Ratings agency Moody’s has put the state-run Metropolitan Transportation Authority in a sort of purgatory, noting (but more diplomatically than I will) that Albany’s utter failure to solve a relatively simple problem “puts the MTA on an operating path that may not support the current A2 rating.”
The bond analysts are much clearer than anyone among the supposed “transit advocates” that Albany and that authority must deal with looming pension obligations.
Moody’s notes that even after savings from cheaper fuel, the MTA’s costs will increase by much more than expected starting, well, now, because of much higher pension costs.
As the MTA starts to make up for investment losses in its employee pension funds, it must spend $245 million more than it had planned this year, $238 million next year, $278 million the year after, and so on.
To put it in perspective, these extra costs are more than the MTA will save from its “draconian” (as described by MTA chief executive Lee Sander) and “horrific” (as described by MTA chairman Dale Hemmerdinger) service cuts.
Indeed, overly generous pensions and health benefits will cost the MTA nearly $3 billion annually by 2012 — $600 million more than today.
With the cost of union raises thrown in, the higher costs would consume at least a third, or more, of the new sources of tax revenue proposed by former MTA chief Dick Ravitch last year and rejected by Albany.
These higher costs should be a wake-up call that the governor and the legislature must pass a law to rein in benefits costs, through higher-than-55 retirements ages for future workers in appropriate job titles and higher employee contributions for both pensions (for future workers) and healthcare (for current workers).
It’s not rocket science, but just a simple math problem.
As E.J. notes in his Post op-ed today, Albany doesn’t really need union cooperation to pass such legislation. It just needs to do it.
Maybe some pressure from a different angle would help.
But, none of the people who purportedly stick up for subway and bus riders — i.e. Gene Russianoff of the Straphangers’ Campaign, but not just him — ever mention these costs, even though they’re a direct culprit behind service cuts and likely disinvestment in the coming years.
It would be nice to hear one of these people say: minimum-wage private-sector workers will face longer and more expensive commutes because Albany is craven when it comes to asking current workers to pay higher health contributions and asking future workers to adjust pension benefits.
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