Archive for MTA Economics
As the legislative session in Albany winds down for the summer, there’s been a flurry of activity relating to the MTA. Unfortunately, that activity, despite a stridently-worded editorial from the Daily News, hasn’t yet involved a confirmation vote from the Senate for Tom Prendergast, but a recent Newsday story says that Senators are pushing for action on the nomination before next week is out. Still, there’s transit news aplenty so let’s dive in.
Transit Lockbox (S3837)
The transit lockbox is back. Since the late-2000s raid on the MTA budget, transit advocates in Albany have been pushing for legislation that would make it hardly and politically inconvenient for the state’s executive and legislative branches to reappropriate money that’s supposed to go to transit. The Senate first passed the lockbox concept in 2011, but Gov. Andrew Cuomo later stripped the bill of most protection.
The Senate is at again. With only three votes against — including one from the same Bill Perkins working to roll back the 125th St. bus lane — the lockbox bill moved out of the Transportation Committee on Tuesday and was approved by the full Senate on Wednesday. If passed by the Assembly and signed by Cuomo, the bill would require a memo with every mass transit funding diversion outlining the total amount taken, that amount as the volume of current fare revenue, the cumulative amount taken over the previous five years, and a detailed statement of impact on service, maintenance, security and the capital program.
Streetsblog penned a piece yesterday on this legislation, and its supporters are guardedly optimistic. The Assembly should take it up early next week, and then Cuomo will have to make a decision. “I don’t think the Governor can water the bill down this time,” Gene Russianoff said to Stephen Miller. “For Cuomo, the option is only yes or no.”
Purple Lights for Select Bus Service (S5703)
It’s been nearly five months since a bunch of Staten Island politicians threw a fit over the MTA’s Select Bus Services’ flashing blue lights. The buses are no longer easily identifiable from great distances, and riders have called upon action from Albany to permit the MTA to employ some form of flashing lights. Slowly, legislation is winding its way through the halls of government that would allow for colored lights on Select Bus Service vehicles.
This new bill would amend the state’s vehicle and traffic law to permit buses owned and operated by the MTA or New York City Transit as part of the Select Bus Service to use flashing purple lights to indicate such service. The bill has the support of Jeffrey Klein in the Senate and Micah Kellner in the Assembly and so far has been referred to committee by each chamber. I’ll keep an eye on this one. Hopefully it can move forward.
Assessing the Impact of Service Cuts (A6249)
Finally, we have another intrigued bit of policy: The Senate and Assembly have both passed a bill requiring the MTA to issue a report detailing service cuts. The bill would require the agency to report detailed information on all services eliminated since 2008 and would be due by December 31. The report would require info on the following:
- The number and geographic breakout of all customers impacted by such service reductions and eliminations, for each route;
- The actual revenue savings versus the anticipated savings from such service reductions and eliminations, for each route;
- The costs to fully restore such service reductions and eliminations, for each route; and
- A detailed plan for full restoration of services that have been eliminated or reduced since January 1, 2008; or, alternatively, a detailed plan for equitable restoration of subways, buses, and commuter rails that substantially mitigates the negative impacts of such service reductions and eliminations and fairly restores the services across all impacted neighborhoods and regions.
Most, if not all, of this information is available piecemeal in MTA budget and board documents, but this report would be a cohesive summary of the past five years’ worth of transit rollbacks and a way forward. It’s unclear if Gov. Cuomo will sign this bill into law.
While I’m on the topic of tabloid coverage of transit, let’s consider the MTA’s post-Sandy spending spree and Nicole Gelinas’ recent questioning of the agency’s dollar figures. In light of the fact that it’s been a whopping seven months since Sandy and that service to the Rockaways will resume in a week, Gelinas claims that the MTA pulled its $6 billion post-Sandy price tag out of thin air and “has no clue how to spend $6 billion to keep our antique subway system dry.” Her argument rests on the fact that Andrew Cuomo, the public face of the MTA’s post-Sandy funding requests, has never said how his office and the MTA arrived at the final total.
On the one hand, Gelinas’ coverage of the MTA’s budget is usually pretty spot-on. She’s highlighted the ever-increasing labor costs and the impact pension obligations have on future fare hikes and service cuts. But on the other hand, her claims in this week’s columns are off base. I’ve been told by a few sources within the MTA and outside of it that their repair estimates were not just cobbled-together guesses. The FTA, the federal body that approves these funding requests, reviews the assessment process and helps estimate repair costs. Essentially, anything under water will have to be replaced, and the MTA and FTA worked to figure out what exactly was under water and how much replacement parts and efforts would cost. The MTA is still working on mitigation plans that will not come free or cheap either.
