Why the Bad Real Estate Market (Continually) Hurts the M.T.A.
Eliot Brown March 24, 2010, 5:24 p.m.
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.
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.