LEGISLATIVE AFFAIRS: Crisis Exposes Staggering Pension Costs

Philip Weiden | August 2017

Repairs on the MTA rail system have not been made because of a supposed lack of a revenue stream. This is simply false according to Nicole Gelinas, a senior fellow of the Manhattan Institute and a contributing editor to the Manhattan Institute’s City Journal.

Gelinas, who is also a columnist with the New York Post, says “Whenever you hear a transit advocate say the MTA needs a dedicated tax, ask him why a tax on wage earnings, a special sales tax, a business-income surcharge, a petroleum tax, a taxi-ride tax and several real-estate-related taxes aren’t enough.”

Yes, you heard that right, real estate taxes, oil taxes, business incomes surcharges and a taxi ride tax are all going to fund the MTA, but it is still not enough. Pensions and benefits are eating up the revenues needed to run the MTA. It is inherently unfair to riders, and not good for the economy, that they pay increasing real estate taxes and fares.

Retirement benefits, according to Gelinas in an issue brief entitled “The MTA’s Escalating Cost Crisis,” are costing the MTA $3.1 billion a year. To be blunt, this is fiscally unsustainable. It is a tired old cliché that the government cannot continue to spend money as it always has done. We are neglecting infrastructure repairs that have not been dealt with in decades.

Back in the 1980s the MTA had little to no debt and now debt is the method being employed to pay for pension costs that are rising every year and are unsustainable at their current rate of increase. All sides need to work together to fix the crisis; real estate taxes on Hudson Valley residents are not the answer to this crisis.

According to Gelinas, the entire MTA tax that was enacted in 2009 went solely to pension costs and benefit costs and not to fix the infrastructure. We are tapped out and we must demand better from our elected officials.

Editor’s Note: Gelinas’ issue bref “The MTA’s Escalating Cost Crisis can be found at https://www.manhattan-institute.org/sites/default/files/IB-NG-0717.pdf

Philip Weiden
Legislative Affairs columnist Philip Weiden is the Government Affairs Director for the Hudson Gateway Association of Realtors.