In fact, Gelinas’ piece runs the risk of drying up the well of federal money for disaster relief and mitigation. All governing bodies, from the state-run transit agencies to municipality-run DOBs, need flexibility in assessing spending requests, and the MTA has only just begun its work. Extensive efforts to replace parts in the East River Tunnels will commence soon enough and a plan for South Ferry will be put in place. Instead of objecting to costs reasonably estimated by everyone involved, maybe a better investigation would involve focusing on why everything costs so much to build in the first place. That is, at least, a legitimate concern.
The ongoing saga of the Grand Central Shake Shack has reached an end as Zocalo, the overpriced and decidedly mediocre restaurant, closed at end of April paving the way for Shake Shack to open, Crain’s New York reports today. After numerous legal challenges that failed and a bankruptcy declaration last fall, Zocalo and its owners decided to comply with a vacate order set to come due on April 30, and now Danny Meyer’s burger chain will move in.
For the MTA, this move is a boost to the money it draws in from Grand Central’s lower level food market spaces. Zocalo had been paying a minimum rent of $336,698 per year while Shake Shack’s lease starts at $435,000 a year with escalators to $567,000 by year ten. Meyer’s group will also pay a percentage of gross sales to the agency. “We are pleased to be able to move forward at last with our ongoing effort to re-bid the retail spaces in Grand Central,” an MTA spokesman said to Crain’s. “Doing so in a regularized, periodic way ensures that the public receives the maximum benefit for this valuable retail space.”
Say what you will about Shake Shack’s food — and plenty of people have plenty of opinions on those burgers and fries — but this place will mint money in the food court at Grand Central.
Toward the end of March, with a general increase in state tax revenue and a slightly rosier financial picture emerging, the MTA revealed a surplus of $40 million that would make its way into the perennially strained budget. Since then, everyone and their mothers has tried to lay claim to these dollars, but the MTA is playing coy. The agency hasn’t determined how to spend or who gets it, and the race is on for the big bucks.
The money itself comes from Andrew Cuomo’s budget. Despite the obvious lessons of Superstorm Sandy, our car-lovin’ governor hasn’t quite seen the transit light yet. Rather, as the overall state economy picks up, there are more dollars to go around, and the MTA will get to benefit. That said, when Cuomo announced the new funding, he called upon the MTA to better serve as the “circulatory system” for the region’s economy. How best to accomplish that is the latest debate.
The loudest calls have been for more service. Over the weekend, the Riders Alliance (of which I’m a board member) held a rally with various MTA Board Members and local politicians urging the agency to reinvest in long lost services. Restoring lost buses, reducing off-peak subway headways and expanding the CityTicket were all on the agenda. “Any budget surplus should and must go toward restoring and improving the transit services on which our city relies — especially in the wake of yet another fare increase,” State Senator Daniel Squadron said.
Others echoed this call. “The MTA must realize that now more than ever the loss of service continues to impact our community and the MTA must do everything it can to restore and expand service for riders who all depend on it,” Assembly representative Nily Rozic, a rising star from Eastern Queens, said.
At various MTA Board and Committee meetings this week, Board members, especially those from Staten Island, argued to use the money to restore services lost in the 2010 cuts. Increasing bus service would be a big help to the city, and reducing subway headways is seemingly a no-brainer. The MTA though remained non-committal, and others have called for the money.
On the labor front, TWU President John Samuelsen has called upon the MTA to use the money to up his union members’ wages. At the Board meeting yesterday, Tom Prendergast, future Chairman and CEO, discussed using the dollars to steep avoid a 2015 fare hike. No one, meanwhile, has mentioned applying the money to the MTA’s crushing debt load and paying off some loans ahead of schedule. In a sane fiscal world, that’s likely the wisest solution and the one that would help the MTA and its riders most in the long run.
But we live in the here and now, and New Yorkers, still adjusting to the new MetroCard prices, want more bang for their bucks. Service should be increased, and the $40 million could go a long way. “I’ve asked the staff of all the agencies to look at service proposals in terms of either restoration of services or enhancement of new services,” Prendergast said yesterday. In July, the MTA must release its annual budget, and we’ll know then how we all will enjoy the fruits of an additional $40 million in spoils. My money is on increased service, and that’s OK.
While overseeing an annual budget of $13 billion and employments rolls in the tens of thousands, the MTA CEO and Chairman earns $350,000 a year and a housing bonus, but by many accounts — particularly that of the TWU — that compensation is far more than he deserves. Even though a mid-six-figure salary sounds good, there’s an argument to ebe made that New York State is under-compensating the MTA head, and that’s just what Josh Barro put forth on Bloomberg News yesterday.
