Home MTA Economics Mr. Walder goes to Albany

Mr. Walder goes to Albany

by Benjamin Kabak

When Jay Walder spoke to reporters following the December 2010 MTA Board meeting, he discussed the MTA’s looming capital problem. The authority’s five-year construction plan that works to both maintain and expand the existing system has been funded only through the end of 2011, and it still suffers from a $10 billion gap. Without action from Albany well before the end of the year, the MTA will have a crisis on its hands.

“We would need, in going forward with any contracts, to ensure that we have any money not just to start a contract but to complete a contract,” he said. “I do not believe we have the capacity to bond out further off of our existing revenue sources.”

Walder added that by the latter part of the year, the authority will need funding commitments from the state. If not, as Michael Horodniceanu, president of MTA Capital Construction reiterated last week, the authority will have to begin slowing down its projects. They won’t cease work entirely, but things will not move ahead on schedule.

Yesterday, the MTA CEO and Chairman went to Albany for what seems like his monthly grilling session. Apparently, our state senators don’t get tired of repeating themselves because the hearing quickly devolved into familiar territory. Suburban representatives went after the payroll tax that their own legislative body approved while city reps rightly expressed concern over the future of the MTA’s capital funding problems.

As the Wall Street Journal reported, Sen. Marty Golden, a new representative on the state’s capital oversight board, asked Walder if the MTA had begun to talk with Gov. Andrew Cuomo’s team. While I’ve given Golden a tough time in the past for his unwillingness to support revenue-generating measures, he understand the importance of the capital project and recognizes that it will both keep our subways running and lead to jobs for city construction workers.

Walder said he has broached the topic with Cuomo’s team, but funding solutions are not yet on the horizon. “I have not had conversations as to avenues of funding for the capital program,” he said. The ever-present panacea of congestion pricing or East River bridge tolls would generate enough revenue to bond out the capital plan. Will the state follow through?

As the MTA head though spoke about the funding challenges on the operating side as well, he again vowed to keep service levels and fares constant. “We will not look to service cuts and we will not look to fare increases. We will look, as we have been doing, for ways that we can continue to reduce our cost structure,” he said. “Well we’ve said and I’ll continue to say is that we’re working on a plan right now to be able to deal with that.”

But suburban politicians again grilled him on the payroll tax as though it were a creature of Walder’s creation. In fact, the MTA CEO wasn’t in the country when the state legislature approved the controversial plan. But this is a point oft repeated that Albany doesn’t seem to understand. Three weeks after the Senate performed a similar farce, the Assembly went at it. “We are paying greater freight in the suburbs for the services that are basically New York City services,” Assembly rep Nancy Calhoun said.

The Rockland County representative wasn’t the only one raising a stink. “It’s killing businesses and it’s making Long Island harder and harder to afford to live there,” Al Graf, an assembly rep from Long Island, said.

Walder though laid out the case for the payroll tax. It isn’t that New Yorkers enjoy the tax; we don’t. But the MTA has been left by Albany with no choice. The Senate and Assembly could have pushed for a more equitable congestion pricing plan, but they opted to close a budget hole that isn’t going away with something far more controversial. “I do not believe that you can take that resource out of the MTA without having a devastating impact upon the region and regional economy,” Walder stressed.

The solution is almost too simple: In exchange for lowering or even eliminating the tax in suburban counties, the city should implement some form of tolling across the East River and into Manhattan’s so-called Central Business District. That money could be used to offset the gap in the operations budget created by a reduced tax revenue.

Of course, then we arrive at the problem of congestion pricing. The MTA needs money for both the capital budget and its operations ledger. The same dollars can’t go to both. Which side will give out first?

You may also like

24 comments

Congestion Toll The City March 1, 2011 - 2:46 am

I wonder if a congestion charge would be more palatable if it applied across the entire city. Drive a vehicle in NYC during the day and pay $X. Off peak pay $X/2 or less. Make trips transiting the city to/from Nassau/Suffolk free (if the transit is some reasonable time period) to get buy in from the neanderthals on the Island.

But otherwise, drive in the city with a vehicle and pay up.

(Less the neanderthals whine: I own a ginormous SUV and drive it approximately once a week).

Reply
John Paul N. March 1, 2011 - 3:24 am

Besides the logistical problems of enforcement (cameras and personnel), if you live in an area of the city with poor transit service, or an area with no traffic, is a congestion charge appropriate for that area? Will the businesses that will lose revenue from discretionary trips that won’t happen think it is worth it?

