Author: Benjamin Kabak

Shortly after I delved into the back-and-forth regarding potential solutions to the MTA’s capital funding woes, the latest episode in this soap opera unfolded as MTA CEO and Chair Tom Prendergast and Gov. Andrew Cuomo engaged in a very public dance regarding financing solutions. While Prendergast discussed the MTA’s commitment to cutting a few billion out of its spending plans, the Governor seemed to accept the idea that the state would have to cover around $8 billion if the MTA’s proposal falls into place. But as the dust settled, we were all no closer to understanding just how this gap will be closed.

The first move on Thursday afternoon came in the form of a letter from Prendergast in response to City and State comments issued earlier this week. He wrote to Mary Beth Labate and Anthony Shorris, agreeing to cut costs through the design-build process, but Prendergast noted that a significant funding gap of around $9.8 billion remained. It’s both admirable and telling that the MTA could trim the gap from $15 billion a few weeks ago to under $10 billion today, but that’s still a sizable gap.

To ensure full funding, Prendergast proposed a two-prong solution of sorts. First, he asked the city to contribute an additional $200 million per year over the next five years in addition to $1.5 billion for the non-Federal share of the next phase of the Second Ave. Subway. The state would then have to come up with only $8.3 billion over five years. “We believe this split is more than equitable to the City, particularly given that $22 billion of the $26.8 billion Capital Program is for projects in New York City,” Prendergast said.

A little more than an hour later, Gov. Cuomo took to the airwaves in a short interview with New York 1 to respond to Prendergast’s letter. He begrudgingly accepted Prendergast’s split of the funding burden: “The MTA divides the $9.8 billion by what they think is fair for the state and fair for the city and I could argue that it’s a little burdensome on the state. But I would accept the MTA’s numbers just to get it done and to go forward.”

He went on in this vein for a while:

Historically, the city was broke…Secondly, something like 90% of the MTA ridership is in the city and of the $26 billion in work, $22 billion of the $26 billion is in New York City. So New York City is a lion share of the riders. They’re a lion share of the assets and I understand they haven’t paid much historically, but the city’s financial condition is much different than it was and I think the MTA is asking for $200 million per year for five years. The city ends up paying a fraction of what the state would be spending, so I think it is fair and it allows us to resolve the matter and move forward. It’s a much larger number for the state, the state ends up paying $8 billion and the city would be a total of about $3 billion at the end of the day so it is, I think, more than fair to the city.

This was his way of slamming New York City — something Cuomo has done repeatedly in recent days as the relationship between he and the mayor has devolved into something you might find in a high school cafeteria. But Cuomo isn’t exactly correct. As the Citizens Budget Commission recently highlighted, the overwhelming majority of all MTA funding comes from the city. Perhaps Cuomo doth protest too much, but that’s politics.

Unfortunately, for here, the NY1 interview veered off the proverbial tracks. The host asked about Uber and then returned to the MTA. Cuomo indicated that he wasn’t keen on seeing the agency raise fares to fund the capital plan and has accepted that the state will fill a $8 billion gap. But the key question remains unanswered. Despite Thursday’s politicking, we still don’t know how the state will find $8 billion or if the city will do its part here. These are major questions that leave $10 billion in the five-year plan still unaccounted for.

So have we gotten anywhere? On the one hand, the Governor has committed to solving the MTA funding gap, and as we know, what Cuomo wants, he seems to get. But the mechanisms of the revenue streams will have to be hashed out amidst the halls of Albany and City Hall. We’re inching towards a resolution, but this saga is far from over. Cuomo is no savior yet.

Are New York City streets and, by extension, the MTA’s capital plan on the verge of becoming another victim of the ongoing soap opera/war of words between New York’s stubborn and intransigent governor and New York City’s neophyte and naive mayor? As political maneuverings and a rosier MTA financial picture make a deal more likely, the Move New York Plan, a key center piece to a comprehensive solution for NYC’s congestion woes that may finally have Gracie Mansion’s support, could be DOA if the Governor gets his way — and the Governor is going to get his way.

First, the good news. As part of its new financial plan released yesterday, the MTA has closed the gap in the 2015-2019 capital plan to a mere $12.8 billion. They’ve achieved these savings of $2.4 billion through what the agency has termed “unanticipated revenues, greater cost savings and more efficient operations.” Some of the money will go toward service enhancements; some will go toward the capital plan; and none will go toward averting biennial fare hikes.

As the MTA detailed, these savings are not reliable year-over-year sources of revenue and are derived largely from a strong economy. The agency drew in $401 million more than expected in real estate transaction taxes and cut pension expenses by $348 million. Fare and toll revenues were up while energy costs were down. “The additional funding we have announced today is a significant self-funded contribution to our extensive capital needs, but it still falls well short of what is necessary to keep our network in a state of good repair, much less to improve its operations and expand its reach,” MTA CEO and Chair Tom Prendergast said yesterday. “We hope our careful budgeting and innovative planning show our commitment to our Capital Program as we work with our city, state and federal funding partners to fully fund those needs.”

