Capital Program 2015-2019

For all of its troubles, politically and economically, the MTA always has a trump card in its back pocket. If nothing happens with regards to the multi-billion-dollar hole in its capital plan, the agency can always look to fare revenue for a potential source of income. The agency’s leaders know they have a captive audience of New Yorkers who have to come to rely on the subway system now more than ever; they know they can jack up tolls; and they know it gets the attention of those in Albany when the dreaded phrase “fare hikes” comes up in the public discourse.

Earlier this week as yet more time passed with nothing happening with regards to the MTA’s 2015-2019 capital plan, agency officials started talking about fare hikes and boy did it start something in the halls of power. During committee meetings on Monday, MTA CEO Bob Foran confirmed what anyone in the know already knows: The MTA could close its capital funding gap by issuing more debt which would incur higher operating costs in the form of debt service which would be covered by … fare hikes.

“If we do not receive adequate funding to carry us through the next two years, we don’t have sufficient funds to keep the program going. At some point, the board may take action and the action that they really only can turn to would be one that addresses fares and tolls,” Foran said.

He explained that fare hikes to cover the gap could top 15% — a far cry from the current rate of around four percent every two years the MTA has implemented. Meanwhile, Foran wasn’t the only one crying foul. Jeffrey Kay noted similar concerns. “If they don’t do anything in the next two months, we have a freight train coming at us,” he said. “This is a real problem, and it’s not just going to impact the MTA. It’s going to impact the riders, it’s going to impact the workforce, it’s going to impact the construction unions, and it’s going to impact jobs…This is a real serious issue, and I don’t know what we can do in order to tell our partners that this is real.”

A day after the meetings — clearly on orders from Gov. Andrew Cuomo’s office — MTA CEO and Chairman Tom Prendergast released a statement backtracking on his colleagues’ assertions. ““Yesterday’s mention of a potential 15 percent fare and toll increase,” Prendergast said on Tuesday, “was a hypothetical answer to a hypothetical question. No one has proposed we pay for our capital needs on the backs of our riders, and no one is considering it.”

He reiterated those sentiments on Wednesday following the MTA’s full board meeting. “We have never, ever closed the capital program on the backs of the fare payers. That’s unconscionable. That’s not our desire. That’s not what we’re going to do,” he promised, again sounding as though the governor’s office had turned the screws on him.

Prendergast doth protest too much as the truth is that few options are even on the table. James Brennan’s proposal hasn’t moved much in the two weeks since it was introduced, and more troubling is recent borough-based opposition to the Move New York plan. A group of Queens Democrats, including the usually transit-friendly Assembly rep Phillip Goldfeder and Borough President Melinda Katz, issued a statement in opposition to Move New York because they claim it is “unfair” to Queens and “lacks any promise of returns.” How they drew this conclusion is beyond me, but their statement is far more damaging to transit in New York City than these politicians realize.

Goldfeder tried to defend his position to me on Twitter. He claims to be concerned that Move New York doesn’t “address transit starved communities,” but without the dedicated revenue, the MTA doesn’t have the money to begin to implement improvements. It’s not even a Catch-22; it’s just common sense — something I usually expect from transit allies such as Goldfeder and Katz.

Overall, without Queens’ Democrats, Cuomo isn’t likely to embrace Move New York, and without Cuomo, Move New York — along the $1 billion that come with it — is dead in the water. Thus, we circle back to the MTA’s fare hikes. They’re a threat and a political cudgel the MTA can use to get attention, but they also shouldn’t be dismissed. Fare hikes are, after all, the only way the MTA can guarantee revenue for itself, and if New Yorkers don’t like the idea of a 15 percent hike, I know a bunch of politicians in Queens who deserve to bear the brunt of any complaints.

Assembly Rep. James Brennan has put forth legislation aimed at addressing the MTA’s capital funding gap.

