If it seems inevitable that congestion pricing will arrive in New York City, that’s because it is. Although no one in Albany appears to be in a hurry to push through pricing plan, every gubernatorial candidate, including the incumbent set to win by 20 points or so in two weeks, has, to one degree of enthusiasm or another, endorsed a fee on cars entering Manhattan. But with expectations high, can congestion pricing be the savior everyone is hoping it will? Can it fund Andy Byford’s Fast Forward plan or is the money already earmarked for something far less sexy? if I’m even asking, you can already guess the answer.
The most recent answer comes to us from a comptroller’s report on the MTA’s tenuous financial outlook. As Thomas DiNapoli explores in a new release [pdf], the MTA’s mounting debt is set to explode over the next few years, and with numerous competing demands on any new sources of revenue the state may authorize, along with a need to modernize the system, the MTA is in a position of promising the moon and stars while stretching dollars to cover investments it simply cannot afford. It’s a dire picture indeed.
The state comptroller summarized his findings in a press release on the report. In essence, even without addressing Andy Byford’s $40 billion Fast Forward plan, the MTA’s debt service payments are set to balloon to $3.3 billion by 2022 with the MTA’s total debt to reach $41.9 billion that year, and that’s before the agency starts bonding out Byford’s plan. Meanwhile, even though the MTA plans to raise fares next year and in 2021 and reduce certain expenditures, the operating budget gaps are projected to be $262 million in 2020, $424 million in 2021 and $634 million in 2022. To close those gaps, the MTA will need to implement massive cuts or fare increases or receive a new dedicated funding stream.
Even then, a balanced budget is no sure thing. As DiNapoli notes, the MTA’s current budget projections rely on “the assumption that the current economic expansion will continue uninterrupted.” As DiNapoli writes, that’s not sure thing: “As evidenced by the sharp drop during the Great Recession, the MTA’s revenues are sensitive to economic fluctuations. Changes in business cycles are inevitable, and the likelihood of an economic setback grows with each passing year.” Additionally, DiNapoli notes that, despite recent trends (including a very negative report on August ridership I’ll cover later this week), the MTA’s fiscal outlook relies upon a ridership increase in 2019. As the comptroller charitably notes, “While subway service has improved marginally in 2018, it remains far below riders’ expectations, and the improvement may not be enough to persuade riders to return in the face of higher fares.” Fare increases, as DiNapoli charts, have already outpaced inflation over the past decade, and if the MTA’s assumptions fail — if the economy falters and/or if ridership continues its precipitous decline — the MTA’s deficits, and corresponding fiscal pressures, will grow.
So how, you may ask, does this implicate the fight over congestion pricing? Well, the MTA has multiple competing fiscal demands right now. The agency is legally required to balance its operating budget and needs money over the next decade, as part of the next two five-year capital plans, to fund Byford’s Fast Forward program. Without it, service reliability will continue to decline, and eventually, the subway crisis will grind New York City to a halt. So essentially, the MTA needs two new revenue streams — one to fund its capital program and one to fund budget deficits (driven by the increased debt load from its capital spending). Congestion pricing can’t cure two ills in one fell swoop, but it’s being billed as a grand solution for the MTA’s woes.
On the one hand, New York City needs congestion pricing for numerous reasons. It needs to clear out congestion for economic, environmental and sustainability reasons, and it needs a new dedicated funding stream for transit. On the other, the MTA needs far more reform than congestion pricing. It needs a strong commitment from Albany to fund the capital budget through direct investments rather than new debt. It needs a strong commitment to reform capital spending so that projects aren’t orders of magnitude more expensive here than they are anywhere else in the world. And it needs an immediate response to the ridership and reliability crisis. These are not ills congestion pricing can solve immediately, and in certain ways, congestion pricing will put more pressure on the transit system to deliver reliable service immediately.
