Second Ave. Sagas

An MTA funding solution from Cuomo that isn’t

Written by

Benjamin Kabak

in

,

The topic of MTA debt is not a particularly sexy one. I’d rather write about how the subways are unsustainably crowded and how the MTA has no real plan for immediate relief. I’d rather write about light rail efforts through Queens, the latest goings-on in London with regards to overnight Tube service or some thoughts on closed entrances. But MTA debt is too important to ignore. Even if you’re tempted to close the tab or allow your mind to wander, stick with me for a few hundred words today.

The latest round of news about MTA debt comes from — you’ll never believe this — Gov. Andrew Cuomo. A few weeks ago, when Gov. Cuomo and Mayor Bill de Blasio magnanimously did their jobs and came to an agreement on MTA capital funding, the two politicians hailed the deal as something groundbreaking. The MTA, the argument went, had unprecedented support from the state and unprecedented support from the city. Everyone wins!

If that sounds too good to be true, well, you’ve been paying attention. Despite announcing around $9 billion in state support for the MTA, Cuomo has not once said how he plans to generate this money. Had he wanted to see through a Move New York-style traffic pricing plan, he could have, but that would have gone against the ethos of Mr. Muscle Car Governor Cuomo. Instead, he’s like to turn to the tried-and-truth method of totally screwing over New York City subway riders: debt.

Bill Hammond, now writing for Politico after his unceremonious ouster from the struggling Daily News, had the story:

At best – and assuming it holds up – the deal settles only the latest turf squabble between feuding politicians: With a $10 billion hole to fill in the MTA’s $26 billion five-year capital plan, Governor Andrew Cuomo committed that the state will contribute $8.3 billion while Mayor Bill de Blasio agreed to chip in $2.5 billion from city coffers. But this divvying-up exercise was a crisis only to the extent that governor made it one, as a tactic to offload a fraction of the headache onto his declared friend, fellow Democrat and favorite punching bag at City Hall.

The real political heavy lifting to be done involves not who collects that $10 billion tab, but who gets stuck with paying it – and how and when. And whether the MTA will walk away with a short-term cash infusion, or with the sustained base of funding necessary to build and maintain a halfway up-to-date mass transit system…The overdue debate on covering the $10 billion gap should begin to get serious in January, when Cuomo is promising to spell out, as part of his annual budget proposal, exactly how he intends to raise the $8.3 billion. De Blasio, too, will have to account for his share in budget documents due in the next three months.

This should be interesting. The Daily News has reported that Cuomo will likely borrow some or all of his amount – which is legitimate, given that it will be used for long-term investments in infrastructure – and that he is ruling out tax hikes. But $8.3 billion would add 15 percent to the state’s already prodigious debt load of $55 billion. Even if spread over a 30-year term, the annual payments on those new bonds would be roughly half a billion dollars – corresponding to nearly a 10 percent increase over current debt service.

The Daily News report Hammond mentioned is right here, and it’s a tells a tale of more debt. The MTA may have to borrow to cover the state’s contributions, and it’s not clear if the MTA or the state would fund the debt. The MTA simply cannot afford more debt. The agency is already carrying $35 billion in debt — debt that’s funded through fare revenue. More would simply push the cost of the capital plan onto the shoulders of riders, no matter what Cuomo says.

So Cuomo’s solution has been anything but a solution. Without identifying a revenue stream, debt simply becomes something we must fund in the future, and that’s no way to solve transit funding problems. Will New York wake up the problems of debt? It’s not looking good for the near future or the far future, and that’s not a positive development for anyone.

Comments

16 responses to “An MTA funding solution from Cuomo that isn’t”

  1. Larry Littlefield

    “The Daily News has reported that Cuomo will likely borrow some or all of his amount – which is legitimate, given that it will be used for long-term investments in infrastructure.”

    The MTA is ALREADY planning to borrow for long-term investments in infrastructure.

    This would be more borrowing for ongoing maintenance.

    More making the next generation pay for Generation Greed’s responsibilities and its own, until the weight on those with lower average incomes becomes to great and there is a collapse.

    This has been an exercise in DeBlasio and Cuomo engineering consent for robbing younger generations again in exchange for postponing that collapse.

    Reply
  2. =+=

    The debt has actually passed the 35 billion dollar mark? Wow, that’s nearly the size of the debt attached to the whole rail network in France or the UK!

    Reply
  3. R2

    Fear not. In a few short years we’ll get the classic: “due to circumstances beyond our control” followed by the acceleration of the 2017 fare hike and the introduction of another one in 2018.

    Reply
  4. Nathanael

    Bluntly, the state itself can afford to take on waaaaay more debt. We have the taxation power and we can offer very low interest rates and have people buy our bonds.

    The MTA, however, cannot take on such debt.

    Perhaps the only solution is to repeal the state constitutional restriction which causes all the state debt to be accumulated in “authorities” instead of in actual state-issued bonds. Put the debt back on the state as consolidated bonds backed by the full taxing power of the state, and we could cut the interest rate being paid by a massive amount.

    Reply
    1. Nathanael

      Of course, *Mario* Cuomo called for a state constitutional convention to fix stuff like this. But it didn’t happen, and *Andrew* Cuomo seems to be comfortable with irresponsible business-as-usual.

      Reply
      1. Ralfff

        Anthony Weiner says that a state constitutional convention opportunity will be on the ballot automatically in 2017 and that the state should vote yes. It’s not a one-time thing, it’s every 20 years: http://changenys.org/a-ny-convention/4571408747

        Reply
        1. Nathanael

          The legislature can also put a Constitutional Convention on the ballot at any time.

