Feb
11

Whither the MTA’s $32 billion capital plan?

By

As we approach the six-week mark of 2015, the MTA’s next five-year capital plan — all $32 billion of it — was supposed to kick off on January 1. Now, it’s not a surprise or out of the ordinary that nearly half of the plan’s funding isn’t in place or that the plan hasn’t been approved by the state’s Capital Program Review Board. Last fall’s rejection was a pro forma measure designed to attract political attention to the need to identify funding sources. What’s surprising is how utterly silent Albany and Governor Cuomo have been on the issue.

At this point in the debate, there has been no debate. The only action from Cuomo involved tossing a wrench in the form of the ill-designed LaGuardia AirTrain into the MTA’s plans and requiring the agency to re-write a portion of the five-year proposal. He hasn’t talked about funding mechanism; he hasn’t discussed new dedicated revenue streams; and he certainly hasn’t leaped to embrace anything as progressive as MoveNY’s traffic pricing plan. The silence is deafening.

It’s not though for lack of action and noise downstate. Earlier this week, Mayor Bill de Blasio — who thanks to politics has nearly no say over perhaps the most important element driving New York City development — essentially punted the MTA funding question to Albany where it belongs. The mayor recently proposed some new Select Bus Service routes and $300 million over funding over the next decade (though the proposal could be better), and that’s the extent of his control over major MTA moves. DOT can reallocate street space, and the MTA will provide the buses. Meanwhile, the mayor has asked Albany to do something about the capital funding gap.

De Blasio’s statements earlier this week echo comments he made last week. As Capital New York reported, hizzoner made it clear that Albany must find a solution. “I think clearly this an Albany question first and foremost,” the mayor said while on NY1. “Not only do we need to preserve the payroll tax that’s playing such a crucial role now, but I think we have to have a real debate about what Albany should do with its resources and what’s fair for the whole state.”

Of course, the city’s contribution to the MTA’s capital plan has stagnated at $100 million per year for decades. At a rate of inflation, the city should be contributing $363 million, but even that huge increase would leave a gap of nearly $14 billion. The city could do more, but by and large, de Blasio is looking in the right direction.

The mayor isn’t the only one squawking at Albany that isn’t really listening. On Wednesday, the Urban Land Institute of New York and the Permanent Citizens Advisory Committee to the MTA released a report and a fancy website highlighting why the region needs a fully funded MTA capital plan. The report highlight a bunch of facts anyone reading this far already knows — 90% of NY workers live in areas served by the MTA; the Lexington Ave. line carries more riders than subways in San Francisco, Chicago, and Boston combined; the MTA needs to keep investing in system renewal to avoid constant breakdowns, etc. But it’s important because it’s a salvo in a political fight.

“We need to focus on continuing to deliver to New York commuters an affordable, accessible transit network that is equipped for the challenges of tomorrow. As the city and state’s leaders determine the final shape of the Capital Program, it is vital that they keep everyday New Yorkers at the top of their agenda,” William Henderson, Executive Director of PCAC, said. We can’t risk not investing in the system as we’ve been down that road before.

So what happens next? Eventually, Albany will pick up the cause, and the debate may play itself out in familiar fashion. No one will propose traffic pricing, but debt will be on the table. And the MTA’s debt, as a new report by the Straphangers highlights, is a problem. The MTA itself is carrying more debt than 30 nations including war-torn Syria and the entirety of Chile. And yet underinvesting is on the table because, as Joan Byron of the Pratt Center said yesterday, “we have a governor who has demonstrated that he does not get how important the MTA is to the metro and regional economy.” That’s a scary thought indeed.



26 Responses to “Whither the MTA’s $32 billion capital plan?”

  1. Larry Greenfield says:

    i don’t see much progress on an MTA budget until the mayor and governor agree to cooperate and that is quite unlikely. They seem unable to do anything but blame each other.

    • lawhawk says:

      Given that the Assembly is in turmoil with Silver’s indictment and subsequently stepping down as Speaker giving the reins of power to Heastie, it’s going to take some time before the budget talks ramp up. It’s not going to be the typical 3 men in a room, as we’ve got new players looking for a seat at the table.