So as we talk about solutions to the MTA’s problems, and digest DiNapoli’s report in light of the MTA’s own budgetary picture, we have to be realistic. Congestion pricing is a piece of the puzzle, but that money will disappear into the agency’s budget as fast as it can. Perhaps congestion pricing can delay the inevitable, but can the MTA save itself from, well, itself? That’s the billion-dollar question upon which the fate of New York City rests, and as the Magic 8 Ball might say, “Reply hazy; try again.”
In addition to congestion pricing we need to start charging motorists who park their cars on pubic streets. Here in Williamsburg Brooklyn we desperately need more north/south lanes of traffic, which are currently choked by parked cars. This revenue could be used to subsidize mass transit.
Raising money for A and then spending it on B is a time-honored tradition with the subway system, going back at least to the 1950 funding of the bonds for the Second Avenue Subway, which then had to be diverted to upgrade the system and purchase new rolling stock to replace the original equipment (because the city had barred fare increases 30 years earlier to deal with rising costs facing the IRT and BRT/BMT after World War I, which resulted in the first round of deferred maintenance within the system).
So if the current officials promote congestion pricing as a way to provide the necessary funding for modernization, and then turn around and use the funds to pay off the bonded debt while deferring the needed upgrades, it would simply be just the latest bait-and-switch operation on the public. They’d be better off long-term just admitting that the funds will be used to pay off things already purchased than to make promises they know they can’t keep (but hope that by the time the public figures that out, they’ll be gone from their current offices and their successors will have to deal with the backlash).
Gee, can’t we have “creating solutions” such as using the “hidden $billions” from the “two sets of books” or funding the entire agency through advertising revenues?
There needs to be some talk about how we got here. Because it isn’t just the MTA’s debt, and the MTA’s deferred maintenance. Every decision for decades went the same way — party in the present, sell off the future. We were robbed, and lied to.
PBS Frontline will have a documentary on public pensions on Tuesday. It will be interesting to see if they will just talk about the states where the disaster is mostly due to taxpayers not funding the pensions public employees were promised to begin with — the trailer focuses on Kentucky. That is what I expect.
Or if they will also break Omertà and talk about the impact of one retroactive pension increase after another in New York City, where taxpayers have paid enough in taxes to pay for the pensions (and the subway) but we ended up with a disaster anyway.
It isn’t just state and local government debts, in adequate past infrastructure spending, public pension underfunding and retroactive pension increases for those heading for Florida either. It isn’t just government. It’s everything in the era of Generation Greed.
And the still want more. There aren’t multiple competing priorities. There is only one priority. Whatever Generation Greed wants (and thus believes it needs) now, particularly for its rich members in the executive/financial class and its politically powerful members in the political union class.
Don’t fret, Larry, my generation is going to get clobbered soon enough. Mitch McConnell’s number one priority for 2019 is to slash Social Security and Medicare, while in a parallel effort Gorsuch and Kavanagh go all out to persuade SCOTUS to find the two programs unconstitutional.
The Republican plan has always been to slash Social Security and Medicare for less well off later born generations only, because they have “time to adjust.”
In fact, the Republicans have generally paired proposals to slash old age benefits for those born after 1958 with proposals to make the current level of benefits for existing beneficiaries a “contractual guarantee.”
But won’t the less well off later born generations gradually catch up via continuing periodic GWIs, even as a decade or so of double digit inflation wreaks havoc on fixed income retirees? (trade war, 3-way arms race, bi-annual tax cuts as far as the eye can see.)
That would reverse a 50-year trend. What would have to happen to reverse that trend would be nasty indeed.
As it is now, all vested interests get to take off the top, before the shortage is divided among the peasants.
With Trump, all things are possible.
Donald Trump is THE MAN of his generation. The epitome.
I said before the election that while Clinton would competently manage our ongoing social and economic decline to ensure their generation would be exempted from the fallout, Trump might get the whole thing over with in a hurry.
But if anyone is part of the war on those born later, it’s him. This only concern for future generations is the repeal of the estate tax — to exempt the children of the rich from the common future they have created.