As the MTA enters a fourth month of uncertainty regarding the agency’s proposed five-year plan, we’ve heard a big fat nothing from Gov. Andrew Cuomo’s office, and within the city, Mayor de Blasio is content to let Albany fiddle while asking the feds for more national support for transit. But while the Move New York fair tolling plan garners a groundswell of support, Assembly representative James Brennan is set to introduce a new piece of legislation aimed at shoring up capital funding for transit.

Brennan’s plan, announced via a Dana Rubinstein piece and subsequent Facebook post, could generate additional revenue against which the MTA could bond out its capital plan through a combination of gas and income taxes and would force New York City to pony up more money. That latter piece is important, and I’ll return to it soon. Brennan’s proposal is far from the platonic ideal, but it’s the first sign of real life we’ve seen from Albany on the MTA’s capital funding woes.

“To say that the MTA’s $14 billion shortfall is extremely alarming would be an understatement,” the Brooklyn representative said. “Now more than ever we need to think creatively about how to address our transportation funding needs as well as how to generate reliable consistent funding for our state’s infrastructure. For too long the state’s infrastructure and mass transit systems have operated with unreliable funding.”

His plan revolves around a new New York State Transportation Infrastructure Finance Authority that would issue the bonds to finance $20 billion in various MTA and other state infrastructure projects. My issuing the money under a new authority, Brennan’s proposal would not necessarily add more debt to the MTA’s already-sagging books, and it would instead rely on a new state agency to carry the fiscal load. To generate the revenue needed to issue these bonds, Brennan has called for a ten-cent increase in the state gas tax and an increase in the income tax rate for those earning between $500,000-$2 million a year of ½ of 1 per cent.

Brennan estimates these tax increases would generate around $1.25 billion per year. Yes, it’s true there are tax increases,” he said to Capital New York. “The idea of this is we are not running away from our problems.”

The third piece of this puzzle is more intriguing. Brennan’s legislation would demand that New York City pony up a mandatory contribution, starting with $60 million in year one and increasing each year of the five-year plan by $60 million annually. The contribution under this bill would thus be capped at $300 million. How the city generates this money is up to Mayor de Blasio and the City Council.

And therein lies the rub. Brennan’s plan isn’t Move New York. As Stephen Miller at Streetsblog wrote, “It lacks most of the traffic-busting, safety-enhancing benefits of toll reform.” But by essentially forcing the city’s hand, Brennan’s plan could spur City Council to pass a a home rule resolution requesting Albany approve a Move New York plan to help generate the revenue required by Brennan. It’s a roundabout solution to a tricky problem, but, as I said, someone is thinking about it.

So far, de Blasio’s and Gov. Cuomo’s offices have issued platitudes. Cuomo’s office said that efforts to solve the funding gap “will continue with all stakeholders” while de Blasio said he is “committed to investing in our infrastructure, which will only come with strong partnership between all levels of government.” The MTA, which won’t go to bat for any particular solution, expressed a desire to “engage in a robust dialogue” on closing the $14 billion gap.

For now, Brennan’s plan is the dialogue, but as the state has passed its budget, watchers expect Cuomo to begrudgingly turn some attention to the MTA’s funding gap. The ideas today start with gas and income taxes. Where it goes after is up for debate.

At one point earlier this winter, it seemed as though the perfect storm of MTA funding had appeared on the horizon. The MTA had issued a request for a funding plan for a $15 billion capital budget gap while New York State had a $6 billion windfall in fines from financial institutions. When the dust finally settled on the budget discussions this week, yacht owners earned themselves a tax break while the MTA received a big, fat nothing. Instead, Gov. Andrew Cuomo and his staff plan to work toward a resolution on the capital plan while budget watchers and transit advocates are left shaking their heads in dismay as Albany again lets down New York City.

