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October 16, 2004

As the MTA proposes jacking up fares and cutting service, riders are asking: Where are Mayor Bloomberg and Governor Pataki? What plan do they have to keep fares affordable and service decent?

The MTA has real financial problems, with the agency facing large and growing operating deficits. It is proposing to meet a projected $436 million cash deficit in 2005 largely through higher fares and cuts in service. The MTA's proposals to raise the 7-day and 30-day unlimited-ride MetroCards would come just 18 months after a 50-cent hike in the base fare, the largest increase in the system's history. Express bus fares would rise 50%, going from $4 to $6. The cuts would be severe, including closing 164 station booths and increasing crowding and waiting time on buses throughout the city.

Asking the public to pay more and more for less is a recipe for discouraging transit use, undermining the region's economy and hurting many vulnerable of New Yorkers. A $3 increase in the 7-day card comes to $150 a year in higher commuting costs, with an equivalent impact of a 30-cent fare increase for these riders. City subway and bus riders are already paying more than their fare share: New Yorkers pay about 58%of the cost of a ride, while the national average for large cities is 40%.

Even with these harsh cuts, the MTA is projecting growing deficits in 2006 and beyond with cash balance gaps of $695 million in 2006, $801 million in 2007 and $1.1 billion in 2008.

As a result, there may be worse cuts ahead. In 2006, the MTA has warned it may have to completely eliminate 33 of 190 local bus routes, end bus service at night on 95 routes, reduce subway service by 10%, abandon several branches of the Long Island Rail Road and slash service on Metro North.

The cause of the MTA's financial woes is clear: The leading pressures on the MTA's operating budget are interest payments on enormous borrowings for capital repairs and declining state subsidies. Debt service interest on the borrowing will double between 2003 and 2007, leaping from $800 million annually to $1.6 billion. And state subsidies will drop $220 between 2004 and 2005.

Why all the borrowing? Because the State under Governor Pataki's leadership has forced the MTA to rely more and more heavily on operating budget-backed bonding to meet its essential rebuilding needs. At the same time, Mayor Bloomberg has cut $90 million in city aid to the current MTA five-year rebuilding plan. The city is now making the smallest contribution to fixing the subways in at least 25 years. The Mayor also wants the MTA to hand over the valuable land the MTA owns on Manhattan's West Side at a bargain basement price, money that could fund capital repairs.

The solution is as clear as the problem: The MTA needs a new long-term revenue source for its needs including a crucial $27.6 billion five-year rebuilding plan it has proposed. And that will take the leadership of the Mayor and the Governor.

For more information, contact: Gene Russianoff (212) 349-6460

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