There are a few things entangled. First of all, the people collecting this year reflect the demographics of the early 1950s America, which was 90% white. The point will soon come when the people paying into SS are majority non-white. Try explaining to a Hispanic 20yo why 15.3% of his money should go to support the wealthiest segment of the population, the supermajority of whom are white?
Second is the major change in the 2017 tax bill, using chained CPI. Basically, they’re going to underreport inflation so as to increase tax payments and reduce SS benefits. For all the bitching about the tax bill, neither side made much notice of this. It was originally a Democratic idea, now enthusiastically embraced by Republicans.
As to older Americans? “Yes, we know it’s a Ponzi scheme, especially people who never paid into Medicare before 1965, but please don’t let it collapse until apres moi, le deluge.”
There’s less funding from the congestion pricing, no matter how the money is spent. Its supporters have included increased revenue from increased ridership as additional funds but have not included the cost associated providing the additional service for this increased ridership.
There are two flavors for the Fix NYC Plan that are calculated in the Oct. 16th version of the BTA spreadsheet. The low cost version predicts an increased fares of $170M and $5M for the subways and buses. The high cost figures are $300M and $5M.
The MTA’s fare current recovery rate (2015) is approximately 60% for subways and 30% for buses. This is down from approximately 70% and 40% back in 2006, when patronage was lower than present.
Applying these number to the anticipated fare revenue windfalls, reveals that anticipated additional costs of $225M and $517M were not included in the bottom line for these two options.
This hasn’t prevented the supporters from using the proceeds as backing for new bonds. This means that instead of providing additional operating subsidies of $550M or $500M after deducting bond costs, congestion pricing will provide only $250M for the low cost plan and an additional operating short fall of $17M for the high cost plan.
Whenever the congestion pricing issue comes up – there is the basic “promise” that transit will somehow become so much better so that “those who don’t need to drive don’t drive.”
Now there may be some quibbling on the exact nature of the phrases used, but that is the gist of the promises issued.
Of course – congestion pricing (of what ever scheme) should be looked at for its own merits. The major issue of tolling ALL of the bridge and tunnel passageways within the NYC-NJ region is something that should really be looked at. However that is not the discussion right now. There is a basic problem with the nature of those promising “congestion pricing will fix stuff.”
On Staten Island, it basically took 35 forking years to get rid of the hourly ferry boats that made Saturday and Sunday nights spent at the ferry terminal a routine hell of an experience. (The weekday late night hourly ferries were not much better, either.) Public trasnit that sucks provides a basic reason to use your car – besides creating the mind-set to continue to use your car for as many non-work trips as possible.
It took several years for the politicial sea change to enact each aspect of this change, while many “transit folks” questioned the nature and need to improve Staten Island transit ridership. Finally by October 2015 – for those with short memories – 3 years ago this month – the longest waiting time for any ferry was 30 minutes – at any time during a regular 7-day week started. (Prior to the 1970’s mid-day boat wait times were 20-minutes apart with 30 minute wait times being the midnight schedule. Missing a boat still is a major time penalty.) This long fought for change included increases in bus and SIR service to accommodate the increased ferry ridership. On Staten Island the buses that serve the ferry terminal and the Staten Island Railroad are timed to the ferry boat arrivals.
Recently one of the state’s financial agencies came out with the suggestion report of cutting in half the nightly and weekend buses that accommodate the increased ferry service – to save money. The majority of those ferry users NEED local buses to get to their homes at all hours! That is in addition to the folks that use these buses to get AROUND the island.
Thus the basic inducement to use your car for as many non-work-related trips as possible to places other than Manhattan remains. The usual long waiting times of the very un-reliable local buses even with Bus-Time remains a major reason to continue to use your car, if you have one.
So on one-hand there is increased ferry service TO the island, but a reduction of ON the island transit which provides a major inducement to continue to use your car! My basic point is that making it more difficult for folks to get where they need to be is NOT going to get them out of their cars! It will not reduce congestion.
