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MTA 2009 Preliminary Budget July Financial Plan 2009 – 2012

MTA 2009 Preliminary Budget July Financial Plan 2009 – 2012. DJC. Process and Timetable. Four-year financial planning process kicks off in July The process encourages public discourse and culminates in Board approval of the 2009 Budget in December No Board action today

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MTA 2009 Preliminary Budget July Financial Plan 2009 – 2012

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  1. MTA 2009 Preliminary Budget July Financial Plan 2009 – 2012 DJC

  2. Process and Timetable • Four-year financial planning process kicks off in July • The process encourages public discourse and culminates in Board approval of the 2009 Budget in December • No Board action today • Balanced budget required “based on reasonable assumptions and methods of estimation…”

  3. February Financial PlanClosing Cash Balance($ in millions)

  4. Update on Major Risks July 2007 July 2008 • Real Estate Market is Very Soft • Regional Economy is Weak • Huge Energy Price Increases due to Global Market Forces • Growth in Controllable Expenses Consistent with Budget Forecasts

  5. Significant Changes from February Plan(2008-2009) • Fuel and Energy Costs: ($208 million) • Impact of Economic Downturn on Tax Revenues Real Estate Tax Revenues: ($443 million) State Tax Revenues: ($60 million)

  6. Energy Expense Growth 2007-2009($ in millions) $678 9% $624 28% $487 6% 62% 6% 11%

  7. Real Estate Transaction TaxesActual Collections and July 2008 Plan($ in millions) MRT-1 Rate Increase 7/2005 0.30% MRT-2 Started 6/1987 0.25% MRT-1 Started 6/1979 0.25% Urban Tax Started 5/1982 RPTT: 1.0% MRT: 0.625%

  8. Real Estate Transaction Tax ReceiptsConcern for More Than A Year April 2007 Finance Committee: Real Estate Transaction Taxes, What If … Adjusted for: Inflation, MRT-2 Implementation Date & MRT-1 Rate Increase($ in millions) Actual Collections and July 2007 Financial Plan ($ in millions) Inflation Adjustment: 1982 – 1984 = 100.0 Reflects increase in projection, in real dollars Reflects increase in projection Reflects decrease in projection, in real dollars Reflects decrease in projection July 2007 Financial Plan:“If 2008 receipts are identical to 2004 receipts, then $1,167 million drops out of the plan through 2011 ($309 million in 2008)”

  9. Changes from the February Financial Plan($ in millions)

  10. July Financial PlanWith Gap Closing Actions ($ in millions)

  11. Gap Closing: Internal Actions($ in millions)

  12. Gap Closing: Internal Actions Already Taken • Agency-wide Service Enhancements Cancelled • Administrative Cost Reductions: • Hiring Delays • Travel Restrictions • Vehicle Usage Reductions • Business Development

  13. Gap-Closing:Internal Actions to be Taken Recurring Actions • 2009 & Post-2009 Agency-wide Reductions • New Contracts Labor Contribution • Business Service Center • MTA Reorganization • Reduce Subsidy LI Bus • Eliminate E-ZPass Forgiveness

  14. Gap-Closing:Internal Actions to be Taken One-Time Opportunities • Inter-Agency Loan • Recover Uncommitted Spending From Prior Year Surplus

  15. Year-to-Year Changes in Expenses Uncontrollable Operating Expenses include Paratransit Service Contracts, Fuel for Buses & Trains, Traction & Propulsion Power, OPEB Current Payment, Health & Welfare, Pensions (see note below), and Insurance. Controllable Operating Expenses include Payroll, Overtime, Claims, Other-Fringe Benefits, Reimbursable Overhead, Maintenance & Other Operating Contracts, Professional Service Contracts, and Materials & Supplies, Other Business Expenses, Other Expense Adjustments, and Gap Closing Actions. Total Expense Growth includes the General Reserve and the impact of the Gap Closing Actions but excludes Debt Service. 2008 Pensions exclude a one-time payment to NYCERS and MaBSTOA for refunds associated with the 55/25 retirement program.

  16. Gap Closing: External Actions($ in millions)

  17. Gap Closing: Fare & Toll Yield Changes($ in millions)

  18. July Financial PlanClosing Cash Balance($ in millions)

  19. If External Actions Fail & No New Revenue Streams are Identified($ in millions)

  20. Next Steps • August to November: Public discourse on Preliminary Budget • Late November: Final Proposed Budget presented to MTA Board • Early December:Ravitch Commission issues report • Late December:MTA Board adopts Budget and schedules public hearings for changes in fares and tolls and for service reductions, if necessary

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