NYS Comptroller: MTA needs new funding for improvements

Written by Kyra Senese, Managing Editor
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Patrick Cashin

New York State Comptroller Thomas P. DiNapoli has announced in a new analysis of the Metropolitan Transportation Authority’s (MTA) financial plan that the transportation authority needs to acquire new funding sources to avoid raising fares and tolls more quickly than expected.

 

If the transportation authority is unable to secure new revenue sources, the MTA would be required to raise fares and tolls more quickly than planned in order to maintain and repair its system, which is said to have deteriorated “sharply” in recent years.

“Maintaining, modernizing and expanding the largest mass transit agency in the nation is critically important to the future of the New York metropolitan region,” DiNapoli said. “In the absence of adequate funding, the system could fall into further disrepair and riders could face unplanned fare hikes. The state and city need to find solutions to prevent these possibilities from becoming reality, and the MTA must make the best use of its resources.”

DiNapoli said in his report that the Long Island Rail Road’s (LIRR) performance, in addition to that of the subway system, has declined. During the first six months of 2017, he said on-time performance along the LIRR fell sharply.

DiNapoli added that the system was headed for its worst year in 17 years, which he attributed in large part to increased delays related to Amtrak-owned tracks, signals and switches, as well as to the railroad itself.

Nearly a third of the subway fleet is more than three decades old, and DiNapoli notes about 40 percent of the system’s signals are more than half a century old. A sharp growth in subway ridership throughout the past 15 years is a strain on the system, as well.

Though the MTA has invested more than $120 billion in capital improvements since 1982, DiNapoli said the rate of investments has not met the MTA’s needs.

The subway system also has major needs to restore signals, power, stations, repair shops, pumps and emergency ventilation equipment to a state of good repair. Subway car purchases have been delayed, as well.

More than a third of the 201 emergency ventilation plants in the subway system are more than 50 years old and have never been rehabilitated, including five that are more than a century old, DiNapoli said. He added that more than half of the system’s tunnel segments are not protected by ventilation plants.

The MTA announced a two-phase Subway Action Plan in July to deal with the system’s degradation. Phase 1—with an estimated cost of $836 million—emphasizes improving the subway system.

The MTA has suggested the city and state share the cost of Phase 1, but a cost-splitting agreement has not been reached. While awaiting a funding agreement, the MTA has been using its own funds to start Phase 1.

The MTA had projected that Phase 1 would be completed in 2019, but it now hopes to complete the first phase by late 2018. After Phase 1 is complete, DiNapoli said recurring costs could surpass $300 million yearly, which would equal unscheduled fare and toll increase of about 4 percent. The MTA already raised fares and tolls by 4 percent in 2017.

The MTA is contributing 43 percent of the funds needed for the 2015–2019 capital program, a larger share than its funding partners.

The cumulative impact of the 2015–2019 program and prior capital programs imposes a heavy burden on the system’s operating budget and on customers who face higher fares and tolls.

Operating resources that support the capital program are expected to rise by 22 percent throughout the next five years to $3.5 billion, using a fifth of all MTA revenues. Before considering the 2020-2024 capital program, debt outstanding is predicted to reach $42.6 billion by 2022, landing at a deficit of $7 billion more than five years prior, DiNapoli said.

The MTA is relying on the federal government to support nearly 25 percent of its capital program, but uncertainty remains surrounding the funds.

Though the state has committed to contribute $8.5 billion to the 2015-2019 capital program, it has not yet confirmed a source for $7.3 billion of the commitment. The state funding could be met through MTA bonds backed by an existing or new state revenue source. New York Gov. Andrew Cuomo recently announced the state’s intent to contribute an additional $1 billion to the current capital program, but DiNapoli the source of that funding is also yet to be identified.

The 2015–2019 capital program had a funding gap of $15 billion when it was initially proposed. It took 17 months for the state, the city and the MTA to agree on a funding solution, which delayed several projects. The 2020–2024 capital program could entail a larger gap in the absence of secure funding, DiNapoli said in the report.

The MTA projects a balanced operating budget through 2019, but it projects budget gaps in the years to follow, starting at $112 million in 2020 and reaching $493 million in 2021, despite planned biennial fare and toll increases of 4 percent in 2019 and 2021.

These estimates assume uninterrupted economic growth, DiNapoli said, with $1.4 billion in unidentified cost savings and the restoration by the state of $65 million in annual funding to offset the revenue loss to the MTA from a reduction in the Payroll Mobility Tax on small businesses.

DiNapoli’s full report is available to read here

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