Debts that no honest man can pay

The word of the times these days is debt. From home owners defaulting on their mortgages to the extremes of the credit industry to our governments on both the local and federal level, Americans are crippled with debt. The MTA is, of course, no exception, and their debt problems and payments are at the root of the authority’s fiscal crisis.

In fact, just the week, the non-partisan Drum Major Institute released a succinct and thorough study of the MTA’s funding woes. They accurately pinpoint the debt as well as a steep decline in city and state contributions to the agency’s various budgets as the origins of the current transit funding crisis. To solve this problem, the Institute calls upon Albany to “develop a public investment strategy that incorporates revenue from a variety of sources at the local, state, and federal level.” It’s not a bailout; it’s simply smart transit spending.

To me, this revelation is nothing new. I’ve warned about the MTA’s precarious debt situation before, and I’ve spent the last few months urging for a properly funded MTA. The DMI study though really sums the situation up in a way that average New Yorkers — those who either refuse to or simply just don’t understand the MTA’s funding woes — should be able to grasp. After all, it’s about debt, and we as a society are well-conversant in that field right now.

John Petro, the urban policy analyst, at DMI, summarizes:”The MTA’s current budget crisis is the result of a series of irresponsible political decisions that have prioritized low taxes over adequate investment in mass transit. For more than twenty years, the city and state abdicated responsibility to fund capital programs, forcing the MTA to borrow huge sums to maintain mass transit service. This borrowing has led to the acute crisis we are facing today; as huge debt payments eat up larger portions of the Authority’s operating budget, the MTA is facing ever-larger budget deficits.”

Basically, the MTA has engaged in a two-decade-long capital construction campaign without having the money. Thanks to the city and state, the agency has been forced to spend on credit and now the bill is due. According to Petro, the state contributed 20 percent of the MTA’s capital fund from 1982-1986, 11 percent from 1987-1991 and 0 percent since 1992 when then-Governor Cuomo cut state contributions.

“For more than fifteen years,” Petro writes, “New York State has not contributed any direct funding towards the MTA’s capital needs, while New York City has also drastically decreased its contributions—from approximately 10 percent of total capital planning between 1982 and 1999, to about three percent for the capital program of 2000-2004.”

As such, the MTA has been forced to borrow, borrow, borrow. The agency has a current outstanding debt of $25.5 billion, and the agency can probably not refinance any further. While labor costs have grown at 16 percent over the last five years, dept payments have increased by 45 percent. Payments will continue to balloon, and without a permanent solution, the MTA will just simply face more steep fare hikes and more service cuts each year until service reaches unacceptable levels.

So what’s Petro’s fix? He has a few. First, he calls upon a restoration of state and city contributions to the MTA’s capital budget. “To enable mass transit to function as a sustainable public good, the state’s contributions to capital planning must reinstate pre-1992 funding levels of the first two capital plans,” he writes. “That’s the most appropriate and responsible level of financing the state should pursue at a minimum.”

He also calls upon the state, city and MTA officials to lobby Congress for more federal investment in mass transit. I can’t argue with that point.

In the end, Petro’s analysis is exactly what transit advocates need. It easily presents the issues that have been plaguing the MTA; it pinpoints the people responsible for it; and it offers up a fix. While it’s being published a little late in the game, we should embrace it, propagate it and hope people start paying attention.

From more from Petro, check out this DMI blog post. After the job, bullet points from his report about the reasons why New York City needs the MTA. These too should become pro-transit talking points.

Why We Need It
The MTA provides a service that benefits not only transit users, but everyone in the region, the state, and even the nation. A fast, efficient transit system is a public good, and as such should be supported with subsidies. And like any other piece of infrastructure, without the proper investments, the mass transit system will no longer be able to provide the public benefits that improve our quality of life, protect our environment, and drive our economic prosperity.

• Aside from the obvious benefits to traffic congestion, air quality, and real estate values, the $901 billion regional economy also hinges on the ability of the MTA to provide safe, efficient transit service across the region.
• A strong transit system allows New York City to achieve densities that would otherwise not be possible. It is this density, and the concentration of skills and firms, that have allowed New York to become a national and global leader in business, academics, and the arts.
• The region’s future growth depends on strong mass transit as well. The city will not be able to reach projected levels of growth if auto use continues at its current rate, based purely on the amount of space automobiles consume in terms of roadway and parking.
• Disinvestment in the transit system amounts to huge potential costs that would far outweigh any savings. The effect of cuts in MTA capital spending would cost four times the amount of any spending cuts.
• The New York region’s mass transit system is a vital piece of the nation’s infrastructure. The MTA is responsible for a transit system that accommodates 8.5 million riders a day, a population equivalent to the state of New Jersey. Additionally, the New York region’s GDP is the second highest of any state or metropolitan region in the country, trailing California but ahead of New York state.