Not theirs to invest
Now the New York MTA wants to develop those railyards for housing, businesses and new MTA headquarters. On Thursday, the New York Post reported that the MTA revealed it has an $833 million "surplus" -- and cutting fares (present or future) is out of the question:
Instead, Katherine Lapp, the agency's executive director, asked the MTA's board to consider spending $481 million of the surplus to build its own platform over the rail yards — not for a football stadium, but for a residential and commercial community.Funny, I seem to have missed the public announcement that they'd changed their name to the Metro Real Estate Development Authority.
It's easy, of course, for the MTA to throw so much at a very risky venture: it's not their money! NYC Mayor Mike "Führer" Bloomberg and Gov. George Pataki were eager to "invest" a total of possibly $1 billion taxpayer dollars in the proposed West Side Stadium. In both cases, had there been a genuine demand for the stadium, or for the railyards to be developed into communities and business space, the private sector would have already looked into it -- and probably would have completed it long before the politicians even dreamt of it. Remember what Donald Trump did for Central Park's Wollman rink: after the city had tried and failed for six years to repair it, Trump stepped in. "The job took 4 months to complete at a fraction of the city’s cost," he wrote in his book The Art of the Deal.
Since politicians are investing other people's money, they have no incentive to weigh the risks carefully. Politics, not business sense or reason, becomes the chief influence, blinding the politicians so that they have no reason to scrutinize the endeavor's worthiness, let alone consider alternatives. As Milton Friedman put it, "...if I spend somebody else's money on somebody else, I'm not concerned about how much it is, and I'm not concerned about what I get. And that's government."
The MTA has raised fares twice in the last few years, the most significant of which was in 2003, when single fares went from $1.50 to $2. Is it so surprising that the MTA is now in the black? The last hike came despite loud criticism that the MTA has not opened its books to a full, independent audit. As far as I'm aware, it still has yet to, and it continues to perform certain accounting shenanigans. Back in 2003, the New York State Comptroller's Office released a report detailing its discovery of the MTA's two budgets: one public, one secret. The public budget "hid" half a billion dollars compared to the secret budget, and the MTA used that artificial revenue shortfall to justify that year's fare increase.
But the bigger reason the MTA is in the black is that Albany gives it so much taxpayer money, i.e. subsidies. The proposal for the 2006-2010 "capital plan" is more than $17 billion, which seems like a lot, but then consider the MTA had asked for $27 billion. The MTA has requested similar amounts for previous five-year plans (is anyone else spooked by the Stalin reference?). As long as Albany keeps handing out money, the MTA has no reason to streamline its operations, structure its employees more efficiently, or make do with older equipment that's still serviceable. To that list we can now add "making do with its office headquarters." While a developer will build the new MTA headquarters, the MTA must still spend money to prepare the site before anyone will touch it.
The fair (no pun intended) thing to do is for the MTA to return the $833 million to Albany. It can be valid to cut fares and/or shore up the MTA's pension program, but the taxpayers who provide the subsidies should get the first relief. Why not put the money toward pensions? Simply, the MTA needs to improve it other than relying on lucky "found money." If the pension program is underfunded, then workers need to contribute more for their own retirement, the MTA needs to streamline itself so it can contribute more, and the MTA needs to ponder whether its benefits are too generous. Letting the MTA put the money toward pensions doesn't encourage it at all to improve the program's structure.
The best solution is to eliminate the MTA's subsidies completely and force it to run like a real business: lean and efficient, competitive, and profitable. But that will never happen. Similar to Amtrak, there's too much politics involved. MTA executives, and the union members who like their taxpayer-funded jobs with generous benefits, are a powerful influence. Even were that not the case, nothing can be done until people stop believing the lies that public transportation doesn't have to run like a business, that it's ok for government to bail it out.