      The state budget is due April 1, so Cuomo will be looking towards that first and foremost, and then seeing how to shoehorn the MTA budget into that framework.

      Add to that the proposals to consolidate the Thruway Authority, Mid Hudson Bridge Authority, and State DOT under one organization, and there’s a lot of attention on transit affecting upstate. If they can somehow wring more cost savings out of consolidating those authorities (without forcing toll hikes outside the TA to keep the tolls on the mainline from skyrocketing to cover the TZB), then we might see some progress there.

      Even with all the state machinations, the City should be contributing more to the MTA to cover its costs. There’s a power aspect to that – as contributions should beget accountability but the Governor isn’t going to give that up.

      There’s also another attempt at congestion pricing/equalizing tolling on bridges and tunnels in NYC to balance traffic across the crossings into Manhattan, and the question is whether to adjust the tolls so that additional revenue can go towards transit or to maintaining existing bridge/tunnel infrastructure.

      • Tower18 says:

        One could make the argument “why SHOULD the city contribute to the MTA budget when they have so little input/power in the processes?”

        The whole thing is broken.

    • Bolwerk says:

      Know what else the mayor had no say in? Contract negotiations.

      Those happened last year in the run-up to the election. I didn’t see much concern debt last year when something could have been done about it.

  2. Alon Levy says:

    I’d care 300% more about the MTA’s capital plan if it bothered to tell us how much SAS Phase 2 would cost.

    • al says:

      SAS Phase 2: $4-$5 billion range.

      We need more competition for work, and incentives for higher productivity and quality inside and outside the MTA.

      The foreign parent companies of local large contractors, whether from Sweden (Skanska) or Spain (ACS), look at NYC and its bloated construction costs as cash cows. This needs to end.

  3. Eric F says:

    DiBalsio does have a budget pushing 80 billion dollars. To provide context: the entire state budgets of NJ and Pennsylvania are around 30 billion each. I get that the MTA is a state agency, but if DiBlasio redirected about 4% of his budget to MTA capital projects he’d have enough money to fund $30 billion in capital improvements over ten years without adding a cent to borrowing.

    • al says:

      However, some of that $78 billion is pension obligations and debt. Furthermore, much more of it will be pension and debt going forward. Finally there is the issue of bureaucratic inefficiency, and horrible contracting practices that runs into problematic project management that create bloated project costs. All of which DeBlasio will not reform as the people, unions, and contractors are either his base, or in cahoots with the local Democratic Party.

      • Alon Levy says:

        Honestly, it’s entirely possible the sandhogs have written him off because they decided he hates the cops and their family and friends are either other sandhogs or cops/firefighters.

        It’s kind of hilarious how in a city that’s 36% white, the sandhogs’ union leadership is like 100% Irish.

  4. Larry Littlefield says:

    “Of course, the city’s contribution to the MTA’s capital plan has stagnated at $100 million per year for decades. At a rate of inflation, the city should be contributing $363 million.”

    You are measuring from AFTER the city and state contributions were slashed in the early 1990s recession. Because that is what you are being told by the very officials who have screwed future generations and run up that debt.

    The real number, the Ed Koch number, was more like $800 million in today’s dollars. And of course there was a pre- “big ugly” budget Mario Cuomo number that was a large. You are only considering the Generation Greed Pataki/Bruno/Silver numbers. Fiscal evildoers and child rapers.

    The city and state need to put in at least $800 million each in cash, or Andrew Cuomo and Bill DeBlasio (further) join the ranks of fiscal evildoers and child rapers.

    • Larry Littlefield says:

      One more thought. Cuomo and DeBlasio, the interests that back them, and the state legislators and the interest that back them, are unwilling to pay to maintain the transit system.

      But no city or state politician has paid to maintain the transit system since 1991. They have simply shifted that cost to day. The only cash money funding has been from the federal government. And all the additional dedicated revenues enacted have already been spent — including future revenues.

      I’ve been screaming about this for years. You can’t wake up now and say “this is a problem.”

