Finance New York

The Problem with Authorities

A system run by “experts” too easily gets the blame for issues it cannot control

An authority, I learned in my first urban politics class, is an organizational entity that is entitled to many of the powers of local government without having to be subjected to the democratic processes that arbitrate the work of municipal agencies. During the progressive era of the early 20th century, advocates for a new brand of government argued that politicians were too easily influenced by private interests and money, and that as a result they were incapable of making efficient and appropriate decisions about the use of municipal funds. The first public authority was the Port of London Authority, formed in 1908, and the Port of New York Authority was one of the first in the United States, created in 1921. Both operate independently of elected government, with the capacity to make decisions without being concerned by the will of voters.

After the merger of its three subway networks, New York’s municipal transit system was managed by the city’s Board of Transportation, but in 1953, the city decided that year to transfer bus and subway assets to the New York Transit Authority under the assumption that this “public-benefit” corporation would be able to better manage the transit system’s finances and run the network more effectively than had the municipal agency. That authority, however, didn’t have sufficient strength to maintain New York’s once-ambitious subway expansion plans, so in the late 1960s, Governor Nelson Rockefeller orchestrated a state takeover of the system by the Metropolitan Transportation Authority, which had been formed only three years previously to manage failing commuter railroads.

The story of what happened next is well-known: the transit system had a brief period of expansion in the early 1970s, it then headed quickly towards death in the late 1970s and early ’80s, and since has pulled off a remarkable comeback once agency head Richard Ravitch developed a major capital plan. One could argue that today’s New York City transit system is better than it’s ever been, and construction on the Second Avenue Subway, Long Island Railroad East Side Access project, and 7 Line extension are all underway as I write.

It could be argued, then, that it was a good idea to place decision-making on the transit network’s future in the hands of an authority.

Today the MTA faces a major budget crisis because tax revenues haven’t fallen in line with expectations because of the recession. The result is an inability to pay operating expenses, and the likely consequences are major fare increases and service reductions. It’s not necessarily the fault of the authority that these problems are occurring. After all, city agencies are also having to cut their services.

The separation of management – the MTA – from financing – the state government – is the obvious consequence of a public-benefit corporation that lacks complete control over its funding. Unlike the Port Authority, whose funds come from operating revenues, bond releases, and direct grants from state and federal governments, the MTA relies on dedicated taxes that fail to produce enough revenue from time to time. It must ask the state government to provide it additional sources of tax revenue when it faces a troubling economic environment.

The fact that the MTA is an authority without self-financing makes it uniquely vulnerable. That’s because while it depends on decisions by state politicians for funding, those same lawmakers can point to the MTA for blame when funding the subways and buses becomes a problem. In other words, though the state is responsible for the adequate funding of the authority in fiscal emergencies, the state legislature doesn’t have to take the blame for the failure of the agency to produce a balanced budget – it can simply heap criticism onto the MTA, which has no power to raise taxes itself.

I do not necessarily think that transferring the MTA back to politics – putting it in the hands of the State Department of Transportation, for instance – makes the most sense.

Simply put, it is frustrating to watch New York legislators hem and haw about solving the MTA’s financial problems by blaming the authority for being “irresponsible” when these politicians know full well that the MTA’s finances have been under their supervision for decades, and that a budget crisis such as is now being faced was the inevitable consequence of a recession. The irresponsibility here is these legislators’ attempt to shift the blame to the MTA.

One reply on “The Problem with Authorities”

I wholly agree. The fact that responsibility and accountability gets shunned is a fundamental flaw in the management structure as it exists. The same problem exists with the way Amtrak is run. Amtrak management gets blamed for ‘irresponsibility’ when every year Amtrak has to beg for funding.

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