Governor-elect Andrew Cuomo has not yet pledged to protect transit dollars. (AP Photo/Mary Altaffer)
Our Governor-elect is not starting things off on the right foot with transit. While speaking yesterday, he declined to pledge to protect transit funding, and in fact, spokes words that should send up the warning lights. Andrew Bernstein has the transcript:
Cuomo: “I understand the concern. Everyone — especially in a declining budget environment, where we are now, everyone — we just met with the environmental groups. They’re very concerned that nobody raids the funds that should be going to the environment. People who are involved in transit want to make sure nobody raids the funds that are involved in mass transit. I understand the concerns, and that’s the balance of putting together the budget.”
REPORTER: That means you’re not committed to allowing the money –
Cuomo: “You can’t say — money is fungible to a certain extent. There are a lot of needs the state has to fund and it’s the balancing of those needs that will be done through the budget process.”
As Streetsblog’s Ben Fried said, these are “scary words for transit riders.” New York must vow to stop taking revenue collected in the name of transit and using it instead to plug holes in the state’s general budget. The New York City Transit Riders Council said it will try to push for a measure in New York similar to California’s Prop 22, but this change must start at the top.
To drive home this reality, Lieutenant Governor Richard Ravitch released a report today on the state’s transportation network, and he urged New York to invest more in transit. “In this period of austerity, national economic uncertainty, unpredictability of federal funding, and rising social service costs there is an increasing risk that funding for infrastructure investments will be curbed to dangerous levels,” he said in a statement. “To preserve safety and prepare for economic recovery, the State must craft a multi-year transportation capital investment strategy that sets clear and attainable priorities, identifies reliable revenues, and balances competing regional demands.”
The report — embedded below — is a scary statement on the state of the transportation funding. New York, he says, “lacks the revenues necessary to maintain its transportation system in a state of good repair” and “has no credible strategy for meeting future needs.” He further warns:
Right now, neither the MTA nor DOT has adequate resources to cover both its operating expenses and the level of new borrowing demanded by its proposed capital program. New York, therefore, faces a choice: significantly higher taxes, fees, fares, and tolls or a drastically diminished transportation program that could jeopardize safety and economic well-being.
On the MTA, he discusses the authority’s debt problem. Essentially, the state must contributing more to the MTA’s coffers instead of relying upon bonded debt to maintain and build out the transit network. Says the report:
Today, debt service exerts pressure on the MTA program just as it does on the DOT program. A debt restructuring carried out between 2000 and 2002 took advantage of lower interest rates, which reduced debt service on the bonds outstanding at the time. Lower debt service payments in the short term allowed for additional borrowing for a new capital plan without new taxes and fees or higher fares; but the refinancing resulted in a dramatically larger debt burden and debt service payments in future years. Bonding, as a share of the 2000-2004 MTA capital plan, jumped to 55.7 percent from its traditional share of around 36 percent. Between 2000 and 2008, the MTA nearly doubled its debt burden from $13 billion to $24 billion. The restructuring also extended the maturity dates of the MTA’s outstanding debt. If the restructuring had not extended the maturity dates on MTA debt, a substantial part of the MTA bonds outstanding in 2000 would now be paid off, freeing up revenues to support new borrowing capacity. Instead, the maturity schedule for the more- than-$31 billion in outstanding MTA debt is back-loaded into the 2020’s and 2030’s; and the MTA is in acute need of new revenues to service its existing debt and finance new borrowing for capital purposes. Short-term fiscal and political relief came at a long-term cost.
This imbalance in the MTA’s budget was masked for a short time by the economic bubble of the mid-2000s, when the real estate taxes that support the MTA generated surpluses for the agency. Instead of reserving these surpluses, the agency was under pressure to use them to hold down fares; it even offered short-lived and short-sighted fare holidays amounting to $45 million. When economic conditions changed and dedicated tax revenues plummeted, the MTA found itself without enough revenues to meet both its operating costs and its debt service payments.
To solve these problems, Ravitch urges the state to search for new revenues sources. He doesn’t flat-out call for congestion pricing, but he has been a long-term advocate of a fee-based transit funding solution that involves traffic calming as well. He also calls upon the state to institute “special taxing districts” that capture revenues from “certain mega- projects that have the potential to dramatically increase economic activity and property values in an area.” In essence, developers would have to pay higher tax rates to ensure better transit — something the city should have instituted to secure funding for the 7 line stop at 10th Ave. and 41st St.
Ultimately, Ravitch says the ongoing capital projects such as the Second Ave. Subway are safe simply because the MTA would be on the hook for billions of dollars in penalties if work stopped now. But the state must figure out how to close the capital budget’s $10 billion gap. To do so through borrowing would require at least another $700 million in MTA revenues, and the bond payments would come due decades from now.
The state, as we know, is facing a crisis. Can the new governor begin to solve it? So far, he hasn’t sounded too willing to try.
After the jump, read Ravitch’s report.