The idea that New York City commuters have long drawn the short straw in budget talks isn’t a new one. Cap’n Transit explored the issue in an April 2012 post that’s still sadly relevant today. This year, though, the disparity grew worse as Cuomo used the $6 billion windfall for upstate projects and potential toll relief for drivers who will eventually use the New New York Bridge. Unless the governor is going to make a big push for the Move New York fair tolling plan — and even if he does — this is a disappointing turn of events.

The coverage of the budget shenanigans has now turned its focus to the MTA. In a headline that is as much an understatement as anything the Daily News will ever run, a Glenn Blain story trumpets: “MTA not allocated enough money from state’s new budget, advocates charge.” In fact, “not enough” would be a welcome amount; rather, the MTA received $250 million earmarked for one of Cuomo’s own pet projects.

At City Journal, E.J. McMahon of the Manhattan Institute wrote a scathing piece on the Governor’s failures. He writes:

Incredibly, however, the only piece of the windfall Cuomo and the legislature aimed anywhere near the MTA is a $250 million appropriation to begin construction of a new Metro North commuter rail line from southeastern Westchester to Penn Station. The Penn Station access project is an odd one to be singled out for preferential funding. As the Citizens Budget Commission noted, “its total cost has not been reported, its benefits have not been quantified, and it is not clear why it is preferred” over other priorities in the MTA plan. The new line can’t become operational until the MTA completes its massive East Side Access project linking Long Island to Grand Central Terminal, which will free platform space at crowded Penn Station. The latest completion date for that chronically behind-schedule, over-budget project is 2023. For now, the MTA will have to settle for a token $750 million that Cuomo agreed to provide in bonded support for the transit capital program.

Ignoring the MTA’s needs made it possible for Cuomo to spend upward of $1 billion in remaining windfall cash on other purposes…Late in the recent budget negotiations, Senate Republicans tried to persuade Cuomo to set aside more of the windfall cash for transportation infrastructure, as well for municipal water and sewer projects. When the governor wouldn’t budge, they countered by authorizing more borrowing to supplement a separate bonded appropriation Cuomo had already proposed for highways and bridges. (In true Albany fashion, the legislative additions also included a pork-like $400 million “transformative investment” fund just for Long Island.)

…It’s all too common for crumbling infrastructure to be ignored until it poses an imminent threat to health or the smooth running of the local economy…The manner in which Cuomo and the Legislature have chosen to divvy up the windfall pie is sure to win them plenty of thank-yous over the next few years from politically wired developers, corporate executives, and unions around the state. But future generations of New Yorkers probably won’t feel as grateful.

Disappointing and expected. Now we head into a spring of uncertainty. The MTA can’t keep megaproject costs under control, and now they’ll continue to rely on a pay-as-you-go funding approach to a capital plan that needs support. I sound like a broken record, but trains are more crowded that ever. The MTA can ill afford to wait, but the last best chance just passed by. What comes next is a political blank slate with no easy solution in sight.

Sometimes, when I ride the subways during supposed off-peak hours, I’m reminded of a twist on a phrase Yogi Berra coined. Of a popular spot, the Yankee great once said, “Nobody goes there anymore. It’s too crowded.” In a way, it makes perfect sense and no sense at all, but applied to the subways, the inverse is seemingly true. Unfortunately, it’s too crowded, and everybody keeps going there.

My personal anecdote spans the course of this week. Hot on the heels of the MTA announcing that they recognize they have a crowded problem came some of the more crowded rides I’ve taken in months. I had to let some early-morning Q trains pass me by at 7th Ave. because it was impossible to board. Then, on Tuesday night, while coming back to Brooklyn from the Upper West Side, I had to stand all the way from 96th to Grand Army Plaza, and on Wednesday, journeying at 9 p.m. from Union Sq. back to 7th Ave., there were no seats to be had on my Q trains.

Traveling companions who boarded at Canal St. were shocked to find the train so crowded at a relatively late weeknight hour. “It never used to be this crowded,” one said to the other, and I nodded to myself. As recently as a five, let alone ten, years ago, the subways just weren’t this crowded. We’re living through an historically unprecedented explosion in ridership, and the MTA can’t catch up.

