nyc & the mta — prepare for the same thing in a city near you.
one of the many ramifications of the ‘financial’ crisis is going to be reduced tax revenue from things like real estate, incomes, etc. at the state and local levels… and it is at these levels that the ‘forgotten man’ of this country will feel the pinch of administrative choices while facing these difficult times. right now, the deepest effects have been psychological– when your 401k diminishes to 40% of its previous size, and the value of your home decreases, you get worried… but it doesn’t cost you extra dollars everyday. when state and municipal govts are forced to replace lost tax revenues, you can expect to have you wallet tapped to keep those services in place, and those are dollars which will come out every day.
because nyc is the home for the financial industry in this country [for the moment], we can be viewed as the canary in the coalmine- whatever happens to us now will happen to every major municipality when *their* primary industries become more deeply affected by the situation. for this reason, i think that nyc, and nystate’s, response to budgetary shortfalls in their mass transit system should be viewed carefully.
due to a loss of revenue on real estate and mortgage related taxes, and the revenues from payroll and income on the financial sector, the mta is experiencing a 1.2 billion dollar budget deficit for 2009. so far, the state is discussing two different possibilities to fill that gap:
1- increase the single ride fare to 2.50, the monthly to $100+, and cutting multiple services on the bus and subway lines.
2- add a 0.3% payroll tax on all companies in the areas serviced by the mta lines.
each of those ideas fills the deficit– in fact, the payroll tax covers it with $300,000 on top. sadly, the proposal with that includes the payroll tax also includes a toll on all of the east river bridges- effectively punishing the drivers who [one would assume] are driving into Manhattan because the mta isnt adequately servicing their neighborhood… and its that second clause which will get the program shot down. why didnt they just propose the payroll tax, on its own, as a solution? i have no idea.
the reason this is important to people outside nyc is that the model- an overall bad economy driving down tax revenue, resulting in increased cost to the user and decreased services, will most certainly be replicated all over the country.
EDIT:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~:
so, an additional comment on how this process is being reported– the newspapers are showing the MTA as the bad guy, approving a budget filled with crazy service cuts and fare increases, instead of giving the full store. the MTA is required to pass a budget which covers their needs, and they can’t pass it unless its balanced- and the only things they have control over are fares and services, as east river bridge tolls or the payroll tax are both up to the state legislature. the second half of the story is that the mta passed this emergency budget, after spending money on a famous consultant [see Ravitch Commission] who recommended the bridge toll/payroll tax.
so, at the end of the day, whatever happens, the mta has fought to keep fares down and services up, using a tax structure which puts the cost burden on ALL of the business which benefit from the mta service, and not just the commuters who use the lines.