In addition, plenty of the folks that use transit (late nights, off-hours, etc.) do not have alternatives! They are not “choosing not to drive because they have alternatives” – they are not driving – because they do not have alternatives!
I’m saying that one hand there are the “pro-transit folks” and the “pro-congestion pricing folks” that say loudly “take transit it is better” – and then there are the “myriad forces” that say “by taking transit you are screwed” either by un-reliable service, cutbacks in service, long waiting times, the constant weekly hardships of taking transit, etc.
New York City is one of the few cities where living life without the continual need of a car is possible – so let’s make that more difficult!
No, no. It’s fine. The people that have their own #RoboCars can use those (boom – parking issues *solved*) and those that don’t can just hail a driverless Uber #RoboCar (boom – transit issues *solved*).
All that whining about transit is just unions trying to protect jobs.
Q. What would the consequences be of defaulting on the MTA debt or declaring BK? I’m not trying to be sarcastic, just want a serious answer as many organizations in the business world pull such stunts to get out from bad financial situations. Yes I know that the MTA is a governmental entity, but it’s also structured as a business with several moving parts.
The first initiative of the “Fast Forward Plan” — the express bus redesign on Staten Island — doesn’t have me feeling particularly optimistic about things. The MTA implemented a borderline-extreme service cut that somehow ended up being nominally MORE expensive to run than the old routes. If they repeat the same process across all the boroughs — more expense for less overall service — I think we’re in real trouble, especially if the MTA is already in debt up to its earlobes.
I have a feeling once Cuomo is re-elected, the MTA’s problems will once again fall by the wayside. Neither he nor di Blasio, for that matter, will do much of anything other than pay lip service and snipe at each other and the MTA commuters will continue to bow their heads meekly and submit to the continued decline of the City’s transit system. Uber, Lyft, bicycles, scooters…that’s what people will resort to. Others will eventually simply move away from the region.
This is exactly correct and it’s already happening. Road traffic will get immeasurably worse as a result and more people will be injured/maimed/killed in car/bike car/pedestrian incidents.
Unfortunately, I don’t expect Molinaro to do any better on the subject, especially if the Paladino-types feel emboldened to try to push their nonsense through.
I don’t particularly like Molinaro, but I will vote for him rather than for Cuomo. Cuomo doesn’t care about mass transit – that is clear by now. He has no vision – witness the ill-conceived and silly airtrain-like ‘solution’ for getting to LaGuardia – when anyone with common sense can see that, for instance, extending the N or W train to LaGuardia, via a viaduct, for instance, is a more viable way to go.
Where is di Blasio in all this? Silent. How about the Regional Plan Association? They endorse this nonsense. How’s that for the public being served by politicians and so-called stakeholders. Is New York a world class city? It pompously advertises itself as the Capital of the World, of all things. And yet, on the ground, this is the reality. Quite a contrast, don’t you think?
Here’s the thing, though. Politicians tend to use certain talking points to sway voters when trying to win seats, even if what they’re saying is pure drivel. As much as I really don’t like Cuomo winning (for the same reason you gave), I have a hard time believing Molinaro will actually do anything for two reasons. The first is because absolutely nothing about that publication released months ago had anything original in it. The second? If that interview Paladino himself gave is any indication, Molinaro would only allow what people like Paladino and Trump want, which would only set the decay on overdrive (after all, the services provided are somehow unimportant, even though the bulk of the state would have a difficult time thriving without an effective NYC metropolitan area, which said services can allow for if properly funded).
For the record, I’m not saying this because I want to.
“We will do anything to maintain a system that has failed us.”
Your comment reminded me of that saying from Howard Zinn. Say what you will about his political orientation and biases, but if there’s anything he said that is on the mark from just about every angle…
If I had confidence in another option, this wouldn’t be an issue.
The subway was on 60 min