The multi-billion-dollar gorilla in the room

By · Published in 2013

At what point is it no longer practical for New York State and its various transportation-related agencies to resort to fare hikes and toll increases to fund infrastructure projects? Have we reached the breaking point? These are two questions that no one likes to ask, but as the state begins to build a new Tappan Zee Bridge and as the MTA looks toward another $28 billion five-year capital plan, these are questions that deserve our attention.

The topic came up yesterday when Chris Ward, the former head of the Port Authority, spoke about the Tappan Zee Bridge. Dana Rubinstein was on hand for the talk and filed this report:

“The very things that we have taken for granted, which were the foundation for building infrastructure, we have probably lost within this region,” said Ward. “If you look at the great notion of the Port Authority as an independent authority. You look at the M.T.A., you look at even the way the City of New York functions with how it builds infrastructure, that model today, unfortunately, is broken.”

The Port Authority’s LaGuardia Airport, for example, remains “a crap airport,” according to Ward.

“The Port Authority faces probably a $7 billion infrastructure gap on what it would like to do and what it can afford to do,” he continued. “The M.T.A. is probably in a somewhat worse position and we’ve realized and the governor has realized we are not going to be able to fund the capital plan off fares and tolls on the M.T.A.”

Ward didn’t present a catch-all solution, but his point is a good one. We need infrastructure, and infrastructure costs money. We need to be willing to pay for infrastructure, but we also have to willing to invest in maintenance and upkeep. We also need to figure out a way to control costs. There’s no good reason for New York City to have the highest capital costs in the world, but our leaders aren’t willing to take on the cost structure which include work-rule reform and an overhaul of the bidding process.

For the city to remain competitive, it will have to build — and fund — infrastructure expansion projects that do a bit more than Select Bus Service does. That’s going to require a discussion about alternate funding schemes including congestion pricing. No one wants to talk about it, but it’s there. Within ten years, New York City will either have congestion pricing or an infrastructure gap too large to overcome. I’ll take the former. Now let’s start talking about it.

22 Responses to “The multi-billion-dollar gorilla in the room”

  1. Eric F says:

    The answer is obvious, namely a re-prioritization of where the money goes. New York State has a budget of over $120 billion annually. Assuming the Tap is a 5 year project, that’s $600 billion out of which you need to find $4 billion. When everything is a priority, nothing is a priority. There is no reason why New York can’t look at a 1/2 trillion pot of money and decide that 50 billion would fund a transformation of key infrastructure and additions to infrastructure, including a cross Long Island Sound Tunnel and a new Penn Station. But that would mean cutting elsewhere and when every bit of the budget is a precious snowflake, that’s not going to happen.

  2. Larry Littlefield says:

    Even if we do everything Ward suggests, the debts from the past will remain. One might say that the past 25 years have seen a shift from physical debt — the product of deferred maintenance of a prior generation — to Generation Greed’s financial debts.

    I think I read somewhere that Ward has a religion and ethics background. He should channel that. This is not a technical issue.

  3. Beebo says:

    Still and all, you have to have sane priorities. Let me ask you: are you satisfied with Penn Station’s capacity? If you’re not, then, a) would it be better to punch a tunnel for straight-thru running to Grand Central/Queens, or b) make a “station beautiful”, to restore the Penn of yore? (Thus, maybe moving MSG.) (If you don’t like the idea of straight thru running, insert your capacity-approving idea.) Enough boondoggles.

    Secondly, name a city’s “second airport” that isn’t the pits. It should not be a shock to anyone…

  4. BBnet3000 says:

    Finding the money is one thing, but if we had reasonable costs and timetables for construction (ie in line with best practices) we’d be riding the T to the Financial District in 2018 rather than talking about finding the money just to get it to 125th st.

  5. Alon Levy says:

    I can’t let this comment go: “For the city to remain competitive, it will have to build — and fund — infrastructure expansion projects.”

    It’s not about competitiveness. Every time you justify an infrastructure project based on competitiveness, a kitten dies. Trying to build things to compete with Chinese cities will get you suboptimal spending – more infrastructure spending than optimal, less spending on social services of the kind China is neglecting.

    Infrastructure is a service cities should provide to current and future residents. It always should be about this and not about having something to brag about at international meetings.

    • Bolwerk says:

      True to a point, but you can’t underplay the role infrastructure plays in economic mobility (competitive or not) either. We aren’t oversupplying subways or social services, but we are oversupplying and misutilizing highways and prisoners.* Good transit improves job opportunities, offers a wider base of workers to firms, grows neighborhoods, and makes new businesses possible.

      Competition isn’t totally avoidable either. We do need to care about keeping firms that could just go to Houston and get a tax break.

      * No, that’s not an endorsement for slave labor!

  6. SEAN says:

    At what point is it no longer practical for New York State and its various transportation-related agencies to resort to fare hikes and toll increases to fund infrastructure projects? Have we reached the breaking point? These are two questions that no one likes to ask, but as the state begins to build a new Tappan Zee Bridge and as the MTA looks toward another $28 billion five-year capital plan, these are questions that deserve our attention.

    I couldn’t let this comment go either. As long as we can borrow, fares & tolls will continue to rise. Of course there’s the popular public private partnership if our transit agencies need a quick cash infusion, but we have seen what happens when public infrastructure lands in private hands.

