Metropolitan Transportation Authority July 2008 Financial Plan 2009-2012 1 MTA 2009 Preliminary...

Metropolitan Transportation Authority1

July 2008 Financial Plan 2009-2012

MTA 2009 Preliminary Budget

July Financial Plan 2009 – 2012

DJC



Process and Timetable

• Four-year financial planning process kicks off in July

• The process encourages public discourse and culminates in Board approval of the 2009 Budget in December

• No Board action today

• Balanced budget required “based on reasonable assumptions and methods of estimation…”



February Financial PlanClosing Cash Balance

($ in millions)

$368

($216)

($335) ($416)

-$500

-$400

-$300

-$200

-$100

$0

$100

$200

$300

$400

2008 2009 2010 2011



Update on Major Risks

July 2008

• Real Estate Market is Very Soft

• Regional Economy is Weak

• Huge Energy Price Increases due to Global Market Forces

• Growth in Controllable Expenses Consistent with Budget Forecasts

July 2007



Significant Changes from February Plan(2008-2009)

•Fuel and Energy Costs: ($208 million)

•Impact of Economic Downturn on Tax Revenues

Real Estate Tax Revenues: ($443 million)

State Tax Revenues: ($60 million)



Energy Expense Growth 2007-2009

($ in millions)

$294

$193

$313

$311

$347

$331

$0

$200

$400

$600

$800

2007 2008 2009

Traction & Propulsion Power Fuel for Buses & Trains

$487

$624

28%

$678

9%

62%

6%

6%

11%



Real Estate Transaction TaxesActual Collections and July 2008 Plan

($ in millions)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

MRT-1Started6/19790.25%

Urban TaxStarted5/1982

RPTT: 1.0%MRT: 0.625%

MRT-2Started6/19870.25%

MRT-1Rate

Increase7/20050.30%



Real Estate Transaction Tax ReceiptsConcern for More Than A Year

$0

$100

$200

$300

$400

$500

$600

$700

Reflects increase in projection, in real dollarsReflects decrease in projection, in real dollars

Inflation Adjustment: 1982 – 1984 = 100.0

Adjusted for: Inflation, MRT-2 Implementation Date & MRT-1 Rate Increase($ in millions)

$0

$300

$600

$900

$1,200

$1,500

$1,800

Actual Collections and July 2007 Financial Plan ($ in millions)

Reflects increase in projectionReflects decrease in projection

July 2007 Financial Plan:“If 2008 receipts are identical to 2004 receipts, then $1,167 million drops out of the plan through 2011 ($309 million in 2008)”

April 2007 Finance Committee: Real Estate Transaction Taxes, What If …



2008 2009 2010 2011

February Closing Cash Balance $368 ($216) ($335) ($416)

Cash Carryover ($524) ($368) $0 $0

MTA Policy & Gap Closing Actions ($35) ($129) ($1,096) ($1,251)

February Cash Balance before Carryover and Policy & Gap Closing ($191) ($712) ($1,432) ($1,668)

Fuel and Energy Increases ($81) ($127) ($66) ($60)

Real Estate Tax Revenue Reductions ($201) ($242) ($282) ($305)

State Tax Changes ($41) ($19) ($84) ($121)

MTA Bus Subsidy Timing $60 $0 $0 $0

Debt Service Changes $16 ($23) $11 $50

Other $92 ($18) ($29) $35

Total Changes ($155) ($431) ($450) ($400)

July Baseline Cash Balance ($345) ($1,143) ($1,882) ($2,068)MTA Gap Closing Actions $194 $813 $1,618 $1,785Cash Carryover $495 $344 $15 $0July Plan Net Cash Balance after Carryover & Gap Closing $344 $15 ($250) ($283)

Changes from the February Financial Plan($ in millions)



2008 2009 2010 2011 2012July Plan Baseline before Prior-Year Carry-Over ($345) ($1,143) ($1,882) ($2,068) ($2,334)

Internal Actions $155 $310 $411 $225 $361

External Actions $40 $302 $801 $873 $955

Fare / Toll Yield Changes $0 $202 $405 $687 $699

Gap Closing Actions $194 $813 $1,618 $1,785 $2,016

Prior Year Carry-Overs $495 $344 $15 $0 $0

July Plan Closing Cash Balance $344 $15 ($250) ($283) ($318)

July Financial PlanWith Gap Closing Actions

($ in millions)



2008 2009 2010 2011 20122009 Agency Program to Eliminate the Gap $16 $82 $80 $88 $79

