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Posts from the "Transit Funding" Category

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DiNapoli: If Cuomo Borrows More for the MTA, Get Ready for Fat Fare Hikes

Without a commitment from the state to close the $15.2 billion gap in the MTA’s capital program, the cost of a MetroCard is likely to spike as the MTA adds to its cumbersome debt load, according to a new report from Comptroller Tom DiNapoli [PDF]. The warning comes as Governor Andrew Cuomo and the legislature begin the very early stages of negotiations over funding the capital plan, which maintains, upgrades, and expands the transit system.

Is he listening? Debt is at record levels. Without new revenue, it will go up even more. Photo: MTA/Flickr

MTA debt has skyrocketed and without new revenue, it will consume even more of the agency’s budget. Does Cuomo care? Photo: MTA/Flickr

By some measures, the MTA is doing well: Ridership is reaching new highs, the authority is making progress on cost savings, and an improving economy has buoyed its finances. But there’s trouble around the corner: Labor and health care expenses are already rising faster than the MTA can pay for them even as new labor deals pile on more costs, federal funding is questionable, debt is at record levels, and the next capital plan is only halfway funded. Without new sources of revenue, issuing more debt to pay for system upkeep and expansion will translate into more fare hikes.

The authority is already planning on issuing $6.2 billion in debt for the next capital plan. Even with that borrowing, there’s still a $15.2 billion gap. Without action in Albany to bring in new revenue, the MTA will likely do what it did last time: Cut the capital program while issuing even more debt. That means fare hikes.

Fares are already scheduled to increase faster than inflation, with back-to-back four percent hikes scheduled for 2015 and 2017. If the MTA has to issue more debt to pay for the capital program, DiNapoli calculates that riders should expect an additional 1 percent hike for every $1 billion borrowed.

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Trottenberg: Federal Cuts Could Make MTA Funding Gap Even Bigger

Transportation Commissioner Polly Trottenberg said today that the MTA is making “optimistic assumptions” about federal funding as it plans its next five-year capital program. The agency has identified only half the funds to cover the projected costs of the plan, which maintains, upgrades, and expands the transit system. At a panel with top-level city agency heads this morning, Trottenberg, who sits on the MTA board, warned about a possible cut in federal support, which would further widen the funding gap.

Are the doors closing on federal transit funding? Polly Trottenberg says Andrew Cuomo's MTA is too "optimistic" about the feds paying for the capital plan. Photo: MTA/Flickr

Polly Trottenberg said Andrew Cuomo’s MTA is too “optimistic” about the feds paying for the capital plan. Photo: MTA/Flickr

A drop in federal funds would supposedly increase pressure on Governor Andrew Cuomo, who controls the transit authority, to support new sources of revenue. So far, the governor has opposed any new revenue for the MTA.

This morning’s panel, which kicked off the annual meeting of the American Planning Association’s New York Metro chapter, featured Trottenberg, City Planning Commission Chair Carl Weisbrod, HPD Commissioner Vicki Been, and EDC President Kyle Kimball. It was moderated by Regional Plan Association Executive Director Tom Wright.

Trottenberg, who was a top U.S. DOT official before moving to NYC government, questioned the assumptions the MTA is making about the federal contribution to its capital program. “At the moment, they have half the funds in hand,” she said. “I’m not even quite sure that they have that money in hand, because it does make some optimistic assumptions perhaps about what’s happening at the federal level.”

After the event, I asked Trottenberg why she thought the MTA’s assumptions are optimistic. She took a long pause before answering. “There is a big question mark about what the federal funding picture is going to look like in the next few years, and understandably when you’re doing a capital budget you have to take a guess at a number,” she said. “But I think there’s a chance that the feds are going to be even less supportive on the transit front than they have been in the past.”

Many political analysts expect Republicans to gain control of the Senate in November, which could disrupt the current stasis in federal transportation policy.

While Trottenberg raised the possibility of a decrease in federal support for transit, the MTA expects those funds to remain steady [PDF].

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It’s Cuomo vs. Transit Experts on MTA Funding

Yesterday, Governor Andrew Cuomo called the region’s transit investment plan “bloated” and rejected calls for new revenue. Today, MTA Chairman and CEO Tom Prendergast, speaking at a forum on best practices in regional transit governance, hammered home the need for elected officials to find new money to fill the half-funded capital plan’s $15 billion gap.

The MTA's boss isn't terribly interested in funding transit. Actually, he called the capital plan "bloated." Photo: MTA/Flickr

The MTA’s boss isn’t terribly interested in transit investments. Actually, he called the capital plan “bloated.” Photo: MTA/Flickr

“This is the start of a process. This is the start of a dialogue,” Prendergast told reporters when asked about the governor’s comments. He refused to agree with the governor’s assertion that the capital plan should be trimmed, and indicated that without new funding, the MTA would resort to increasing its debt load above already record levels. “I don’t like greater debt finance, but I’ll tell you what,” he said during the panel, “I’ll treat that finance as a bridge to another day.”