    • Justin Samuels says:

      Giuliani and Silver working together got rid of the commuter tax. Bloomberg tried to restore this, but Pataki and Silver blocked him.

      For the city to contribute the money it did in the 80s to the MTA new revenue streams would need to be identified. Bloomberg tried this with congestion pricing, but SILVER blocked this from being considered in the Assembly.

      Well Silver is out of power now, so maybe Hestie would let a proposal like this pass.

      • Bolwerk says:

        Hestie will let it pass, only to be blocked by Cuomo?

        Cuomo would likely lean in to stop it before it ever got to his desk, and his Republikan friends in the senate would probably oblige.

        • Eric F says:

          Far be it from me to not be excited about yet another new tax for the MTA, but doesn’t the payroll tax effectively accomplish what the commuter tax was intended to do? Would the commuter tax replace the payroll tax, or would we live in Candide’s best of all possible worlds and get to have both?

          • Bolwerk says:

            Are you confusing CP and the commuter (income) tax, or was that a typo? (Or did someone really try to bring back the commuter tax, and I don’t remember?) As I recall…

            • Giuliani helped dump the old commuter tax to boost his Senate campaign against Hitlery. Circa 1999.

            • Maybe circa 2002 some talk, it was only talk, of bringing the tax back came up in the post-9/11 recession. Bloomberg did things like property tax hikes instead.

            • Fast forward a few years, Bloomberg wanted CP for environmental reasons and transit investment (circa 2007)

            • The congestion charge was scuttled before the payroll tax came up. I think Bruno still controlled the Senate at this point, so it was 2008.

            • Skipping the whole Spitzer era scandal, the small-R republicans had just won the NYS senate in 2009 and were engaging in their usual bickering against the backdrop of an MTA funding shortfall. Nobody wanted to act unless they could skim some cream off NYC’s crop. (This is probably why Cuomo wanted to keep the Dems out of control of the Senate. He remembered what happened to Paterson.) The payroll tax was the abortion from that battle.

      • Phantom says:

        Justin

        Giuliani vehemently opposed repeal of the commuter tax. Any local should remember this.

        http://www.nytimes.com/1999/05.....r-tax.html

  5. Matthew says:

    While the MTA may be in dire financial straits, there are other ways of getting transit projects funded in NYC. There needs to be an economic development component to every transit plan moving forward. The reality of the capital funding dilemma is that we need the contribution (either direct or through leveraging future tax revenues) of private players. The funding mechanisms for the 7-Line extension in the Hudson Yards, while not perfect by a long stretch, still should serve as the guide for large scale transit projects in the future. And while the MTA may carry more debt than they know how to handle, interest rates are still extremely low and dedicated agencies tasked with developing specific transit projects (like the HYIC in the Hudson Yards) can better access this cheap debt.

    All across the country, transit oriented development has become the way to catalyze transit funding. If expanding transit is at all an important priority for Mayor De Blasio, he must look to alternative funding mechanisms that are not solely dependent on the MTA. Where there’s a will there’s a way.

  6. Thomas Graves says:

    New Yorkers re-elected Cuomo. You get what you deserve. Cuomo has shown time and time again that he doesn’t give a rat’s ass about mass transit in the city. He likes cars. He will do nothing. DeBlasio also cares very little about infrastructure and the subways. Sure most of the power is in Albany, but the Mayor has zero intention of upping the pathetic $100M contribution the city makes to the capital plan. With the two jokers at the helm, the possibility of getting a decent long-term funding plan in place for the MTA is substantially less than zero. I thank the good lord I live now in Tokyo, where high-quality rail transit is viewed as being as necessary as clean drinking water.

    • Justin Samuels says:

      Some of you guys are frantic about trains to the point of being irrational. Transit is very important to NY, yes, but it is far from the only issue that is being important. With the feds investigating the New York Legislature for corruption, this has thrown things out of whack.

      At some point Albany will get around to passing a decent 5 year capital budget. They do this every 5 years. In recent years phase one of the Second Avenue Subway and the LIRR to Grand Central have been funded.