Reply
Bolwerk March 1, 2011 - 1:05 pm

Likely it is appropriate. Those are often areas with more congestion.

I really would like to see evidence of a statistically meaningful trend of businesses losing revenue because of changes in traffic policy. You hear anecdotes reported a lot, but never actual statistics. (Probably because the statistics favor the argument for congestion pricing and traffic calming….)

Reply
pete March 1, 2011 - 6:15 pm

I goto Target College Point, not the new Target Flushing, even though its farther, because of free parking. If you own a car, there is a strong incentive to not pay for parking/dont goto the city, and just stay in the suburbs to get the maximum from your investment.

Reply
Bolwerk March 1, 2011 - 10:12 pm

Fair enough, but that doesn’t mean congestion fees in congested suburbs don’t make sense. r

Congestion Toll The City March 1, 2011 - 2:27 pm

It’s as appropriate as having the millions of NYC residents who don’t drive subsidize streets and highways throughout the state via income taxes.

It’s as appropriate as placing tolls on the various bridges.

Someone is going to feel discriminated against. For reasons that defy logic, drivers get portrayed as under constant assault by pedestrians and transit riders, when the truth is exactly the opposite.

There’s no 100% clean, “right” answer. The easier it is to move people around NYC, the more the local economy will benefit. We can’t build more road capacity, even if you could it’s simply more efficient to use mass transit (whether by bus, rail or something yet to be devised).

Which would you prefer: spend $5 (hypothetically) on a daily congestion zone charge with the benefit of reduced congestion (and I think that the toll should be increased until congestion drops) or spend two hours in traffic?

Reply
John Paul N. March 1, 2011 - 3:57 pm

One major assumption of invoking congestion pricing (and the political support for it) is that more people will be inclined to take transit. Areas of the city that have little or no viable transit options will feel penalized since their only mode of mobility is with a personal car (if walking or biking are not suitable options). I am not counting on the MTA to increase services if CP only replaces and is not in addition to the payroll tax.

As I (again) learned from last week, the use of roads is not free, and I wholeheartedly accept that. I don’t mind having a charge that would reduce congestion, assuming that the congestion exists everywhere, which it does not within the entirety of New York City. To be clear, I support congestion pricing as was originally proposed (East River bridge tolling, south of 60th Street or so). I’m less supportive of a charge for all of NYC, only because the zoning characteristics of the city in general are so much different than the original congestion charge. People do tolerate the fact that traffic and congestion is a part of life in NYC, because of how much population there is compared to other cities and metro areas. Manhattan congestion is well publicized and observed; New York City as a whole, with the side streets that make up a large percentage of streets and apart from the major thoroughfares and known bottlenecks, is not.

To budget $100 or more a month, or even $50, to use your car is not an easy thing to do and accept. Maybe it is for you, but not for me and I don’t have a car. (But if I buy a car, I would budget it because I paid for the privilege of having a car.) Like I said in an earlier post about the LIRR choosing seats over additional doors for train cars, some people prioritize comfort over quickness. I’m not necessarily saying I do, but that’s what I observe.

Reply
Al D March 1, 2011 - 9:03 am

In the instance of East River Bridge tolls, then suburban residents should be charged to equivalent train fare to travel into CBD. In other words, Nassau residents should be charged a median LIRR fare, Suffolk residents, Westchester, Bergen, etc. So if you wanna charge us outer borough residents, the only other fair way is to charge suburban residents as well.

Congestion pricing is simply the far better way to go.

Reply
BUZZ March 2, 2011 - 9:09 am

That would only further discourage the Suffolk drivers from ever going into the city. They are already paying a lot more than others in gas money.

Reply
Hank March 1, 2011 - 9:14 am

First, good luck to Mr. Walder! I think all NYCers owe him a big thank you for the way he has handled these dire times.

Second, Ben: Will you ever be doing another series of interview with Walder or other MTA officials? If so, solicit questions first! Regardless, thanks for this website.

Reply
John-2 March 1, 2011 - 9:47 am

I would think the electronic tolling plan for the Henry Hudson Bridge has to be under development with an eye towards tolling not just the East River bridges eventually but also the Harlem River crossings. I just don’t expect Jay Walder or anyone else at the MTA to come out amd say it until the HH experiment is completed, since the main problem with tolling the free bridges as it stands now is the absence of toll plaza space, and the new system with it’s electronic deductions and camera enforcement for non-EZ Pass subscribers opens up the Brooklyn, Manny B, Willie B and the Eddie K (jeez what a stupid name change) along with the Bronx crossings to tolls without the other usual manpower and infrastructure requirements.