Today, debt service eats up an ever-greater share of the authority’s budget, with the MTA spending almost as much in debt service as it does to operate Metro-North and Long Island Rail Road service combined. During his comments yesterday, Cuomo also repeated his rejection of toll reform or other new sources of revenue to help fill the capital program’s gap and reduce the MTA’s reliance on debt.

“At some point the interest payments on MTA debt are going to completely implode any capacity to do anything for the MTA going forward,” said Chris Ward, Dragados USA executive vice president and former Port Authority executive director. “The toll structure has reached [the end of] its useful life,” he said. “Public transit is going to have to face, fundamentally, a question of funding, and what the mechanisms are going to be.”

The panel this morning, hosted by the Eno Center for Transportation, TransitCenter, and the Regional Plan Association, marked the release of a new report examining the governance of regional transit systems in New York, Boston, Chicago, San Francisco, Dallas, and the Minneapolis-St. Paul area [PDF].

While panelists noted that New York often serves as a model for other systems, the MTA came in for serious criticism on the way it is governed by its board members and the governor who appoints them.

New York’s governor calls the shots with state authorities, noted Robert “Buzz” Paaswell, director of the University Transportation Research Center at City College. During a training for board members of state authorities, Paaswell asked them if they would disagree with the governor if his wishes contradicted the best interests of the authority. ”Ninety percent of the board members would say, ‘I would do what the governor says; he appointed me,’” he said. “Even if that goes against the interest of the authority.’”

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Fair Tolls: Fixing NYC’s Gridlock and Transit Shortfall in One Fell Swoop

moveny_graphic

The Move NY Fair Plan sets tolls at all East River crossings and 60th Street at the same amount, while lowering tolls on four outlying MTA bridges. Graphic: Christina Roman, Sam Schwartz Engineering

When Governor Nelson Rockefeller merged New York’s commuter rail lines, the NYC Transit Authority, and Robert Moses’s Triborough Bridge and Tunnel Authority to form the Metropolitan Transportation Authority in 1968, he had several motives. The new agency consolidated political power, made more efficient use of regional infrastructure, and devoted surplus bridge and tunnel toll revenues to rescue a faltering transit system.

That last idea, making drivers pay for transit, had a powerful logic, since drivers themselves benefit from viable transit that prevents stifling traffic jams. But the original set-up had a built-in flaw: New York’s tolled crossings compete with free bridges.

Today, almost half a century later, this formula is broken. “Toll shopping” is exacerbating gridlock in communities on both sides of the free East River bridges and throughout the Manhattan central business district while eroding MTA revenues. Meanwhile, the MTA needs a new revenue stream to fund its next capital plan, but current users of its crossings are balking at soaring tolls while adjacent bridges remain free.

Excluding the Port Authority-controlled Lincoln and Holland Tunnels, an estimated 1,733,000 car and truck trips are made into or out of the CBD or on a major MTA bridge each weekday. Each trip that crosses the CBD boundary imposes, on average, two hours of aggregate delay on all other drivers (more during rush hours, less during off-peak hours). Yet only 604,000 — 35 percent — of those 1.7 million-plus trips are tolled: 458,000 on the MTA bridges plus 146,000 through the MTA’s Queens Midtown Tunnel and Brooklyn Battery Tunnel (see graphic).

The remaining 1,129,000 trips — of which 445,000 enter or exit the CBD via an East River bridge while 684,000 cross 60th Street — pay nothing. (These and other figures in this post are derived in my Balanced Transportation Analyzer Spreadsheet [PDF].)

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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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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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City Council: Drivers With Free On-Street Parking Have Suffered Enough

It may be the Vision Zero era, but some things never change. If you’re looking for cost-free, consequence-free storage of your private automobile in public space, the City Council still has your back.

The bill under consideration today by the City Council’s transportation committee, to nibble away at alternate side parking restrictions, may not be as egregious as previous council ideas like free time at unpaid meters or changing city law to mandate parking permits for teachers. But it did offer an opportunity for council members to inveigh on behalf of put-upon “real New Yorkers” who store their cars on the street for free.

Although the average car owner in New York City has a much higher income than a car-free counterpart, that didn’t stop council members from constantly referring to parking tickets as a tax on the middle and working class.

“It’s the anger of real New Yorkers who feel that the city is using them as a piggy bank and that the middle class is being squeezed by unnecessary tickets,” said Council Member Costa Constantinides of Astoria, who signed on to the legislation after seeing illegally-parked drivers on a swept street get tickets before the parking restriction ended. ”It felt as if it was just for revenue,” he said.

The bill would allow drivers to park during prohibited hours so long as they are “in the vehicle and ready to move” when the street sweeper comes through. ”We should not be going after the working class or middle class,” said Transportation Committee Chair Ydanis Rodriguez, who has pushed the legislation for years. ”[It's] a struggle New Yorkers are all too familiar with.”

The city’s sanitation and police departments testified today in opposition to the bill. ”The signs are put up there for a reason,” said NYPD Inspector Dennis Fulton. “The streets need to be cleaned.”

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