Post-2009 Agency Program to Eliminate the Gap $0 $0 $97 $174 $275

Business Service Center (Exclusive of Capital) $0 ($7) ($10) ($14) $29

New Contracts Labor Contribution $0 $53 $82 $85 $86

MTA Reorganization $0 $3 $13 $13 $13

Reduce Subsidy to LIB $0 $4 $4 $4 $4

2006 Surplus Recovery $120 $0 $0 $0 $0

Other Administrative Reductions $15 $30 $0 $0 $0

Eliminate E-Z Pass Forgiveness $3 $10 $10 $10 $10

Inter-Agency Loan $0 $135 $135 ($135) ($135)

Total $155 $310 $411 $225 $361

Gap Closing: Internal Actions($ in millions)



Gap Closing: Internal Actions Already Taken

•Agency-wide Service Enhancements Cancelled

•Administrative Cost Reductions:

– Hiring Delays

– Travel Restrictions

– Vehicle Usage Reductions

•Business Development



Gap-Closing:Internal Actions to be Taken

Recurring Actions

•2009 & Post-2009 Agency-wide Reductions

•New Contracts Labor Contribution

•Business Service Center

•MTA Reorganization

•Reduce Subsidy LI Bus

•Eliminate E-ZPass Forgiveness



Gap-Closing:Internal Actions to be Taken

One-Time Opportunities

• Inter-Agency Loan

• Recover Uncommitted Spending From Prior Year Surplus



7.9%

11.3%

5.8%

3.6%

9.7%

0.4%

2.6%

4.4%

1.7%2.6%

5.8%

1.0%

2.2%

6.5%

0.0%

0.0%

5.0%

10.0%

15.0%

2008 2009 2010 2011 2012

Total Expense Growth

Uncontrollable Expenses

Controllable Expenses

Year-to-Year Changes in Expenses

Uncontrollable Operating Expenses include Paratransit Service Contracts, Fuel for Buses & Trains, Traction & Propulsion Power, OPEB Current Payment, Health & Welfare, Pensions (see note below), and Insurance.

Controllable Operating Expenses include Payroll, Overtime, Claims, Other-Fringe Benefits, Reimbursable Overhead, Maintenance & Other Operating Contracts, Professional Service Contracts, and Materials & Supplies, Other Business Expenses, Other Expense Adjustments, and Gap Closing Actions.

Total Expense Growth includes the General Reserve and the impact of the Gap Closing Actions but excludes Debt Service.2008 Pensions exclude a one-time payment to NYCERS and MaBSTOA for refunds associated with the 55/25 retirement program.



2008 2009 2010 2011 2012Federal Legislative Actions $0 $15 $62 $63 $66

School/Senior Citizen Fare Reimbursement $0 $104 $104 $104 $104

City Reimbursement to Paratransit $0 $113 $138 $164 $205

State Tax Restoration $40 $19 $84 $121 $152

State Legislative Actions - Tax Statute Revisions $0 $50 $50 $50 $50

New Governmental Aid $0 $0 $364 $371 $379

Total $40 $302 $801 $873 $955

Gap Closing: External Actions($ in millions)



2008 2009 2010 2011 2012Fare/Toll Yields on 7/1/09: 8.0% $0 $202 $405 $414 $418

Fare/Toll Yields on 1/1/11: 5.0% $0 $0 $0 $272 $281

Total $0 $202 $405 $687 $699

Gap Closing: Fare & Toll Yield Changes($ in millions)



$344

$15

($250)($283) ($318)

-$500

-$400

-$300

-$200

-$100

$0

$100

$200

$300

$400

2008 2009 2010 2011 2012

July Financial PlanClosing Cash Balance

($ in millions)



2008 2009

July Plan after Gap Closing Actions $344 $15

External Actions Do Not Take Place ($40) ($341)

Resulting Surplus/(Gap) $305 ($327)

Additional Actions within MTA Control Needed to Balance: 2009For Each Additional 1% Fare/Toll Yield Increase $25 ($51 annualized)

For Each 1% Cut in Service $30 ($60 annualized)

If External Actions Fail & No New Revenue Streams are Identified

($ in millions)



Next Steps

•August to November: Public discourse on Preliminary Budget

•Late November: Final Proposed Budget presented to MTA Board

•Early December: Ravitch Commission issues report

•Late December: MTA Board adopts Budget and schedules public hearings for changes in fares and tolls and for service reductions, if necessary

Metropolitan Transportation Authority July 2008 Financial Plan 2009-2012 1 MTA 2009 Preliminary...

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