Election aftermath: Will N.Y. MTA get a permanent, reliable funding source?

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Joseph Lhota's departure as chair of the New York Metropolitan Transportation Authority after last week's election may herald a shift in the government's strategy for funding the nation's largest transit system.

Lhota left the MTA on Friday after serving two terms as the head of the authority, three days after New York voters handed control of the State Senate to Democrats, who retained control of the assembly.

Lhota, a Republican, had run against Bill DeBlasio for mayor of New York City in 2013. In 2017, he was appointed to the transit authority by Gov. Andrew Cuomo, a Democrat who has feuded with the mayor over how to finance rehabilitation of the MTA's bus and subway system.

Previously, Lhota had served as MTA chair in 2011 and 2012. Fernando Ferrer, MTA’s vice chair, will serve as acting chair until Cuomo names a permanent replacement, who must be approved when the new State Senate convenes in January.

“The change in leadership in the State Senate and the resignation of Joe Lhota presents an opportunity to hit restart in the conversation about how to address the problems faced by the MTA,” said the New York City Independent Budget Office’s Chief of Staff Doug Turetsky. “The answers can’t simply be about extracting as much money from the city as possible — especially as the city also contends with difficult and costly troubles at the housing authority and public hospitals — nor continuing to bury the subways under a mountain of debt.”
The MTA is one of the largest municipal bond issuers in the country, with over $37 billion in debt.

Howard Cure, director of municipal bond management for Evercore Wealth Management, while lauding Lhota for his tenure, said there were undercurrents that may have led to his departure.

“Lhota helped slow the tide of the system’s decline and was a signal from the governor that he was serious about addressing the issue,” said Howard Cure, “But ultimately I think Lhota’s potential conflicts of interest, such as in Madison Square Garden, hurt the MTA’s credibility and played a part in his leaving.”

Lhota only took $1 a year as head of the MTA. While he is a director on the board of the Madison Square Garden Co. as Politico reported in January, the MTA said at the time the chair was careful to avoid any conflicts of interest and would recuse himself from any decisions regarding MSG or Penn Station. Lhota is also a vice president at NYU Langone Health.

Looking ahead to next year, Cure said the recent elections portend some changes for MTA funding at the state level while some things will remain the same.

And congestion pricing, in which bridge and road tolls would raise money for transit will be a hot topic in 2019, many observers said.

“Congestion pricing will still face the same issues as before the Senate flipped,” Cure said, pointing out that people in some under-served areas, such in Whitestone in Queens, have few transit options available, so there may have to be some sort of flexibility, such as lower fares or tolls, for certain areas.

“But the MTA needs to have a steady and reliable flow of revenue,” he said. “It’s now up to the governor and the issue needs his leadership on this.”

The Citizens Budget Commission agreed a congestion pricing plan was much needed.

“Funding streams to accelerate the turnaround at the MTA remain a critical issue, and passing a congestion pricing plan should be a top priority for the new Legislature,” said Maria Doulis, a vice president at the budget watchdog. “In addition to funding challenges, the new chairman will have to focus on continued management and construction efficiency and increased productivity among the unionized workforce.”

John Raskin, executive director of the Riders Alliance, said "Gov. Cuomo needs to appoint a capable chair, but most importantly he has to pass a funding package that will make the MTA’s Fast Forward modernization plan a reality."

Mayor Bill de Blasio stressed that a permanent funding plan needed to go hand in hand with financial accountability.
“No one is going to be able to get the work done of fixing our subways and buses if we don’t have a permanent funding source,” de Blasio said last week on the Brian Lehrer show on WNYC. “…they need a plan from Albany and the other thing is they need accountability. I mean one of the things that did not happen in the last few years sufficiently was clear accountability about how money was spent including the money the city has contributed to the MTA. We still would like to see a lot more detail to confirm that that money was used to address the problems in the subway.

"There’s obviously bigger issues like East Side Access that you’ve seen a huge amount of money, cost over runs, and delays that need to be addressed," said the mayor. "So something more fundamental needs to change in the MTA going forward, but most especially we need a permanent funding source.”

Cure said that the millionaire’s tax has been the mayor’s go-to position.

“But in 2019, the state’s version of the millionaire’s tax is set to sunset – so if the state extends or renews it, the city’s is less likely to get its own version.”

And Cure said that talk about a city takeover of the MTA looked very premature – and very unlikely.

“The state likes to have control over the MTA,” he said. “The city is a ward of the state.”

Cure did say, however, that under a new State Senate dominated by Democrats the funding dynamic was changing and that upstate would lose influence and leverage as the city and suburbs gain, helping not only the subway and bus system but also the Long Island Rail Road and Metro-North as well.

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Budgets State budgets Infrastructure Metropolitan Transportation Authority New York