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Reinvent This: Cuomo Cuts Future Investment to Pay for MTA Labor Deals

When Governor Cuomo smiled for the cameras to announce labor deals with the Transport Workers Union and Long Island Rail Road unions, he promised they wouldn’t push already-planned fare hikes any higher. The unanswered question was: How much will this cost, and how is he going to pay for it? Now we know: The governor’s MTA is moving money away from investments in the system’s long-term upkeep, widening a $12 billion hole even as a panel of experts studies ways to pay for needed improvements.

He appointed a commission, but will Governor Cuomo do what it takes to fund the MTA's future? Photo: Diana Robinson

He appointed a commission, but will Governor Cuomo do what it takes to fund the MTA’s future after cutting capital plan funds to pay for labor deals? Photo: Diana Robinson/Flickr

Yesterday, the MTA released its proposed 2015 budget and four-year financial plan. It reveals that labor deals, including expected settlements with Metro-North workers, will cost the authority at least $1.28 billion through 2017.

Over the same period, the MTA is expected to save $635 million through higher revenue from taxes, tolls, and fares, and better than expected savings on para-transit, energy, health care, and debt service. It’s also continuing internal cost-cutting measures. The net result: There’s a new $645 million hole in the MTA’s budget over the next three years.

How to fill it? The authority is cutting its long-term contributions to pensions and other retiree funds, and will even dip into existing funds this year. That covers most of the gap. The rest will come by cutting the contribution the MTA makes to its capital plan, which funds both big expansion projects and state of good repair for reliable buses, trains, and stations.

The MTA’s contribution from its operating budget to its capital plan is a down payment on the next round of planned investments. City, state, and federal dollars are less certain, and they’re secured later to fund the majority of the program.

In February, the MTA said it planned to contribute $370 million each year from its operating budget to the capital program. If it used these funds to issue bonds, it could leverage $6.5 billion over eight years. Thanks to the new labor agreements, that number has been cut by more than one-fifth, down to $290 million a year. The MTA says this will cost the capital program $1.5 billion.

Comptroller Tom DiNapoli, assuming the MTA would contribute what it said it would earlier this year, warned last week that the capital program faces a $12 billion gap. Yesterday, that gap got $1.5 billion wider. That’s not chump change: The MTA has identified $26.6 billion in capital needs over the next five years.

Paying for the capital plan with more debt brings big risks. The MTA has already increased its debt load to record levels to pay for capital investments. In fact, 17 cents of every dollar the MTA spends in its 2015 budget goes to debt service, costing the authority $2.4 billion a year. That’s about how much it costs to operate Metro-North ($1.2 billion) and Long Island Rail Road ($1.4 billion) combined. Without changes to the status quo, paying off that debt will ultimately fall to straphangers, since fares and tolls comprise a majority of the MTA’s operating income. In other words, by pushing costs to the capital program, the labor agreements could result in a fare hike — just not right now.

It doesn’t have to be this way. The governor has appointed a “transportation reinvention commission” to study, among other things, ways to fund the capital program. It’s set to release recommendations in September, less than a month before the MTA sends its next five-year capital plan to the state. With the latest cut to the capital plan’s funding, the need for other sources of revenue just became even more pressing.

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Unlike Toll Reform, a Sales Tax Really Is a Regressive Way to Fund Transit

Funding the MTA with sales taxes? This is who will end up paying the most for it. Image: Institute on Taxation & Economic Policy

Among New York state residents under 65, poorer households currently pay a far greater share of their income in sales and excise taxes than more affluent households. Chart: Institute on Taxation & Economic Policy [PDF]

The MTA capital program is facing a $12 billion shortfall, according to Comptroller Thomas DiNapoli, and unless that gap is closed, transit riders will end up paying even more to cover the agency’s ballooning debt load. There’s one clear way to address that problem while cleaning up the traffic mess that ensnares motorists, bus riders, pedestrians, and cyclists alike — raising revenue by reforming NYC’s broken toll system. But a leader of Governor Cuomo’s MTA Reinvention Commission appears to favor a regressive option that won’t fix the dysfunction on city streets.

