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The MTA is always in debt, so how can it have a $400M surplus, and what will happen to it?

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NEW YORK — Typically, when the three letters M, T and A are used together, they spur a reaction that is very rarely positive.  Often, that's because the news related to the MTA is most usually negative, such as fare hikes or service cuts.

So when Wednesday's news surfaced of a large budget surplus for the Metropolitan Transportation Authority, the reaction may have been expected to have been upbeat.  Surprisingly, though, it was more muted.

Specifically, the authority found that it has a $400 million surplus in its operating budget.  The MTA chairman's reaction to the news was decidedly and characteristically business-like.

"We find ourselves in a situation as we approach what we showed in the financial plan today," said Chairman Thomas Prendergast in his comments to assembled media following Wednesday's MTA Board meeting. "It's a four percent increase in '17 and a four percent increase in '19."

So on the same day that his board showed the transportation authority is comfortably in the black, Prendergast was talking about increasing fares.  Such talk was actually deceptively negative sounding, however.  He talked about the increases in terms of possibly not having them be as high as the MTA had initially recommended.

More on that in a moment, but first, the situation does beg the question, how did the country's largest mass transit system find it has far more money than it thought?  Its own report shows that revenues from real estate it owns, and lower than expected payouts for pensions for its retirees are among the reasons it has extra money.

Now that that's the situation, it may leave many train and bus passengers wondering how they might benefit from the newly discovered funds.

"People take the subways," said Straphangers Campaign executive director Gene Russianoff, "and they see thousands and thousands of people stream in and swipe their cards, so [they ask], 'Where's all that money going?'"

Russianoff, the country's foremost advocate for public train and bus riders said what many of the people for whom he's advocating feel:  that a surplus in the triple-digit millions should perhaps result in lower fares.  However, the whole situation is more complicated than that.

For starters, the MTA is not exactly rolling in dough.  Its newly found $400 million dollar surplus is in the MTA's operating budget, which is essentially money for its day-to-day operations.

At the same time, the MTA also has a capital plan, which is the money the century old system needs to maintain and upgrade its cars, tunnels, buses and stations and work to attract more riders.  It's not a matter of the MTA having separate accounting books, one public and one private, as it had been accused of in court eight years ago, and found not guilty.

Instead, it's just a case of math.  In its capital plan, the MTA has a $13 billion funding gap, more than 30 times the size of its operating budget surplus.

That's why the MTA chairman isn't doing a happy dance.  Instead, he's talking about fare increases, but in milder terms than if the fiscal news had been worse.

"If we can lower the amount of the fare increase, we will do so," said Prendergast, who added that he's optimistic that the current budget review process will keep the MTA in a steady enough position to prevent higher fare hike surprises.

"What a lot of us [have] lived most of our entire career[s]," said Prendergast, is having "no kind of known point at which" a fare may need to be readjusted.  Now, he said, the MTA has a much stronger sense of its fiscal needs.  Without it, Prendergast said, in the past "you['d] have these big fare increases."

So projected fare increases may not be as high as originally planned, thanks to the surplus.  Still, though, his organization has to buy more cars, do maintenance, and pay interest on money that it's borrowed to do some of those improvements and others.

"There are choices," said Russianoff in an interview with PIX11 News.  "The fare, service, paying for their capital improvements.  I think the good news is there is money to argue over."

He said that in the nearly four decades that he's worked in public transportation passenger advocacy, he's only seen seven budget surpluses.  He added that in more than one case, New York's governor at those times decided that the surplus could be better used in areas other than public transportation, and decided to reallocate the funds to state entities other than the MTA.