mind that the objective evidence is that far too many workers have been claiming hours they couldn’t possibly have worked.


On the downside, the MTA’s financial projections now assume that it will get major cost savings from ending these abuses, as called for in the Transformation Plan pushed by Gov. Andrew Cuomo and endorsed by the Legislature.

The Citizens Budget Commission rightly notes that those estimated hundreds of millions in savings ignore “serious barriers to its implementation,” such as Samuelson, his fellow union bosses and their entrenched power. “Highly optimistic” is how the CBC terms that financial plan, and the watchdog is clearly right — unless the unions decide that the public has had enough.

Most MTA workers are not thieves, but their unions are determined to protect the thieves among them because . . . union solidarity?

More likely, labor leaders figure the average New Yorker is too blinded by pro-union sentiment to realize what a racket this is. Here’s hoping Cuomo, Foye and all the rest of management have the guts to put that to the test.

The Metropolitan Transportation Authority's financial outlook is not as bad as the agency says. It's worse.

That's what the Citizens Budget Commission found when it gave the sprawling authority's budget plans a closer look. In a report released Wednesday, the budget watchdog group argued the MTA is relying on overly optimistic estimates of how much money its new reorganization plan will save.

The MTA released a 2020 preliminary budget and four-year financial plan last month. The plan projected the budget deficit at the authority will grow from $6 million in 2020 to $443 million by 2023, at which point the MTA would have a cumulative deficit of $740 million.

That may seem bleak, but the Citizens Budget Commission argues the estimate may not be bleak enough.

While the state this year bolstered the Metropolitan Transportation Authority's capital budget with congestion pricing, the MTA's financial outlook remains "bleak," according to the Citizens Budget Commission.

In an analysis released today, the budget watchdog group said the MTA's four-year financial plan is overly rosy, in part because it assumes that the MTA's controversial "transformation" plan will achieve all of its desired goals.

If fully enacted, the transformation plan could give the MTA as much as $538 million in annual savings by 2023. But that's a big "if," according to the CBC.

"This savings estimate is highly optimistic because it assumes savings at the top of the range suggested by the plan's designers and because the plan is vague and faces serious obstacles to implementation," the analysis reads.

The financial plan also assumes the MTA is able to get more in savings during ongoing labor negotiations than it has in the past.

A spokesperson for the MTA had no immediate comment.

"The MTA's financial outlook is bleak," the analysis reads. "Even if everything goes according to plan, the Authority will run substantial cash deficits in coming years reaching a cumulative total of more than $700 million in 2023. Importantly, it is unlikely that all will go according to plan."

New York’s Metropolitan Transportation Authority should reconsider its contractor debarment policy for unexcused late or overbudget work, the head of a watchdog organization said.

“The rule should be modified to allow the MTA to exercise discretion, which may be warranted in circumstances when debarment would disadvantage the MTA,” Andrew Rein, president of the Citizens Budget Commission, said in a letter to the authority’s deputy general counsel, Peter Sistrom.

The MTA, one of the largest municipal issuers with roughly $43 billion in debt, is scheduled to issue $434 million of climate-bond certified Series 2019C transportation revenue green bonds competitively on Thursday. Public Resources Advisory Group is the financial advisor.

Maria Doulis of the Citizens Budget Commission and Howard Cure of Evercore discuss what's behind the city's $93 billion FY20 spending plan, and the effect of Albany legislation on city operations. Paul Burton hosts.

“One of the hard things about the whole property tax system: changing things is always going to impact someone else. If you move things for one tax class -- because we’re trying to stay revenue neutral -- it inevitably means changes for a different tax class,” Marcy Miranda, a spokesperson for the mayor’s office, told Gotham Gazette.

Some experts have asked why, if the commission’s purpose is to create a more fair and equitable system, is it constrained by the mandate to leave the city’s revenue untouched?

“It is definitely a substantial constraint. And I think that is being driven more by city fiscal concerns than it is by questions of how to structure the tax and what is the best tax,” Ana Champeny of Citizens Budget Commission told Gotham Gazette.