Facing an MTA with a smaller gap, though one still in need of a large sum of money, and battling concerns that Uber’s popularity, among other causes, has led to an increase in congestion in the Manhattan Central Business District, the de Blasio administration may finally be coming around on the Move New York fair tolling and traffic pricing plan. In a letter to Prendergast [PDF], Deputy Mayor Anthony Shorris recognized the need to find funding for the MTA capital plan and expressed interest in the Move New York plan. Without funding, Shorris wrote, “the negative impact on the state economy will be substantial…we cannot go back to the days of infrastructure neglect and declining service from which it took us a generation to recover.”

Recognizing that more debt and higher fares will overburden riders, Shorris noted that a the solutions on the table will “demand financial sacrifice and political leadership.” He listed Move New York first and noted other plans to increase taxes and fees that support the MTA, but Shorris also noted that, while NYC residents bear the bulk of MTA funding, the state has ultimate control. Still, he issued an olive branch to Albany. “The City is ready and willing to work with the State to develop sound, long-term solutions,” he said. “We are ready to sit down today and have a full and frank discussion about comprehensive funding options for this essential engine of the State’s economy.”

In an alternate universe, Albany responded with a wide-open embrace of Shorris’ position, noting that city residents have always supported congestion pricing if revenue is dedicated to transit improvements, but this is Cuomo’s New York. The governor’s response was nearly immediate. “Been there done that…I don’t see how it would ever pass,” he said in response to the Move New York plan. In subsequent comments, he threw more cold water on the idea. “If you think that’s going to close the gap and that’s going to pass, then I think you’re going to be sorely disappointed once again,” he said.

This is of course a self-fulfilling prophecy from Cuomo. He has the political capital and the political will to see that a Move New York plan — one that would alleviate the environmental and economic destruction wrought by congestion while funding transit — would pass Albany, and the city wants it to happen. But what de Blasio proposes, Cuomo shoots down. That’s just the way of things these days, and the dysfunctional city/state relationship has the MTA in its cross-hairs.

So what’s the state’s solution? It’s not entirely clear yet, but in a letter sent this week to the MTA [pdf], Mary Beth Labate of the New York State Division of the Budget hinted at a solution. The state is concerned that the MTA is asking for too much since they usually do not spend all of the capital money collected within the five-year plan as originally budgeted, and she suggested design-build as a way to cut costs. So the path to a deal is set: The MTA will trim some spending and projects from this five-year plan, and the state will move on….something. What that something will be isn’t clear right now, but it seems unlikely to be the Move New York plan. For that, we all suffer.

During its meeting on Wednesday, the MTA Board will vote to approve a $205 million contract with Siemens and Thales Transport for a part of the communications-based train control installation along the Queens Boulevard line. As the MTA works to pre-qualify other companies with relevant expertise, these two companies — the only two pre-qualified to bid on contracts since 2006 — will spend 67 months installing CBTC along the western part of the Queens Boulevard line. This may mean five years of intermittent service changes, but it also may lead to, as the MTA claims, a “‘state of the art’ train control system.” And we all know it’s about time.

As part of the discussion about CBTC, Transit released the video I embedded above. It explains how the stations aren’t the only part of the subway system. In fact, much of the technology is older than any of us (and nearing, or well past, the end of its useful life). It’s supposed to explain how CBTC can help increase frequency of trains along the Queens Boulevard line, but it also underscores exactly how deferred maintenance throughout the decades can come back to hurt a transit agency.

For decades, the New York City subway system was a victim of politics. It initially operated as a quasi-private business overseen by the elected Board of Estimate with fare policy set not by the operators but by politicians who had to answer to constituents. So the five cent fare lingered and lingered and lingered, even when it became obvious that the transit operators couldn’t run the system breaking even, let alone generate revenue to keep up with technology innovation. This was a repetitive cycle until the MTA came into being in 1968, and the nascent agency had its work cut out for itself.

Since the early 1980s, the city, state and feds have poured billions of dollars into restoring some semblance of investment in the transit system, but the backlog was tremendous. Nearly since its founding, the subways hadn’t undergone top-to-bottom overhauls, and the early money was spent on upgrading rolling stock and restoring stations to a usable state. We’ve had massive track replacement and big-ticket capital projects too, but the signal systems have lingered as a relic of history. Now, the MTA is trying to play catch-up, and it’s going to take a long time.

Elsewhere, transit agencies can focus on technological upgrades without having to sacrifice other projects in part because costs are kept under control. Paris, for instance, can fully automate subway lines quickly as they’re working from a base of newer equipment and shut down the system at night. They don’t face the same labor and corruption issues that New York hasn’t been able to combat.

As you watch the MTA’s nine-minute video, think about how the choices we make today reverberate for decades into the future. We need a state-of-the-art subway system now because it’s the system we’re leaving to our children and grand-children. It has to function then at least as well (or perhaps as poorly) as ours does today. And that incremental $200 million investment for a part of the Queens Boulevard line doesn’t even begin to cover it. Now does anyone want to close that $15 billion capital program gap?