Reply
JohnPetroDMI March 1, 2011 - 10:58 am

I think that the suburban counties should still have to pay their fair share, and giving up their portion of the payroll tax for congestion pricing isn’t necessarily a good deal for NYC and the inner counties.

Reply
Benjamin Kabak March 1, 2011 - 11:02 am

For me, John, that trade off is more about political expediency rather than fairness. The only way to get suburban legislators to support congestion pricing will be to give them something in return. If a reduction in the payroll tax rates for their counties is the way to go, that’s a trade-off I’m willing to make.

Reply
Bolwerk March 1, 2011 - 3:22 pm

Before allowing the suburbanites a reduction in their payroll taxes, the city assemblycretins and senatecretins should howl a little about all the money that flows out of the city to the suburbs – and maybe work to address that disparity too.

Reply
Justin Samuels March 1, 2011 - 6:41 pm

Giuliani got rid of the commuter taxes……..

Reply
Walder: To save $100M, layoffs may loom :: Second Ave. Sagas March 1, 2011 - 11:47 am

[…] « Mr. Walder goes to Albany Mar […]

Reply
JK March 1, 2011 - 11:50 am

The math for eliminating suburban PMT in exchange for pricing doesn’t add up. We need both. Suburban PMT raised approximately $400m in 2010 and is projected to take in $485 in 2014. By 2014 — assuming the TWU gets no salary increase, the real estate market recovers, and there is no new borrowing for the current capital plan — the MTA is still projecting a deficit of $485m. So, if you got rid of suburban PMT and everything else stayed the same, a road pricing plan would have to net $970 million a year just for the MTA operating budget to break even. Note that this assumes that the pricing revenue would not be bonded for capital projects. Given this, how can you propose eliminating suburban PMT? I’m not even getting into the question of fairness, since eliminating suburban PMT amounts to a further subsidy of Long Island by Queens and Brooklyn.

Reply
Benjamin Kabak March 1, 2011 - 12:02 pm

As I said to John Petro, it’s a matter of political expediency. At some point, the MTA will require both a payroll tax and congestion pricing or else it will scale back service to those outerlying areas. It’s a giant mess, but the politics has to play a role in the equation.

Reply
Justin Samuels March 1, 2011 - 6:50 pm

This is already happening Benjamin. Didn’t the MTA and Nassau recently have a fight over subsidies to the Long Island Bus? In fact, didn’t the MTA say they would stop the subsidies and let Nassau pay for it themselves?

Personally, I think NYC transit should go back to being run entirely by the city, and this would leave the city mostly responsible for funding it. Let Long Island the the Hudson Valley pay for the commuter trains and their own buses.

Because under the current situation, NYC has no real incentive to try to help the MTA out. Remember NYC funding to the MTA was decreased in the Giuliani era and my understanding is that it hasn’t been increased……..

Reply
Niccolo Machiavelli March 1, 2011 - 9:29 pm

The missing piece of the equation, politically and economically is the commuter tax. If the burbs can’t live with their payroll tax handle charge them sufficient commuter taxes to pick up the difference in the budget and use the CP or bridge tolls to fund the capital plan. That way the Jersey commuters get to contribute too.

Reply
Justin Samuels March 1, 2011 - 10:29 pm

Bloomberg tried to restore the commuter tax, but Pataki was against it. Nor would the state legislature approve it.

Basically, in the current political climate, I don’t think a restoration of the commuter tax is possible. Any democrats who represent suburban districts will ally themselves with Republicans, likely making a restoration of the commuter tax Dead on Arrival.

Don’t get me wrong, I don’t think Giuliani should have even eliminated the commuter tax. But restoring it won’t be easy.

Reply
Donald March 1, 2011 - 2:15 pm

Slowing down capital projects as Walkder indicated won’t save anywhere near as much money as he might think. The longer you take to finish the work, the more interest your paying on the bonds that fund the project.

Reply
pete March 1, 2011 - 6:20 pm

But you can always roll over the interest into the future. Inflation will kill off the debt before interest will for government bonds.

Reply
JAzumah March 1, 2011 - 5:52 pm

Congestion pricing is a way for the city to cash out of the transit system. It will not inject more money into the system. It will replace what the city kicks in now.

Reply

Leave a Comment