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Nicole Gelinas offers some thoughts on funding the Capital Program

At its December 2011 quarterly meeting, the PCAC was host to noted author and columnist Nicole Gelinas.  She began her talk with a thought provoking statement, “Second to crime control, the MTA capital investments affect New Yorkers’quality of life more than any other government force.”  She followed by making her primary point: “that without significant concessions from labor, the capital plan will remain unfunded.”

This thought is also reflected in the MTA’s assumptions for the 2010-2014 Capital Plan:
” With approximately 60% of the MTA’s expenses driven by labor costs, it is essential that growth in this area reflect the economic realities of this region and the State.  The MTA’s plan includes three years of “net zero” wage savings which are in line with the contract agreements reached by the State and its two largest unions.”

Gelinas called on Governor Cuomo to sell this point, “If Cuomo abandons the MTA to, well, the opaque MTA labor-negotiation process, he will hurt the capital plan and hurt the downstate future.”  She supported this statement with some disturbing facts:

The last three years of the latest capital plan assumes 56% local borrowing of $7.3 billion dollars.  The MTA must support this new borrowing with roughly $200 million a year in operating-budget savings efforts  – at a minimum – in order to pay the debt service. Without labor savings, the operating deficit in 2014 is $508 million, going to $513 million in 2015.

Gelinas suggested that the points to push in labor negotiations were healthcare and workrules, not pensions, as they are legislative.  Healthcare costs are going up 46% in the next four years to $1.7 billion.  She noted that there is real room for a deal on healthcare costs, with sharing of achieved savings after a set time period.  Work rules, too, drive overtime and are costing $578 million this year.

When a question was raised about the possibilities of more Federal funding, she was not optimistic about an increase when the reauthorization of the transportation bill is finally passed.  Her final advice to the group was, “as advocates you need to get the public to think more about the capital program and keep a focus on the Governor.”

Nicole Gelinas is the Searle Freedom Trust Fellow at the Manhattan Institute and a contributing editor of City Journal. Gelinas writes on urban economics and finance, municipal and corporate finance, and business issues. She is a Chartered Financial Analyst (CFA) charterholder and a member of the New York Society of Securities Analysts. Her most recent book, After the Fall: Saving Capitalism from Wall Street—and Washington was published on November 2009 by Encounter Books.

Gelinas has published analysis and opinion pieces on the op-ed pages of The New York Times, The Wall Street Journal, the Los Angeles Times, the San Diego Union Tribune, the New York Sun, the New York Daily News, the New York Post, the Dallas Morning News, the New Orleans Times-Picayune, and the Boston Herald. She has also written for Crain’s New York Business and National Review Online.

Before coming to City Journal, Gelinas was a business journalist for Thomson Financial in New York, where she covered the international syndicated-loan and private-debt markets. She also wrote a regular op-ed column for the New York Post.

Gelinas graduated from the Newcomb College of Tulane University with a B.A. in English literature. She and her husband live in Manhattan.

Here are a few of her articles can be found on the New York Post site here