As Barro argues, we as a society should be willing to pay top government officials far more than we do, in part in order to entice them to stick around and in part in order to entice them to do a good job. As he notes, in the private realm, someone tasked with leading a $13 billion organization would be compensated much better than the MTA head is, and as we saw with Jay Walder, when the right opportunity — notably at triple the salary — comes around, jumping ship is on the table. As Barro argues of recent MTA departures:
Unlike presidents and governors, it’s hard to say that MTA executives are compensated in prestige: As Lhota’s poll numbers make clear, the public generally doesn’t know who runs the MTA, and if they do, they’re predisposed to think he’s doing a bad job. So Walder left for a job that … pays more and Lhota to seek one that would bring greater non-monetary benefits…
Voters expect a lot from top public officials. We want them to be talented managers who run the government well. We want them to stay in their jobs long enough to see projects to completion. We want them not to be corrupt. And we want them to work for a lot less than they could make elsewhere. Dropping the last goal would make it easier to achieve the first three, which is a reason to give Prendergast a big raise.
Over the last few years, we’ve tried to figure out how to get transit executives to stay in place for longer than a year or two. Absent employment restrictions in contracts — which aren’t legally permissible — a higher salary may be the only way to go. It’s a tough argument for the public to swallow, but how else can we retain top talent anyway?
The MTA’s controversial payroll tax went back to court this week as an Appellate Division court in Brooklyn heard oral arguments from attorneys on both sides of the issue. The tax, which delivers $1.8 billion in badly needed revenue to the MTA’s coffers, was overturned by a Nassau County judge last summer in a deeply flawed ruling. The state has continued to collect the tax as the appeal has wound its way through the state court system, and now we’re awaiting a ruling once again on its constitutionality.
Judy Rife of the Times Herald-Record filed a brief report from the court earlier this week. Although the initial ruling focused on home rule measures, lawyers wisely have opted not to pursue this line of reasoning as state precedence does not support the decision. Rather, as Rife writes, “Steven Cohn and Justin Adin, lawyers for the municipalities, now argue that the state is required to impose a tax throughout New York when it benefits an agency of statewide concern such as the MTA.”
This argument is a bold but dangerous one for these lawyers to make. Attorneys for the state and MTA have said that the state “has the authority to enact the tax and to levy it selectively,” but if the court rules differently, the entire MTA funding scheme could collapse. Already, various taxes imposed only in New York City and the surrounding counties bolster the MTA’s bottom line, and denying the state the authority to levy these taxes could send the transit agency’s fragile budget into a tailspin. The odds of such a ruling though are remote, but I’ll feel better about it once the Appellate Division issues its ruling. The payroll tax is far from perfect, but without action from Albany, the alternatives are dire.
As the New York economy has continued to improve, a bit of good news concerning transit funding emerged from Albany yesterday. Gov. Andrew Cuomo announced “major investments in public transit” as part of his 2013-2014 budget. For the MTA, this means an additional increase of approximately $40 million more than it requested for operations support and a reauthorization of capital financing for both the 2005-2009 and 2010-2014 campaigns.
So how to spend it then? Opinions were diverse. “They should increase bus and subway service where they can,” \Gene Russianoff of the Straphangers Campaign said. “That should be their top priority.” MTA Board members agreed. “We ought to be looking for ways to give back,” Allen Cappelli said. “We did the fare and toll increases, and people have the right to expect we’d look to expand service.”
TWU officials had other ideas. John Samuelsen, president of the union, said the money should go toward a new contract for the MTA’s workers — an idea long at odds with the MTA’s triple-zero approach. And therein lies the rub. It’s clear to me that the MTA should restore services lost to the 2010 cuts or expand its current offerings, but someone else always wants the money. For now, though, we’ll have to wait as the MTA won’t unveil an updated budget until the summer.
To most New Yorkers, the MTA’s budget is a thing of mystery. We’ve suffered through constant fare hikes and no corresponding increases in transit service. We’ve heard false tales of two sets of books repeated ad nauseam for nearly a decade. We hear about a capital budget, an operating budget and debt payments. And now the MTA is receiving another infusion of cash totaling billions of dollars for Sandy-related repairs. It’s enough to make anyone’s head spin.
Tonight — Wednesday — at the Transit Museum, as part of my ongoing “Problem Solvers” series, Straphangers Campaign attorney Gene Russianoff and I will get to unpacking some of the complicated and convoluted details surrounding the MTA’s budget structure. We’ll look at who pays for transit in New York City and who should pay for transit. We’ll look at where the money comes from and where it goes. And we’ll explore just why the MTA needs to raise fares every two years and why the MTA’s budget is always so fragile.