Right now, the problems facing the MTA are those of the present and those of the future. In the short term, the MTA, still years away from fully recovering from the effects of Sandy, has a backlog of repairs that need to be initiative. In the long term, to meet demands of today’s ridership, the MTA needed to start planning a decade ago, but right now, they’re stuck in a neutral planning for demands of the next decade without a fully funded five-year capital plan. There’s no easy way out of this conundrum.

The news isn’t exactly getting better for the financially beleaguered transit agency. In a comprehensive report issued this week [pdf], the Citizens Budget Commission examined the MTA’s finances and determined that the agency may face a funding gap greater than $15 billion. In a nutshell, the non-partisan group doesn’t believe the MTA has the cash on hand to make certain contributions to the budget, and thus, the funding gap is closer to $20 billion. On the one hand, this is all accounting sleight of hand, but on the other, someone — future New Yorkers and subway riders — will pay for more debt financing through steeper and more frequent fare hikes or worse service.

As part of the report, the CBC examined numerous funding options, and while no one around here went for their plan to cap unlimited ride MetroCards, the CBC has largely examined driving as a potential source of revenue. The new report discusses the Move New York tolling plan and a variety of fees and taxes on driving to fund transit expansion. These are ideas the MTA tentatively endorsed yesterday, and promisingly, the Board’s Staten Island rep seems to be on board. (For more on the CBC’s ideas, check out this video.)

But I keep coming back to the crowds. The MTA’s system in 2015 can’t handle increasing volumes, and nothing indicates ridership is going to decline. The MTA needs to start planning now for a future with even more straphangers, and they need the money to do so. Every day we wait is another day with trains too crowded for rush hour passengers, delays due to signal problems, and every transit woe in between.

Regular readers of this site have long cast a skeptical eye toward Gov. Andrew Cuomo and his distain for transit. His ideas — an AirTrain to LaGuardia via Willets Point — come out of nowhere and don’t align with transit needs or best practices. He’s thrown weight and tax dollars behind the stridently anti-transit QueensWay while ignoring the voices arguing for rail reactivation, and he’s done nothing to address the MTA’s $15.2 billion capital budget hole.

New York City, meanwhile, is sagging under the weight of record high subway riders. Yesterday, the MTA reported a total of 29 days in 2014 with over 6 million riders, and delays due to aging infrastructure — signal problems, rail conditions — seem rampant. That’s what the $15.2 billion is designed to address. While Cuomo is running away from, or at least ignoring, the problem, other groups such as the Move NY are thinking about the funding and traffic problems. It all might come to a head at some point.

My tiny corner of the Internet isn’t the only part taking note of the politicking though, and in yesterday’s Times, the paper’s editorial board called upon the Governor to, well, do something about it:

The state and city would seem obvious sources for much of this support. Mr. Cuomo, however, rejected the M.T.A. plan as “bloated” soon after it was submitted, even as some mass transit advocates regarded it as barely adequate. The governor’s latest budget gives the M.T.A. about $1.15 billion for these big projects over five years. Mayor Bill de Blasio has offered only $40 million a year as the city’s contribution, far lower than the usual $100 million.

These responses seem miserly when measured against the needs of a system that is already stuffed with passengers and expects at least one million more in the next 10 years. The requirements go beyond new cars; the M.T.A. proposes to replace more than 80 miles of track and a subway signaling system that is more than a half-century old and needs a $3 billion upgrade.

In the end, it is Mr. Cuomo who will have the most to say about whether this vital network thrives or deteriorates. He should help create a five-year capital plan that gives the M.T.A. some confidence about how to expand and maintain itself while he also finds the matching funds that upstate legislators will inevitably demand for bridges and roads in their constituencies. A short-term fix of a year or two is little more than a Band-Aid.

