MTA floats a fiscal ‘what if'

by patrick arden / metro new york

APR 25, 2007

MIDTOWN. The booming real estate market has resulted in large surpluses at the Metropolitan Transportation Authority, defying the agency's attempts to make predictions. Yesterday the MTA announced real estate taxes brought in $185 million more than anticipated. But former labor negotiator Gary Dellaverson warned the good times can't last forever, as he stepped into his new role of chief financial officer.

In what he called “a pure ‘what if' exercise,” Dellaverson showed a series of graphs charting the amounts the MTA has been raking in from real estate transactions. Taxes tripled from 1983 to '87. “The sad part of that story is from '87 to '91 those taxes coming to the MTA lost 65 percent of their value,” Dellaverson said, noting a “pretty obvious bell curve” before wondering “what happens if that type of a phenomenon — that trough to peak, peak to trough — takes place again.”

A dramatic drop of almost $500 million a year would occur by 2010, he said. The purpose of the exercise was not to forecast but to “generate discussion about the volatility of these taxes.”

MTA board member Mark Page, director of the city's Office of Management and Budget, was skeptical. “Different people have different ways of doing econometric modeling, but I think it's worth keeping in mind that none of them are proven to be particularly reliable,” he said. “Almost without exception those forecasts turn out to be wrong.”

“The problem is they've been having this boom for years now, and they keep predicting a bust,” said rider advocate Gene Russianoff. “Last year they ended up with a billion dollar surplus, so what gives? I think it's pretty clear now that the $800 million that they predicted as a deficit for 2008 is going to be substantially lower. It would be interesting to know how much lower and whether it's in the ballpark for the fare hike.”