The party gets started at 6:30 p.m., and doors to the Transit Museum in Brooklyn open at 6. RSVP here, and come with questions. Gene and I will take comments from the audience as part of the discussion as well. See you there.
No one ever expected Andrew Cuomo to be, as governor, a particularly strong advocate for transit. After all, this is a politician who is known more for his muscle cars than anything else. Lately, though, he’s let the top spot at the MTA remain empty for the past 38 days, and, oh, his budget has reappropriated — or stolen — $20 million in funding from the agency as well.
“The Budget will use surplus mass transportation operating assistance funds to pay for a portion of the debt service associated with previously issued MTA service contract bonds. (2013-14 Value: $20 million; 2014-15 Value: $0).”
In yesterday’s post, she elaborates:
This $20 million diversion of funds comes from a pot of money that is statutorily dedicated to cover the operating needs of the MTA. The Executive Budget, however, declared that this $20 million diversion is “surplus,” but there is no explanation of how funds are determined to be surplus. Because of increases in revenues from taxes dedicated to the MTA, the MTA did receive a 7.4 percent increase in the executive budget over last year’s budget. But given the volatility of the economy over the last few years, these days it is hard to say that anything is “surplus.”
Streetsblog lays clear how this sweep is working: “What the budget summary doesn’t say is that the state’s general fund would have paid this $20 million if the administration hadn’t stepped in and diverted the MTA’s $20 million. How transparent!” Streetsblog also notes that while the lockbox would not necessarily have blocked this raid, it would have forced Cuomo to explain the why and how of it. As it stands, the administration can put forward whatever nonsense it wants as an explanation.
The MTA hasn’t yet acknowledged this cut and has yet to say how it will otherwise find the $20 million. The service restorations planned for 2013 add up to around $29 million, but there are no plans to scale back on these increases. Meanwhile, fares are going up in less than a month, and readers will be expected to shoulder even more of the burden as the state has once again stolen from the MTA and its paying customers. But, hey, at least the roads are paved.
I can’t say I’ve thought much about Student MetroCards in the years since the MTA threatened to do away with them entirely in late 2010, but something about that dust-up always struck me as wrong. As enrollment numbers in New York City public schools spiked at the end of the last decade, the MTA — and not the city or city — shouldered the increasing fare burden. Both the city and state have contributed $45 million a year each while the MTA’s contributions — once also around $45 million annually — have spiked to nearly $100 million. What was one an even funding agreement is anything but.
When the MTA threatened to do away with free student rides in 2010, I supported the idea. The MTA is a transportation agency and not a school bus company. If New York City wants its students to be able to get to school in the most cost-effective way possible, it should pay the transit fees. Word emerging from this week’s yellow school bus strike drives that point home.
In an article in today’s Times, Al Baker highlights a driving force behind the strike: It has simply gotten too expensive for the city to continue to pay as much as it does for busing for 10 percent of its students. Take a read at one great anecdote and some eye-popping figures:
The day before the start of New York City’s first school bus strike in 34 years, a long yellow bus pulled up at Public School 282 in Park Slope, Brooklyn, and the little bodies that popped out could be counted on one hand: Three. The big bus had dropped off part of its cargo earlier, at another school, but in all, 10 children had ridden on a bus fit for about 60. A similarly large bus pulled up with 17. Finally, a modern-looking bus whose side panel said it could carry 66 children arrived with its passengers: Five children.
“I think in some cases, we have one child on the bus,” said Kathleen Grimm, the city’s deputy schools chancellor for operations.
The strike that began Wednesday, which idled more than half of the city’s school buses and forced about 113,000 children to find new ways to school, was prompted by a fight over union jobs. But its true roots are in an attempt to reform one of the most inefficient transportation systems in the country, one that costs almost $7,000 a year for each passenger, an amount so high that many of those children could hire a livery cab for about the same price. By comparison with the next three largest school districts, Los Angeles spends about $3,200, Chicago about $5,000, and Miami, $1,000.
Take whatever said you please in this labor dispute, but one thing is for sure: Those figures are insane. The city spends $7000 per student — per student — to employ yellow buses. Some reports cite the total city expenditure as topping $1 billion annually to bus around 150,000 students. Meanwhile, for the students who don’t arrive via yellow bus and request a free student MetroCard — approximately 500,000 cards are handed out per semester — the city pays the MTA a whopping $45 million. What’s wrong with this picture?