Capital New York’s Dana Rubinstein reported yesterday that Ray LaHood, former U.S. secretary of transportation and co-chair of the commission, thinks Virginia’s transportation funding model is worth considering in New York. “They went from a gas tax to a sales tax,” LaHood told Capital. (Virginia repealed its gas tax in favor of a wholesale tax paid by gas station owners and a sales tax increase paid by consumers, raising $880 million each year.)

Speaking to Brian Lehrer on WNYC this morning, LaHood said he was unfamiliar with the “Fair Plan” promoted by “Gridlock” Sam Schwartz and the non-profit Move NY, which would raise revenue for transit by creating a more rational citywide toll system. LaHood went on to say, “People think [the Virginia sales tax model] has great potential.”

But a sales tax is one of the most regressive revenue-raisers out there. Of the types of taxes states typically levy — on property, income, and sales — “sales and excise taxes are the most regressive, with poor families paying eight times more of their income in these taxes than wealthy families, and middle income families paying five times more,” according to the non-partisan Institute on Taxation and Economic Policy [PDF]. In New York, sales taxes already hit the poorest fifth of the state’s households more than twice as hard as the wealthiest fifth, when measured as a percentage of income [PDF].

Compare that to who would pay under the Move NY toll reform plan: Tolls would increase only for people driving to Manhattan south of 60th Street, while tolls would drop on outer borough crossings. Car owners are wealthier than car-free New Yorkers, and a Move NY analysis shows that drivers who will pay more under the plan have household incomes far higher than transit users. Asking them to pay a higher toll to support train and bus service, while lowering tolls in the outer boroughs, transfers resources from the haves to the have-nots — it isn’t regressive at all.

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Affordable Bus and Subway Fares Are Still Worth Fighting For

When the MTA introduced the 30-day unlimited-ride MetroCard in 1998, it cost $63. Today the cost of the 30-day pass is up to $112, a 77 percent increase. Over that time the base subway and bus fare doubled, from $1.25 to $2.50.

Meanwhile, wage growth has lagged. The average wage in the five boroughs increased only 54 percent from 1998 to 2012 (the latest year we have data). We know that most of these wage gains went to the city’s wealthiest earners, whereas wages for the middle class have stagnated or declined. For the vast majority of New Yorkers, a bigger chunk of their earnings is now needed to cover the cost of transportation (not to mention housing).

Despite these trends, former PlaNYC sustainability chief Rohit Aggarwala recently suggested in CityLab that riders would be better off covering a greater share of New York City Transit’s operating costs, arguing that poor transit service is rooted in a fare structure designed to lose money. Higher fares would mean more money for running the trains and buses, Aggarwala writes, which in turn would free up public funds to pay for capital projects, rather than operations.

As one of the chief architects of the PlaNYC initiative and the Bloomberg administration’s congestion pricing proposal, Aggarwala knows how vital an improved transit system is for the city’s future growth and sustainability. He estimates that if the subway fare went up to $5.80, the MTA would be able to borrow an extra $85 billion for capital projects.

This would pack a wallop, but Aggarwala questions whether all transit riders actually deserve to be subsidized: “The only reason to subsidize every transit rider, for every ride, is if you assume that the vast majority of riders do, in fact, deserve public subsidy.”

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Hints About Woodhaven BRT at MTA Reinvention Commission Panel

No room for BRT here, Assembly Member Phil Goldfeder said yesterday to the commission charged with thinking big about the future of transit. Photo: Google Maps

No room for BRT here, Assembly Member Phil Goldfeder said yesterday to the commission charged with thinking big about the future of transit. Photo: Google Maps

The “transportation reinvention commission” convened at the request of Governor Andrew Cuomo kicked off its public hearings yesterday with a panel of experts at MTA headquarters. Appointees, still trying to figure out the commission’s exact role, chewed over some of the region’s big transportation issues in a discussion that mostly lacked specifics. Still, there were a few notable comments, including new information about Bus Rapid Transit on Woodhaven Boulevard from NYC DOT Commissioner Polly Trottenberg.