  7. David Brown says:

    Say whatever you like about Mike Bloomberg ( good or bad), he stressed infrastructure projects ( one of which was the recently completed Manhattan Trunk of Water Tunnel # 3). But the reality was that even he could not overcome a lot of it ( groups opposing selling Parking Lots at NYCHA which could be used to improve living conditions for tenants, comes to mind). So does the cost of Municipal Worker Contracts and Pensions, and political shakedowns as we are seeing with Debi Rose (D) Staten Island which may sink the Empire Outlet Project ( although gut feeling it will not). I dare not mention Community Boards (such as my favorites in Richmond Hill & Woodhaven), who love the Status Quo and the Hell with moving forward ( we see that with Transportation Expansion). But the biggest problem in this Country is a lack of understanding of basic economics which is defined as “The study of SCARCE resources and how best to ALLOCATE them.” We see this with wasteful spending such as the Penn Station Project, and the Olmsted Lock and Dam Project ( it is being Pushed by Senate Minority Leader Mitch McConnell (D-Kentucky), just so people do not think I single out Democrats alone), it’s like we never learned from mistakes of the past like the Boston “Big Dig.” When does it end? When you see more Municipalities end up like Detroit ( with no Bailout from the Federal Government because they cannot afford it), and Major Projects get started but cannot be completed because they simply cannot be paid for ( like the Second Ave Subway of the 1970’s, where they built tunnels and only now are they starting to be used). When will that happen? No one knows that exact date, but when you see the desperation of Gov. Cuomo to bypass a lot of stuff ( Environmental Reviews and the like) and deals with Unions to save $$$$$ to get the Kosciuszko and Tappan Zee Bridge Projects started ( and hopefully completed), you know that day of reckoning is coming real soon.

    • Eric F says:

      “Environmental Reviews and the like”

      Seriously? We needed MORE studies for the Tap. You could have dropped the study documents in the Hudson and dammed the river by now. 20 years of studies is cutting corners nowadays? When the Tap replacement was first studied, AOL was the hottest company in the country.

    • Douglas John Bowen says:

      Second this observation by Mr. Brown. At least in terms of U.S. counterparts, New York, for all its infrastructure woes, has not been napping. Water Tunnel #3 is not a rail transit project, but it is a winner in more ways than many appear to acknowledge. I would add that New York’s citizenry, if not its elected officials, did avoid the Big Dig counterpart we could have had in Gotham, Westway (which actually was preceding Boston’s project). But the argument for pondering scarcity of resources is a good one.

    • MetroDerp says:

      Well, seeing as Mitch McConnell is a Republican, there IS definitely a difference between parties on waste and lack of infrastructure on a national level.

      As for cost overruns and the like, the Big Dig may have been wildly over budget and behind schedule, but it’s still worth every penny. What that project did for the city of Boston cannot be overstated (and would that other cities follow suit and deck over their own highways).

      • Bolwerk says:

        You managed to overstate it quite nicely. Simply opting to remove the highway that was there would have had pretty much all the same positive effects.

  8. Larry Littlefield says:

    “At what point is it no longer practical for New York State and its various transportation-related agencies to resort to fare hikes and toll increases to fund infrastructure projects?”

    I shouldn’t have let this go unremarked. New York State and its transportation-related agencies have NOT paid for infrastructure projects with fare hikes and toll increases. They have paid for them with debt.

    The real question is, what happens when you have to pay for PAST (plus interest) AND FUTURE infrastructure projects with fare and toll hikes.

  9. lawhawk says:

    The Port Authority isn’t in a position to build big because of the WTC projects, which are winding down, and because they’re constrained by toll revenues. It took a major toll hike to get the latest round of infrastructure projects off the ground, including the Goethals replacement, the Bayonne Bridge lift, PATH equipment upgrades, and airport improvements at JFK and EWR.

    LGA needs major improvements, and the PA worked out a deal to get the central terminal area rebuild, shifting parking around and moving the terminals inland to provide more ramp space on a cramped site.

    The PA used passenger facility fees to help build the AirTrain, which is a major success at JFK. The AirTrain at Newark is much less and is likely to need replacement soon.

    The MTA is in worse shape financially as its debt load is far higher, and is even more constrained on revenue. The state and city will need to figure out how to make the needed infrastructure improvements and expansion of the subway system, which is the only way to move the numbers of commuters/travelers that the City is now having and expected to have going forward.

    That means utilizing the fees/taxes from up-zoning to infrastructure improvements and not turning around and giving abatements to companies to move in.

    It means finding a way to increase the state and city share of transit funds to build.

    It means adjusting the tolling on bridges and tunnels to rationalize the tolls and even the load at all the bridges and tunnels in the region.

    And it means rethinking how we do infrastructure projects – including retaining an institutional memory on construction projects at the MTA rather than outsourcing everything to contracts that lead to significant cost overruns. Spanish companies are deeply involved in NYC projects, but they aren’t giving the cost savings as compared to similar projects in Europe. I wouldn’t go so far to say that they’re subsidizing their businesses on US projects that go overbudget, but there’s no reason that the NYC projects should cost so much more than similar projects in Europe by the same firms.

    And if you’re able to cut the costs on projects, that means that the cost savings can translate into still more expansion.

  10. Alan Miles says:

    Aren’t fares in NYC relatively cheap by international standards? It is too much to ask users to pay their fair share for projects that mainly benefit themselves?

  11. fool says:

    Why is it that when these issues arise in NYC, for any service the only solution considered is additional revenue/cash flows? Why is the value of what we are getting never questioned? Why is cost never looked at to be controlled?

    Second Ave and capacity expansions are needed for the city but at these prices, if they are the real, actual, pushing the productivity curve prices, we should give up on growth and leave ourselves to the historical districts.

    Otherwise what the hell causes our costs to be astronomical?

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