The Unwinding of the Great Infrastructure Boom has Begun

“The Fly” warned you before; he will no longer offer such pleasantries. From here on, you will get the “black flag.”

The next shoe will be a fucking boot in your face, as municipalities struggle to balance their budgets, due to egregious price surges in raw materials.

NYC is telling you what you need to know:

The Metropolitan Transportation Authority released a cascade of grim financial assessments on Monday that mean delays in subway station renovations and other major improvements, as well as possible cutbacks in service and increases in fares and tolls.

The subway station at Smith and Ninth Streets is one of 15 in Brooklyn that will not be renovated as scheduled. Four stations in the Bronx also will wait.

In a series of public meetings of authority board committees, officials said the authority would be forced to cut projects valued at $2.7 billion from its 2005-9 capital spending program, largely because of soaring costs on construction projects already under way.

Officials also said the revenues from taxes on real estate transactions, which have buoyed the day-to-day operations of the transit system in recent years, were falling off at an alarming rate, resulting in a shortfall this year of $122 million. Revenues from the real estate taxes are on track to end the year about $280 million below budget projections.

And costs are up, especially in subway and bus operations, where overtime and fuel prices have led New York City Transit to go $60 million over budget through May.

“Should riders be concerned?” Mr. Sander said in an exchange with reporters at the authority’s headquarters in Midtown. “Absolutely. Am I concerned? Absolutely.”

Mr. Sander said the financial picture would become clearer next month when he presents a preliminary budget for 2009.

“We remain hopeful that revenues will rebound and subsidies will increase, but if they do not then we will, of course, have to consider fare and toll increases and/or service cuts,” he said.

But there is likely to be plenty more bad news before then. The authority must present a preliminary 2009 budget next month, and Mr. Sander said that would include “a variety of potential scenarios.” Those would appear to include possible service cuts and fare and toll increases. Fares and tolls went up last March, and the authority had proposed raising them again in 2010. Only once before, in 1980 and 1981, has the authority raised fares two years in a row.

The authority said it was also scrapping the accelerated capital program that it created in a rush earlier this year to coincide with the legislative debate over Mayor Michael R. Bloomberg’s congestion pricing plan. The failure of congestion pricing means the authority will stick with its regular schedule for capital spending on big-ticket items, with the current plan ending next year and a new five-year plan beginning in 2010.

The current $23.7 billion plan includes spending for new buses and train cars, nuts-and-bolts infrastructure items like subway ventilation fans and tunnel lighting and major projects like the Second Avenue subway.

But rapidly inflating costs have resulted in the trimming of many projects from the program as the budgets for others grow.

The station renovations that will be cut include 15 in Brooklyn: 10 on the D line; 4 on the N line; and 1 (Smith and Ninth Street) on the G and F lines. Four stations on the No. 6 line in the Bronx were also cut.

The amended plan also cuts $366 million in projects to build fans that draw smoky air out of the subway in case of fire and $223 million to modernize subway track signals and switches.

The changes will be submitted to the authority’s board for approval next month, and most of them must then be approved by the state’s Capital Program Review board, which includes representatives of the governor, the mayor, the Assembly speaker and the Senate majority leader.

Mr. Sander said the changes should not be viewed as cuts because most of the projects would be included in the next five-year program for 2010-14. But subway advocates were leery, citing the uncertainty surrounding the financing for that program.

“To me, a cut is a cut is a cut,” said Gene Russianoff, the staff lawyer for the Straphangers Campaign, a transit advocacy group. “Their spin is that they’re deferrals, but they’re deferred into no man’s land.”

In the context of the authority’s financial difficulties, Mr. Sander was asked about the appropriateness of a raise he received this year that increased his compensation by $10,000, to $350,000.

Mr. Sander portrayed the raise as being in the best interest of the authority, saying that other transit systems paid their executives more. “Our ability to retain and attract talent is significantly at risk,” he said. “The reality is the salary structure for the M.T.A. is set in relation to my salary.”

Keep in mind, NYC has not been gravely affected by the housing crisis. As a matter of fact, some assholes believe NYC will skirt by, unaffected.

This, as you know, is impossible.

By July 1st, most municipalities need to have their budgets set for 2009. Unfortunately, for the stupid politicians, their infrastructure projects were pegged to the criminal CPI index, which is not an honest assessment of real inflation, particularly as it pertains to infrastructure projects: concrete, steel, copper, etc.

Once budgets are slashed, stocks like [[TEX]], [[VMC]] and [[ITW]] will get rocked.

What’s amusing to me is the low IQ nature of the talking heads on CNBC, willing to call a bottom, after every reversal. Fucking morons.

I have yet to hear anyone talk about this gigantic looming threat to the one industry that has been holding up this economy. Time will tell if Senor Tropicana is correct.

Lucky for me, I have a time machine.

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