BRT featured prominently yesterday, as panelists highlighted the need for closer collaboration between the MTA, NYC DOT, and other government agencies to bring robust transit improvements to low-income workers with long commutes in the outer boroughs.

“It seems that the less that you make, the further you have to travel,” Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, told the commission. ”My union agrees with the BRT for NYC coalition that we can improve the situation.”

“We are going to look at going to a more full-blown BRT model, let’s say for Woodhaven Boulevard,” said Trottenberg, who also serves as an MTA board member. After the meeting, she said the budget for the project is close to $200 million, higher than the $100 million she put forward at the end of May and suggesting a more ambitious allocation of space for surface transit. Previous Select Bus Service projects, with painted bus lanes, signal improvements, and sidewalk extensions at bus stops, have cost between $7 million and $27 million to build [PDF]. (The full Woodhaven project corridor is about 14 miles — longer than other SBS routes but not dramatically so.)

It’s too early to say what the Woodhaven BRT project will look like — DOT Director of Transit Development Eric Beaton said the agency does not yet have a design for Woodhaven and is continuing to meet with local communities. But in another indication that the city is serious about pursuing a robust configuration for transit lanes on Woodhaven, Beaton said costs for Woodhaven should be compared with projects like Euclid Avenue in Cleveland, or Geary Boulevard and Van Ness Avenue in San Francisco. Those projects feature center-running lanes (the SF busways have yet to be built).

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The Case for Center-Running Bus Lanes on Woodhaven Boulevard

We can rebuild Woodhaven Boulevard as a great transit street. We have the space.

We can rebuild Woodhaven Boulevard as a great transit street. We have the space.

The proposal to improve bus service on Woodhaven Boulevard and Cross Bay Boulevard in Queens is the most exciting street redesign in the works in New York City right now, with the potential to break new ground for bus riders and dramatically improve safety. With as many as five lanes in each direction, Woodhaven Boulevard has plenty of space that can be devoted to exclusive transitways and concrete pedestrian safety measures.

NYC DOT and the MTA are holding a series of public workshops to inform the project, with initial improvements scheduled for this year and more permanent changes coming later. This is a chance for the city and the MTA to build center-running transit lanes that will speed bus trips more than previous Select Bus Service routes, where buses often have to navigate around illegally-parked cars. Critical design decisions could be made this summer.

Kathi Ko at the Tri-State Transportation Campaign has filed dispatches from the first round of public meetings, and she reports that participants ranged from change-averse to eager for “big and bold ideas.”

Of course, it’s the change-averse who sit on the community boards and are getting most of the local press attention. Queens Community Board 9 transportation committee chair Kenichi Wilson told DOT that “the only way I would support” the project is if it doesn’t affect curbside parking, according to the Queens Chronicle. At an earlier meeting, the first vice chair of Queens CB 10, John Calcagnile, predicted that the elimination of parking to make way for interim bus lanes “will have a real negative effect on businesses in the area.”

Experience with Select Bus Service suggests otherwise. Along Fordham Avenue in the Bronx, parking was eliminated and meters were added to side streets in order to run curbside buses for the city’s first SBS route. Merchants objected at first, but three years later, retail sales had improved 71 percent — triple the borough-wide average.

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MTA Announces Public Hearings for Reinvention Commission Next Week

As promised, the MTA has put out a schedule for the public to weigh in on the transportation “reinvention commission” convened by Governor Cuomo as the authority formulates its next five-year capital plan.

The MTA says it is seeking input on different aspects of the capital plan, such as resiliency, demographic and ridership changes, jurisdictional barriers, implementing new technology, and energy efficiency. It’s also looking for ideas about how to better finance and implement these investments.

Before each meeting, the commission will hear testimony from invited experts and organizations.

The public meetings will all take place in the fifth floor board room of the MTA’s Midtown headquarters, 347 Madison Avenue. They are scheduled for:

  • Tuesday, July 15 from 5:30 to 8 p.m.
  • Wednesday, July 16 from 5:30 to 8 p.m.
  • Thursday, July 17 from 12 p.m. to 1 p.m.

