Why the Bad Real Estate Market (Continually) Hurts the M.T.A.



mta logo heathbrandon flickr Why the Bad Real Estate Market (Continually) Hurts the M.T.A.On the heels of the $93 million in service cuts the M.T.A.’s board approved Wednesday—which come as the agency is facing what it says is a nearly $800 million budget gap for the year—here’s a look at one of the continuous problems it faces on the revenue side, thanks to the recession.

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For years, real estate transfer taxes in the New York City region have been a huge source of funds for the M.T.A., and at the market’s peak in 2007, when buildings were trading left and right, the real estate taxes brought the agency a whopping $1.6 billion.

Things are clearly grimmer today. Here are the real estate tax revenues the agency received for the first three months of each year going back to 2007:

Jan. through March 2007: $412.2 million

Jan. through March 2008: $306.3 million

Jan. through March 2009: $96.7 million

Jan. through March 2010: $96.4 million

This is but one of the agency’s many woes. Debt service is painfully high ($1.9 billion this year), and will be so for years to come, thanks to a short-term-focused refinancing during the Pataki administration that kicked the can down the road a few years (until now) on capital expenses the agency could not then afford.

To fix this, the state passed a payroll tax a year ago, expected to bring in $1.5 billion annually. That would have been great, of course, had it worked as planned. Thus far, it’s bringing in less than expected, widening the M.T.A.’s budget hole by an estimated $300 million for the year. 

ebrown@observer.com