N.Y. Bus, Subway Fare Hike Upheld

A state appeals court Tuesday upheld the right of the Metropolitan Transportation Authority to increase fares for the more than 7 million subway and bus riders who use the nation’s largest public transit system.

The five-judge panel of the Appellate Division of the state Supreme Court unanimously reversed two lower-court decisions which held that the MTA had misrepresented its financial condition and failed to provide proper notice for public hearings on the proposed raise. The 50-cent increase, which boosted fares to $2, took effect May 4.

Rider-advocacy groups said they would appeal Tuesday’s decision to the Court of Appeals, New York state’s highest court.

Writing for appellate panel, Justice Ernst H. Rosenberger said the MTA’s notice of public hearings before the fare increase had followed the law, and that the agency had a deficit. “The record does not support the findings of both courts that the projected deficit did not exist or that the MTA’s notice of public hearing was otherwise false or misleading,” Rosenberger said, noting that the notices “exceeded the statutory requirements.”

The judge said the MTA estimated its deficit at $2.8 billion over the next two years, while New York state’s Comptroller Alan Hevesi put the figure at about $2.6 billion.

“The salient, undisputed fact is that the MTA faced a combined deficit of over $2 billion for the 2003 and 2004 fiscal years,” Rosenberger said. “The record does not support either court’s conclusion that the multibillion-dollar deficit did not exist.”

In highly critical reports in April, Hevesi asserted that the agency kept two sets of books and had more money available in 2003 than it had disclosed.

Both the state comptroller and New York City’s comptroller, William C. Thompson, accused the MTA of falsely inflating its budget gap after diverting more than $500 million to pay future debts.

The appellate division panel said the MTA might have avoided a fare increase in 2003 if it hadn’t earmarked the funds for that purpose. But, the panel added, nothing in the law required the MTA to craft budgets and financial plans based on just one year. “Indeed, doing so would appear to run afoul of its statutory obligation to establish five-year financial plans,” Rosenberger said, adding that it is the MTA’s decision alone how to balance its budgets.