Members of the public wishing to testify must register in advance, and a government-issued photo ID is required to enter the building. The commission is also accepting online comments and will webcast all three events. Update: The MTA says these three meetings are the only public input sessions the commission will be hosting.

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What We Know So Far About Cuomo’s MTA Reinvention Commission

In early May, Governor Andrew Cuomo directed the MTA to create a “transportation reinvention” panel as the authority prepared its next five-year capital plan. Members were appointed late last month, and the commission has launched Facebook and Twitter accounts. But details about its agenda and how open it will be to the public are scant. Meanwhile, the clock is ticking: The MTA capital plan has to be finalized by October 1.

Think big, act fast: Details are still murky on Andrew Cuomo's MTA reinvention commission. Photo: joiseyshowaa/Flickr

Think big, act fast: Andrew Cuomo’s MTA reinvention commission doesn’t have much time to come up with its recommendations. joiseyshowaa/Flickr

The MTA says it will announce public meetings by the end of this week, and commission members say those sessions are likely to happen next week, just days after being announced. Beyond that, things are hazy: There is no agenda for future commission meetings and no schedule for reporting the commission’s recommendations.

The 24-member panel, chaired by former US DOT Secretary Ray LaHood and former FAA Administrator Jane Garvey, is being advised by MTA staff as well as mega-consultant Parsons Brinckerhoff, which is already working on the Fulton Street Transit Center, East Side Access, Second Avenue Subway, and 7 train extension to Hudson Yards — all of which are in various states of budget overrun or delay.

Advocates on the commission say it’s off to a good start, however, and they’re optimistic about what will emerge from the process.

The panel met for the first time late last month and members have been broken into five subcommittees:

  • Operating and Maintaining the Existing System
  • Meeting and Exceeding Customer Needs
  • Spurring the Continued Growth of New York’s Economy
  • Financing Investments into the Future
  • Expediting Processes, Procedures and Project Delivery of Capital Infrastructure

The subcommittees, which have weighty issues to consider, have each met at least once, sometimes via conference call. Veronica Vanterpool, executive director of the Tri-State Transportation Campaign, says members haven’t been afraid to think big. ”Many of us are taking it to heart that this is a reinvention commission, and that things that have not been discussed before really should be on the table going forward, even if they’re just ideas,” she said. ”It’s sort of rethinking our transportation network in this region.”

“The whole thing feels like it has more energy than the typical fare or service hearing,” said commission member Gene Russianoff of NYPIRG’s Straphangers Campaign. “I’m hoping the commission finds a serious way to get people to think along with it about how we improve on transit.”

How that will happen remains to be seen, even to commission members. “It’s hard to talk specifics,” Vanterpool said. ”I’m assuming this is going to be due this summer, but I don’t have any firm dates.”

“The commission hasn’t yet established a specific date by which it expects to conclude and/or report its work,” said MTA spokesperson Aaron Donovan. There is one final deadline: The MTA will submit its five-year capital plan to the governor and the legislature by October 1.

The MTA reinvention commission isn’t the first transit panel created in New York state, but the three most recent examples all had more time to deliberate publicly and come up with recommendations than the MTA reinvention commission.

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Four Tough Problems the MTA Reinvention Commission Needs to Tackle

Governor Cuomo’s MTA Reinvention Commission met for the first time last week at the agency’s midtown headquarters. Cuomo has charged the 22-member commission with developing a plan “to make our subways and our entire transit system ready for the challenges of the next century.” The commission’s recommendations are expected to shape the MTA’s next capital program — its five-year plan for maintenance and expansion — as well as the authority’s long-term planning and vision.

Governor Cuomo’s MTA Reinvention Commission will have to address the high cost of construction for mega-projects like the Second Avenue Subway. Photo: ##https://www.flickr.com/photos/mtaphotos/12780228293/in/set-72157641529209245##MTA/Flickr##

Governor Cuomo’s MTA Reinvention Commission will have to address the high cost of construction for mega-projects like the Second Avenue Subway. Photo: MTA/Flickr

How effective the commission will be is unclear. Governor Cuomo has stymied other high profile commissions when they’ve gone against his inclinations, like when the McCall/Solomon tax commission suggested that the state scale back its film and TV tax credit, or when he disbanded the Moreland Commission.