      • Matthew says:

        You are absolutely right — putting things into proper context, NYC today has a tremendous transit network, and some of the biggest projects the City has seen are in progress or wrapping up as we speak. But I think the broader problem, however, is in the future. There is a transit resurgence in our nation’s cities that is overburdening decades (if not centuries) old infrastructure. When the automobile was gaining in popularity in the 40s, 50s, and 60s, local governments pushed forth a tremendous infrastructure program to ease crippling traffic and insufficient roadways. But today, as our transit infrastructure is becoming insufficient, it is increasingly difficult to plan and fund worthwhile projects, and there are no shortage of worthwhile projects. In the 1960s, under the Interstate Highway Act, the federal government provided 90% funding for a bridge or tunnel where the state was able to raise the remaining 10%. Today, the hodgepodge of federal grant programs provide maybe 35% of a project’s total cost. And debt financing at the federal level is hard to come by considering all the regulatory requirements. At the state level, agencies like the MTA are already carrying tremendous amounts of debt. The point being, there needs to be a new and improved paradigm when it comes to transit planning and financing. So while things may be peachy (relatively speaking) right now, we need to be proactive in our transportation infrastructure planning. And while transit may not be the most important issue of the moment, let alone the only issue that matters, it branches into many other issues that are important today, like promoting economic development, creating new and affordable housing, and making the city more livable and competitive.

        • Justin Samuels says:

          You don’t need a new paradigm for mass transit expansion. From the very beginning the privately owned IRT and BMT financed their expansion through issuing bonds and stocks. Investors were to be paid back by transit revenues.

          Bloomberg paid for the 7 line extension without any federal money. The city issued bonds, and the bonds are serviced by tax revenue from the West Side (which got spurred development due to the 7 line extension).

          There are plenty of tax revenue streams the city or state could use to service new transit debt that’s used for system expansion. Gambling revenues. They could legalized weed. As gentrification expands they could use real estate taxes. Or alternatively they could place a small sales tax on food and medicine and use that to fund transit expansion.

          • adirondacker12800 says:

            Or as areas gentrify skim the increased income taxes. Letting more of the state income tax stay in the city would be nice instead of sending it upstate never to be seen again.

      • mister says:

        See, the problem is just what you said: this KEEPS happening. It seems as though no one remembers that this exact same drama played out for the last capital plan: there was a $9.9 billion funding gap. Anyone remember how it was closed? Answer: cutting out projects to reduce the size of the gap and then having MTA borrow the rest. NYS has not had a serious strategy to fund the capital plan in a long time, and they show no signs of rectifying that anytime soon. The problem is that the MTA’s debt is growing to levels that probably are not sustainable, so the old solution of “let them borrow it and the riders will pay it off” won’t work.

        • Justin Samuels says:

          The debt is a crucial part of paying to expand the MTA projects.

          Bloomberg paid for the 7 line extension by having the city issue bonds. The bonds are payable off of the West Side real estate taxes (those tax revenues service the debt of the bonds). Either NYC or NYS is perfectly free to issue bonds provided they have the revenues to back those bonds up. The state has legalized gambling, perhaps they could use taxes from casinos to pay off bonds that are issued to fund transit expansion.

        • Larry Littlefield says:

          You are right mister. People seem to have this attitude that more and more resources going to more and more debt is fine, as long as they don’t have to pay for things now and SHTF after they are gone.

          This country is going broke, and Generation Greed just hopes to get to the grave while limiting the consequences.

  7. Elvis Delgado says:

    I would direct the attention of the New York State legislature, along with that of anyone else interested in the effects of underfunding a transit system, to the plight of the Massachusetts Bay Transportation Authority (MBTA).

    It snowed in Massachusetts this winter, and while the volume was large, it was not so great that a well maintained systems should not have been able to deal with it. And yet – principally as a result of decades of underfunding and deferred maintenance – the system was paralyzed. It was totaly closed for days, and has been offering only partial “service” on others.

    Politicians are asking “why?” and looking for someone to blame, but they’re only going to find that person if they look at a mirror.

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