          Reply
    2. Nathanael

      Also, *Mario* Cuomo understood that income taxes on rich people were an important way to fund services which we all need. But *Andrew* Cuomo seems to be in the pocket of rich greedheads.

      The apple falls very very far from the tree sometimes.

      Reply
      1. AG

        I still can’t understand why people look fondly at Mario’s leadership. He was a gentleman – but NY state fell apart under his reign. The economy was decimated and he and everyone else in Albany was asleep at the wheel. Upstate still hasn’t recovered.

        Reply
        1. Nathanael

          Well, let’s see.

          * Immediately before Mario, we had Hugh Carey, and arguably (and in my opinion) that’s when the state ACTUALLY fell apart. Lots of terrible decisions by Carey. Before that, Wilson was ineffective, and before that we had Nelson Rockefeller, who was a megalomaniac, although he was good in some ways.

          * After Mario, we’ve had Pataki (lots of kicking the can down the road), Spitzer, and Paterson (who I actually thought was OK, but was totally sabotaged by the legislature).

          Comparatively, Mario was pretty good, and actually got a fair amount done. I also remember listening to his weekly radio show: his diagnosis of what was wrong with the state legislature (his main frustration) was *spot on* and it’s become more and more clear that he was correct as the decades have gone on. His son has just not even tried to fix any of the problems.

          Reply
          1. AG

            Started under Carey… Continued and accelerated the drop under Mario. If not for the NYC metro the rest of the state would have sunk completely – well before Andrew got in office.
            Again – Mario was a wonderful gentleman… I’d have him over for dinner. In that way he’s like David Dinkins. Neither would I vote for again though.

            Reply
  5. Ralfff

    This state and city never miss an opportunity to miss an opportunity. From the Daily News article:

    Cuomo has repeatedly said he believes the money would come from the state budget general fund. But, according to sources with knowledge of the internal talks, one idea being seriously discussed is to borrow and pay it back including interest over 30 years, using money from the general fund.

    It’s likely the same plan could be used to fund bridge and road improvements upstate being sought by Senate Republicans who say there should be parity between upstate projects and money going to the Metropolitan Transportation Authority.

    We are presented with the ludicrous situation of upstate suburban Republicans demanding equal funding for roads- for frigging who?- thanks to the completely useless and implicitly corrupt “Independent Democrats” who have given Republicans political relevance 15 years after they should have been dead in the state. The Democrats are absolutely awful but there is no reason that the Republicans should be in any position to demand a pound of flesh out of a normal budget obligation.

    Whoopty doo, “no tax increase” says Cuomo. Truly, the visionary leadership we need. In a state with the highest income taxes and nearly the highest property taxes in the country, and more or less average sales taxes, something is seriously wrong with the budget, and I’ve come to realize it’s not the $55 billion in state debt, it’s that that debt has been incurred for nothing.

    Muni bond rates are so low right now we may as well go all-in and bond out $100 billion at the city level. Cancel the useless and redundant IDNYC program (now that the state doesn’t require proof of citizenship for driver licenses there should be no objection to just giving payment vouchers for any city residents to go to the DMV and get a regular non-driver ID), shut down the overseas NYPD bureaus, lay off half the NYPD, stop paying for ad space to beg drivers to pretty please not hit any pedestrians that day, and we’ll have saved several times over the interest cost on that money and lost absolutely nothing of worth.

    Get the lowest-bidder-wins law changed for the MTA, get multiple companies building multiple subway lines at once with the understanding that the best performers get future tranches of the money and the losers get nothing more for a decade or more. Yes this is a flawed, unrealistic, dumb internet commenter-rage plan but it approaches the situation with more seriousness than Cuomo or the MTA itself seems capable of mustering.

    Reply
    1. Miles Bader

      Another issue that seems to drive up costs for a lot of American rail development is over-reliance on consultants and the lack of in-house expertise (as you might see in other countries where they haven’t let hard-won expertise wither). Of course in-house expertise is hard to justify and hard to develop unless you’re actually building stuff, and I guess the question is how to manage a transition to a more active system…

      Reply
    2. Nathanael

      Andrew Cuomo explictly gave those Republicans power by signing their gerrymandering bill (he didn’t have to — any judge-designed lines would have wiped them out of power forever, even *with* the Democratic turncoats).

      And it’s not just upstate Republicans — the worst are actually the Long Island / Staten Island Republicans.

      Reply
    3. Nathanael

      Actually, our state income taxes are pretty low, unless you’re super-rich — the rates are *much* lower than California.

      Our property taxes are genuinely completely out of line high, among the highest in the country, because this is the only state where Medicaid is funded at the county level through property taxes.

      Reply
      1. Ralfff

        You’re partly right, I made a mistake. I meant combined city and state income taxes which in New York City are the highest in the country across virtually all incomes. It’s true that considering state income tax alone, higher-end taxpayers (for example, around $90,000 a year for a single adult) pay less in income taxes in NY than in CA. But for those making less, they pay much more in New York. Excluding some sort of special deductions I don’t know about, a single adult earning $30,000 would pay almost twice the money in state income tax in New York last year as her counterpart in California. When you add NYC income taxes it’s brutally high on those who can least afford it. I got my comparison from smartasset.com’s tax calculator, though that calculator wrongly factors in a SF local income tax which doesn’t exist so don’t plug in San Francisco.

        Reply

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