Still, the commission provides a good opportunity to address some of the key challenges and questions facing the MTA.

The issue of resilience immediately comes to mind. Hurricane Sandy made it clear that future storms and rising seas are an immediate threat to the system. This is an issue that is well understood and is likely to enjoy strong political support. Government tends to act effectively in the aftermath of disasters because the effects are immediate and observable. They rise above politics.

However, there are other, more difficult problems that will require taking political risk to solve.

The authority has racked up $32 billion in debt, up from $16.6 billion in 2003. It shelled out $2.3 billion for debt service payments last year — nearly a fifth of the operating budget — and debt service is projected to rise to $2.8 billion by 2017. The growing share of the budget that goes toward debt payments creates pressure for fare hikes and eats into what the agency can spend on delivering service.

A more stable and reliable source of revenue must be established. The best plan out there right now is the Gridlock Sam/Move NY “Fair Plan” — raising tolls to enter the Manhattan CBD while lowering them on MTA crossings in the outer boroughs. This would have the added benefit of relieving congestion where it is most intense, speeding up surface transit for hundreds of thousands of riders. A key indicator of the commission’s independence will be whether it takes on an issue as vital and contentious as toll reform.

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Every Bus Should Get Priority at NYC Traffic Signals

Some inexpensive technology could bring some substantial time savings to NYC bus riders. Image: DOT

Some inexpensive technology could bring substantial time savings to NYC bus riders. Image: DOT

New York City buses serve more than two million trips on an average weekday — more than twice the ridership as Los Angeles, which has the nation’s second-largest bus system.

And yet the city’s buses are also notoriously slow and unreliable. Gridlocked traffic, long boarding queues, and the succession of traffic lights bog down surface transit in NYC and keep many New Yorkers from riding the bus. This may be part of the reason why bus ridership has dipped seven percent since 2007, even as subway ridership is up 9 percent.

NYC DOT and the MTA have rolled out seven Select Bus Service lines that bypass congestion with dedicated lanes and tame boarding delays with pre-paid fare collection. The de Blasio administration plans to build out at least 13 more SBS lines — an important effort — but some of these gains in bus speeds can be realized without being tied to an SBS project.

Specifically, DOT could quickly improve bus speeds across the city by making a relatively small investment in traffic signal priority.

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Will Cuomo Help the MTA Make “Every Dollar Count”?

cuomo_prendergast

Governor Andrew Cuomo and MTA Chair Tom Prendergast. Photo: Marc A. Hermann/MTA New York City Transit via Flickr CC license 2.0

The MTA has made big strides in recent years to streamline its operations, but without political leadership from Governor Cuomo, the agency won’t be able to tackle the high costs and inefficiencies that continue to hamper the city’s transit system.

In 2010, after an acute budget crisis, the MTA began a program to cut costs called Making Every Dollar Count [PDF]. Four years later, the MTA is on target to save $3.8 billion since the effort began. By 2017, the agency predicts that annual recurring savings will top $1.5 billion.

MTA leadership felt the cost-cutting program was necessary not only to balance the agency’s budget, but also to counter the authority’s reputation for being wasteful and inefficient. Jay Walder, MTA chair at that time, said the program was “the only way we can restore the MTA’s credibility and continue improving service in difficult times.”

As the full effects of the Great Recession took hold, the bottom fell out of transit authority’s budget in 2008 and 2009. It was the drop in real estate tax revenue that stung the most, with the MTA’s share of these taxes falling from $1.6 billion in 2007 to $389 million in 2009 [PDF]. By April 2009, the transit authority was facing a two-year budget deficit of $5 billion.

The fix that the state legislature enacted — a new tax on payrolls — lacked the bridge tolls recommended by a gubernatorial commission headed by former MTA chair Richard Ravitch. Albany lawmakers repeatedly cited the MTA’s reputation for bloat and waste to justify their refusal to enact tolls, much as they had during the congestion pricing debate the previous year.

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