5 Things to Know About NYC's New MTA Chief

New York Gov. Andrew Cuomo announced Thursday that he tapped an executive at Madison Square Garden who was a top aide to New York City Mayor Rudy Giuliani to run New York's public mass transit system.

Cuomo, a Democrat, picked Joseph Lhota to be the MTA's new CEO and chairman, replacing Jay Walder, who had previously run London's transportation system and was a favorite among transit advocates.

If confirmed in the New York State Senate, Lhota, who oversaw city agencies and a $36 billion operating budget in the Giuliani administration, will face a daunting task of running the MTA.

Here are five things to know about the appointment of a new MTA chief.

Cuomo Now Owns Transportation

Lhota's appointment follows Cuomo's decision to tap Patrick Foye, one of his economic development aides, to be the Port Authority's executive director.

Together, the MTA and the Port Authority control a complex system of subways, buses, trains, bridges and tunnels that is practically unrivaled in the U.S. With Cuomo-appointees slated to take over these major agencies, the governor has now taken ownership of a public transportation system riddled with funding problems.

This is Gov. Cuomo's chance to really show his leadership and show his priorities, Noah Budnick, deputy director of Transportation Alternatives, told IBTimes. It comes back to the governor's leadership in coming up for new revenue proposals that are going to help close the budget gap and bring the system into a state of good repair.

Labor Pains

Transportation workers' contract is set to expire in mid-January 2012. The MTA's budget plan released in July assumed concessions from the transportation workers union.

The MTA is banking on a three-year wage freeze or concessions to offset any pay raises during that time. If negotiations with the Transportation Workers Union Local 100 are as contentious as they have been in the past, the MTA is in for a fight.

I have no intention of just caving in and letting New York City transit workers pay the price for a crisis we didn't create, TWU Local 100 president, John Samuelson, told The New York Times in July.

Yet the MTA is banking on this wage freeze, among other proposals, to ensure the budget is closed over the next several years.

Filling Budget Gaps

The recession-battered MTA faces financial difficulties on several fronts. A July financial plan for 2011 to 2015 showed balanced budgets going forward, with a relatively small deficits for 2014 and 2015.

There are planned 7.5 percent fare hikes in 2013 and 2015, as well as a proposal to charge $1 for each new MetroCard. Even with asking straphangers to pay more to ride trains and buses, more measures have to be taken to plug budget gaps.

But some of the solutions may be precarious, such as the labor concessions.

There is currently a $10 billion shortfall in the MTA's capital plan from 2012 to 2015. The plan covers transit system maintenance and infrastructure projects like one that will connect the Long Island Rail Road to Grand Central Terminal in Manhattan.

The MTA plans to address the shortfall by cutting a total of $3.8 billion from the capital budget, mainly from maintenance and modernization of the system, down to $24.3 billion. Additional aid from the city and state is part of the plan to close the gap, but counting on government to fund transit is never a sure bet.

The MTA had been looking to its funding partners to fill the entire gap, but those partners are dealing with their own budget challenges, and the current climate offers little support for raising taxes, a report from New York State Comptroller Tom DiNapoli said.

Another part of the plan is to borrow $14.8 billion, which would add stress to its operating budget, according to the report.

The MTA is already paying $2 billion this year in debt service to pay for capital programs. Meanwhile these obligations could reach $3.3 billion by 2018, a 64 percent increase from this year. As a percent of total revenue, the debt service could hit 22.7 percent in 2018, from 16.4 percent in 2011.

Outgoing MTA Chief Popular Among Advocates

Lhota is filling shoes of an MTA chief popular with transit advocates, who can be counted on to push for more transit funding and are close to the riding public.

Walder, a Queens, N.Y., native, came to the MTA in 2009 with a resume transit advocates could get behind. He took the job after a successful stint as head of the London transportation system, where he introduced the Oyster smart card that uses a computer chip that stores rider information.

At the MTA, his tenure coincided with popular initiatives like subway countdown clocks, bus locators and a user-friendly website redesign and easy-to-understand service change notices. But he also presided over fare hikes and massive budget cuts to make up for shortfalls. In July, Walder said he would leave the MTA to take a lucrative position with Hong Kong's mass transit system.

The guy had impeccable bona fides when he came over to lead the MTA, Budnick said. That's why he was so respected and well regarded.

As the MTA's fiscal issues can be attributed in part to Albany lawmakers, who control the MTA's non-fare revenue sources and funding levels, the next leader must tell it like it is when it comes to finances, said Gene Russianoff, an attorney with the New york Public Interest Group's Straphangers Campaign.

We want the new chair to be a vocal and visible advocate for transit, Russianoff told the IBTimes.

New Revenue Lines

Being a vocal and visible advocate will including efforts for more revenue and funding from the city and state, as well as Washington.

Currently, the MTA's biggest source of tax revenue is a payroll tax instituted in 2009 for counties in Long Island and the New York City suburbs, home to many commuters. The tax is expected to bring in $1.4 billion in 2011, but Republican lawmakers from these areas want to kill it.

A plan to put tolls in New York City bridges that Democrats in Albany tanked may have to be resurrected, according to Richard Ravitch, a former head of the MTA who is credited with saving the agency from financial collapse the 1980s.

It will be up to Cuomo and Lhota, if they find it necessary, to push for new ways to fund the MTA.

You have to persuade a lot of people to spend a lot of money, whether they are taxpayers or whether they are transit riders, Ravitch, also a former lieutenant governor, told NY1 Wednesday.