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Posts from the "Transit Funding" Category

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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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Why the Senate Transportation Bill Will Devastate Transit

Transit officials lined up today to make clear that holding transit spending at current levels — as the Senate’s transportation authorization bill does — will put transit systems at risk of falling further into dangerous disrepair.

Beverly Scott of the MBTA warned that current funding levels, as continued by the proposed Senate transportation bill, are "woefully insufficient."

Beverly Scott of the MBTA warned that current funding levels, as continued by the proposed Senate transportation bill, are “woefully insufficient.”

The backlog for transit maintenance and replacement stands “conservatively” at $86 billion, according to the Federal Transit Administration. That backlog is expected to keep growing at a rate of $2.5 billion each year without a significant infusion of funds.

To put it another way, the country needs to spend $2.5 billion more per year – from federal, state and local sources – just to keep the state of the nation’s transit systems from getting even worse.

Sen. Bob Menendez (D-NJ) was determined to expose the shortcomings of the bill Sen. Barbara Boxer (D-CA) recently shepherded through the Environment and Public Works Committee. While the bill’s transit title hasn’t been written yet, EPW has been clear about its intentions to keep spending at current levels plus inflation. That means no help toward the $2.5 billion boost needed to keep things from getting worse.

Menendez chaired a hearing today of the Banking Committee — the very committee tasked with writing the transit title within the framework established by EPW — to demonstrate the problem with the bill’s funding levels.

“By a simple yes or no,” Menendez asked the transit officials before him, “does anyone on the panel believe that current funding levels are enough to help you achieve a state of good repair?”

“They are insufficient,” answered Joseph Casey, general manager of Philadelphia’s SEPTA.

“Woefully insufficient,” added Beverly Scott, head of Boston’s MBTA and a nationally respected transportation visionary.

“No sir,” said Gary Thomas of Dallas Area Rapid Transit.

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Questions Linger Over Cuomo’s Tappan Zee Transit Plans

On Monday, Governor Cuomo announced that the state would provide $20 million for transit service across the new Tappan Zee Bridge, and is applying for a federal grant as well. While this first step is welcome news, there are still more questions than answers about what this money will pay for and how the rest of the project’s bus system will be funded and operated.

That bus now has $20 million behind it, but more work remains before service can begin. Image: Tappan Zee Constructors/HDR Engineering

That bus now has $20 million behind it, but more work remains before service can begin. Image: Tappan Zee Constructors/HDR Engineering

Two months ago, the Tappan Zee transit task force issued its recommendations, proposing a series of bus improvements that should be operational when the bridge opens in 2018, plus further investments to follow. The report did not include cost estimates and was short on details about funding and implementation.

While the governor’s announcement appears to follow through on the task force’s work, it’s not clear exactly what the governor’s commitment of $20 million will pay for. The Journal News reports that “a state official said the $20 million has been earmarked in the state transportation budget,” but there are no other details, including which of the task force’s recommendations will be funded by the state money.

Cuomo also announced that the state DOT is applying for a $26.7 million federal TIGER grant to fund additional improvements. These include a mix of upgrades that have direct and indirect benefits to bus riders, including new bus stations, improved pedestrian connections to transit, “smart” traffic signals on Route 59 in Rockland County that include queue-jumps for buses, a “transit boulevard” on Route 119 in White Plains, and metering on ramps to I-287.

Streetsblog has asked the governor’s office and state DOT for more information about the $20 million announcement and its TIGER grant application. (Applications for the latest round of TIGER funds were due on Monday, but U.S. DOT refused to provide information on pending applications.)

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Panel: NYC Electeds Need to Get Serious About Funding Infrastructure

From right, Jonathan Bowles of Center for an Urban Future, Chris Hamel of RBC Capital Markets, Transportation Commissioner Polly Trottenberg, Chris Ward of Dragados, Denise Richardson of the General Contractors Association of New York and "Gridlock" Sam Schwartz at this morning's panel. Photo: Stephen Miller

From left, Jonathan Bowles of Center for an Urban Future, Chris Hamel of RBC Capital Markets, Transportation Commissioner Polly Trottenberg, Chris Ward of Dragados, Denise Richardson of the General Contractors Association of New York, and “Gridlock” Sam Schwartz at this morning’s panel. Photo: Stephen Miller

This morning, the Association for a Better New York, a business group, hosted a discussion on the city’s infrastructure. The focus was squarely on transportation, and the message wasn’t pretty. Panelists warned of dire consequences if elected officials don’t act on the precarious state of transportation funding.

Calling himself “the ghost of infrastructure past,” former traffic commissioner “Gridlock” Sam Schwartz reminded the audience of the sorry state of New York’s infrastructure in the 1980s, when major bridges had to be closed because they were in such poor condition. While things are in better shape today, without attention to maintenance, history could repeat itself. ”We can very well have those problems again tomorrow,” said Schwartz.

“Back when we rebuilt all those bridges, there was an enormous federal contribution,” said DOT Commissioner Polly Trottenberg. Since the 1980s, federal transportation funds have flatlined as the gas tax has stagnated, she said, and “city and state coffers aren’t flowing either.”

“Forget about the federal government. Local areas have to fix their problems,” Schwartz said, citing Los Angeles as a region where voters have backed major transportation funding measures. “The biggest amount of transit spending in the country is happening in Los Angeles, not in New York.”

But Trottenberg cautioned against using Los Angeles as a model. “[Voters] usually tax themselves to build new things. They rarely tax themselves to keep up the old stuff,” she said. “At New York City DOT, almost our entire budget is keeping up the old.”

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No, the MTA Can’t Afford Cuomo’s Transit Raids

I think most transit riders would laugh — cynically — at the idea that the MTA has more than enough funds to meet its needs. But this is exactly what the MTA’s chairman Tom Prendergast said when he learned that the state would be diverting $30 million from the MTA’s funding stream to balance the state budget.

Crowding on the 7 train platform. Photo: @lreynolds21363 via Gothamist

“Our needs are being met,” Prendergast said, apparently unwilling to speak out against his boss, Governor Cuomo.

Mayor de Blasio was equally sanguine about this raid on MTA funds. “We have to make sure the MTA has the resources they need. But from what I’m hearing at this point, they’re doing well,” de Blasio said.

Is this the same MTA that is regularly described in the press as “cash-strapped,” that made deep service cuts in 2009, leaving hundreds of thousands of New Yorkers with longer waits, more crowded platforms, or no local bus route at all?

When asked about the $30 million diversion, an MTA spokesperson noted that the MTA was actually receiving more state funds this year.

Technically he is correct. The state collects a number of taxes and fees that are then sent into a fund that is “dedicated” for transit. The economy is recovering, more tax revenue is coming in, and as a result the pot of transit-dedicated funds is larger than it has been in recent years.

And it’s true that the $30 million diversion represents a small percentage of the MTA’s $13 billion annual budget. One has to appreciate the amount of public funds that do support transit, either from special taxes or state and local general funds. Last year, $5.1 billion in subsidies helped the MTA run the largest transit system in the nation, which is slightly more than it took in at the farebox.

But there are several reasons why the state’s raid on transit funds is bad policy and is fiscally irresponsible.

First, this year’s raid is not an isolated incident but rather comes on top of $280 million in diversions since 2009. Worse, Cuomo intends to take at least $20 million from the state’s transit fund every year until 2031, adding up to another $350 million.

Second, the tax revenue that the MTA relies on is volatile and subject to the ups and downs of the economy. Tax revenue is up this year, but could just as easily drop in the event of the next recession. The MTA should be able to take advantage of the “good times” to prepare for the next recession.

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