The Times highlights Move NY’s traffic pricing plan and a proposal by Richard Ravitch to raise the gas taxes. Either could address the funding gap, but so too, as the paper points out, would fare hikes, the last gasp for the MTA and a measure it can implement as it so chooses. As The Times notes, if the MTA is forced to “fall back on fare increases … those increases would have Mr. Cuomo’s name on them.” Best we not forget that.

As we approach the six-week mark of 2015, the MTA’s next five-year capital plan — all $32 billion of it — was supposed to kick off on January 1. Now, it’s not a surprise or out of the ordinary that nearly half of the plan’s funding isn’t in place or that the plan hasn’t been approved by the state’s Capital Program Review Board. Last fall’s rejection was a pro forma measure designed to attract political attention to the need to identify funding sources. What’s surprising is how utterly silent Albany and Governor Cuomo have been on the issue.

At this point in the debate, there has been no debate. The only action from Cuomo involved tossing a wrench in the form of the ill-designed LaGuardia AirTrain into the MTA’s plans and requiring the agency to re-write a portion of the five-year proposal. He hasn’t talked about funding mechanism; he hasn’t discussed new dedicated revenue streams; and he certainly hasn’t leaped to embrace anything as progressive as MoveNY’s traffic pricing plan. The silence is deafening.

It’s not though for lack of action and noise downstate. Earlier this week, Mayor Bill de Blasio — who thanks to politics has nearly no say over perhaps the most important element driving New York City development — essentially punted the MTA funding question to Albany where it belongs. The mayor recently proposed some new Select Bus Service routes and $300 million over funding over the next decade (though the proposal could be better), and that’s the extent of his control over major MTA moves. DOT can reallocate street space, and the MTA will provide the buses. Meanwhile, the mayor has asked Albany to do something about the capital funding gap.

De Blasio’s statements earlier this week echo comments he made last week. As Capital New York reported, hizzoner made it clear that Albany must find a solution. “I think clearly this an Albany question first and foremost,” the mayor said while on NY1. “Not only do we need to preserve the payroll tax that’s playing such a crucial role now, but I think we have to have a real debate about what Albany should do with its resources and what’s fair for the whole state.”

Of course, the city’s contribution to the MTA’s capital plan has stagnated at $100 million per year for decades. At a rate of inflation, the city should be contributing $363 million, but even that huge increase would leave a gap of nearly $14 billion. The city could do more, but by and large, de Blasio is looking in the right direction.

The mayor isn’t the only one squawking at Albany that isn’t really listening. On Wednesday, the Urban Land Institute of New York and the Permanent Citizens Advisory Committee to the MTA released a report and a fancy website highlighting why the region needs a fully funded MTA capital plan. The report highlight a bunch of facts anyone reading this far already knows — 90% of NY workers live in areas served by the MTA; the Lexington Ave. line carries more riders than subways in San Francisco, Chicago, and Boston combined; the MTA needs to keep investing in system renewal to avoid constant breakdowns, etc. But it’s important because it’s a salvo in a political fight.

“We need to focus on continuing to deliver to New York commuters an affordable, accessible transit network that is equipped for the challenges of tomorrow. As the city and state’s leaders determine the final shape of the Capital Program, it is vital that they keep everyday New Yorkers at the top of their agenda,” William Henderson, Executive Director of PCAC, said. We can’t risk not investing in the system as we’ve been down that road before.

So what happens next? Eventually, Albany will pick up the cause, and the debate may play itself out in familiar fashion. No one will propose traffic pricing, but debt will be on the table. And the MTA’s debt, as a new report by the Straphangers highlights, is a problem. The MTA itself is carrying more debt than 30 nations including war-torn Syria and the entirety of Chile. And yet underinvesting is on the table because, as Joan Byron of the Pratt Center said yesterday, “we have a governor who has demonstrated that he does not get how important the MTA is to the metro and regional economy.” That’s a scary thought indeed.