Metropolitan Transportation Authority July 2008 Financial Plan MTA 2009 Preliminary Budget July Financial Plan 2009 – 2012 DJC

Metropolitan Transportation Authority July 2008 Financial Plan 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…

Metropolitan Transportation Authority July 2008 Financial Plan February Financial Plan Closing Cash Balance ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan Update on Major Risks 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 July 2007

Metropolitan Transportation Authority July 2008 Financial Plan Significant Changes from February Plan ( ) Fuel and Energy Costs: ($208 million) Impact of Economic Downturn on Tax Revenues Real Estate Tax Revenues: ($443 million) State Tax Revenues: ($60 million)

Metropolitan Transportation Authority July 2008 Financial Plan Energy Expense Growth ($ in millions) $487 $624 28% $678 9% 62% 6% 11%

Metropolitan Transportation Authority July 2008 Financial Plan Real Estate Transaction Taxes Actual Collections and July 2008 Plan ($ in millions) MRT-1 Started 6/ % Urban Tax Started 5/1982 RPTT: 1.0% MRT: 0.625% MRT-2 Started 6/ % MRT-1 Rate Increase 7/ %

Metropolitan Transportation Authority July 2008 Financial Plan Real Estate Transaction Tax Receipts Concern for More Than A Year Reflects increase in projection, in real dollars Reflects decrease in projection, in real dollars Inflation Adjustment: 1982 – 1984 = Adjusted for: Inflation, MRT-2 Implementation Date & MRT-1 Rate Increase($ in millions) Actual Collections and July 2007 Financial Plan ($ in millions) Reflects increase in projection 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) April 2007 Finance Committee: Real Estate Transaction Taxes, What If …

Metropolitan Transportation Authority July 2008 Financial Plan Changes from the February Financial Plan ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan July Financial Plan With Gap Closing Actions ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan Gap Closing: Internal Actions ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan Gap Closing: Internal Actions Already Taken Agency-wide Service Enhancements Cancelled Administrative Cost Reductions: –Hiring Delays –Travel Restrictions –Vehicle Usage Reductions Business Development

Metropolitan Transportation Authority July 2008 Financial Plan 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

Metropolitan Transportation Authority July 2008 Financial Plan Gap-Closing: Internal Actions to be Taken One-Time Opportunities Inter-Agency Loan Recover Uncommitted Spending From Prior Year Surplus

Metropolitan Transportation Authority July 2008 Financial Plan 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 Pensions exclude a one-time payment to NYCERS and MaBSTOA for refunds associated with the 55/25 retirement program.

Metropolitan Transportation Authority July 2008 Financial Plan Gap Closing: External Actions ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan Gap Closing: Fare & Toll Yield Changes ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan July Financial Plan Closing Cash Balance ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan If External Actions Fail & No New Revenue Streams are Identified ($ in millions)

Metropolitan Transportation Authority July 2008 Financial Plan 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