"The report puts the blame squarely on two problems: a structural reliance on bond funding (whose problems we’ve discussed before) and a problem in the leadership structure of the agency. Here’s the critical passage on debt-based funding:
“Fundamentally the MTA’s deficit is rooted in a structural budget imbalance driven by years of over-reliance on self-supported debt to fund its capital needs. This has led to large and growing debt service payments made through the operating budget that have placed extraordinary pressure on the farebox. This structural imbalance has been masked in recent years by an unprecedented collection of real estate transactional taxes.”
And, indeed, this is a major problem: passengers are simply paying more and more for less, as they’re having to pay back the loans that were taken years ago to finance capital improvements. The MTA’s budget has been fine in recent years, as the passage points out, but only because of the huge real estate market in New York City, that held the Authority afloat. Now that the building boom in the city has popped and the overall economy has slowed significantly, the MTA must find other ways to finance itself. Most importantly, it must stop being so reliant on bonds to fund capital improvements and even operating expenditures. Taking out loans simply costs more in the long-term than paying as you go, as direct taxes would ensure."
The Ravitch report also recommends putting more leadership authority in the hands of MTA's full-time executive director, rather than its Board of Directors.