New York’s Metropolitan Transportation Authority board should reject the agency’s proposed $16.4 billion operating budget for 2018 unless new funding sources are in place, according to the watchdog Citizens Budget Commission,
Implementing the first phase of Chairman Joseph Lhota's proposed $1.5 billion subway improvement plan without additional revenues would turn the expected 2018 end-of-year cash surplus of $30 million into an end-of-year deficit of $498 million, said Jamison Dague, the CBC's director of infrastructure studies.
The state-run MTA, which budgets by calendar year, operates New York City’s subways and buses, two commuter rail lines and several bridges. It is one of the largest municipal issuers with roughly $39 billion in debt.
Its board next month is scheduled to act on the proposed budget and rolling four-year financial plan that Lhota presented to the board last month. It contains the first phase of Lhota’s five-year action plan to grapple with the subway system’s mounting equipment and infrastructure failures and late performance.
Gov. Andrew Cuomo declared a state of emergency for the MTA in late June. Lhota has called for the MTA and the city to split the costs of the subway plan, while Mayor Bill de Blasio has balked. De Blasio proposes a millionaire’s tax, which Albany must approve, to help fund transit.
“It’s surprising that the Citizens Budget Commission can’t read a budget,” said MTA spokesman Jon Weinstein. “The 2018 MTA budget is balanced – and will be balanced whether the city steps up and funds their share of the subway action plan or not. We agree, though – we need City Hall as a partner, not an obstacle to fixing the subway system.”
Finding a consistent revenue stream has long been a struggle for the MTA.
The authority has called projected out-year deficits manageable.
“The MTA board is being asked to approve a budget despite unanswered questions about sources of funding, possible reductions should a funding agreement among transit agency stakeholders not emerge, or both,” said Dague.
“Without any new funding, the board should reject the 2018 budget as proposed.”
According to Dague, even if city and state leaders agree on a new funding source, the board must tread carefully when considering this and future financial plans. He said despite actions to mitigate out-year deficits, such as suspending payments to capital reserves in its Bridges and Tunnels unit and retiree health care reserves, the MTA's budget gaps are larger than at any point since 2010.
Several downward revisions since November 2016 have reduced forecasted revenues by nearly $1.3 billion for the 2017 to 2020 period despite continued economic growth, he added.
“Even if city and state leaders agree on a new funding source, the board must tread carefully when considering this and future financial plans,” said Dague. “A downturn in the coming years would exacerbate the situation and leave the MTA with fewer options.”