While the funding details for the Metropolitan Transportation Authority’s capital program from 2015 to 2019 are new, the backdrop is awfully familiar.
The dance, after all, takes place every five years.
New York State, New York City and the MTA on Oct. 10 announced a $26.1 billion agreement on who ponies up what to fund the maintenance, upgrades and expansion of metropolitan New York’s 100-year-old mass transit system.
“The MTA’s challenges have never been greater,” said authority Chairman Thomas Prendergast.
Gov. Andrew Cuomo, a Democrat, has committed $8.3 billion from the fiscal 2017 state budget while New York Mayor Bill de Blasio and city officials have agreed to kick in $2.5 billion – close to quadrupling the current $657 million -- to the $26.1 billion program.
Continued funding will enable the MTA to proceed with its long-delayed East Side Access and Second Avenue Subway megaprojects, and to continue to harden the system in the aftermath of Hurricane Sandy.
Moody's Investors Service on Friday called the deal a credit positive for the MTA, one of the largest municipal issuers with about $36 billion in debt. Moody's assigns an A1 rating and stable outlook to the authority's primary credit, transportation revenue bonds.
The program size shrinks from the $32 billion the authority sought last October, when a state review panel rejected it. The MTA over the summer whittled about $3 billion, projecting savings from procurement efficiencies such as design-build and public-private partnerships, although exactly how is unclear.
After a year of acrimony, political leaders face a “now-what?” moment.
Expect a battle in Albany – 80 miles beyond the MTA’s northernmost reach – where upstate and Long Island lawmakers, Republican and otherwise, could push for a funding bill to include statewide bridge and road repairs.
Republicans have a 32-25 edge in the Senate, not counting independent and caucusing Democrats. The Democrats control the House 103-44.
During the last capital funding crisis in 2009, state lawmakers approved a controversial payroll mobility tax that has survived several court challenges and pumps $1.5 billion into the authority annually.
“Given the state’s political complexities surrounding MTA funding, the timing of legislative approval and subsequent cash distributions to the MTA is uncertain," said Moody's. "Depending on the ultimate funding sources for the city and state, these commitments could be marginally credit negative for both."
Corporate leadership has been largely silent amid some calls for help from the private sector.
Richard Ravitch, who as MTA chairman in 1981 crafted the authority’s initial capital plan, recalls generating business support for the plan by giving the likes of Chase president David Rockefeller a predawn tour of decrepit transit facilities.
After that, executives lobbied Republicans in Albany to pass the necessary taxes.
“I asked Mr. Rockefeller and then he brought Mr. [Richard] Shinn, who was the chairman of MetLife, and Bill Ellinghaus, who was the chairman of AT&T,” Ravitch said in a recent Bond Buyer
New York City must earmark the additional money at a time when officials and budget watchdogs have admonished it to build reserves to buffer against the next financial downturn.
City sources include a guarantee of $1.9 billion from direct city sources and a guarantee of $600 million through alternative non-tax-levy revenue sources.
"Depending on the ultimate funding sources for the city and state, these commitments could be marginally credit negative for both," said Moody's, which rates the city's and state's general obligation bonds Aa2 and Aa1, respectively, both stable.
Also, MTA board members are to have significant input on projects related to their region. The board is a mix of city, suburban and rural people appointed by the governor, mayor, county executives and organized labor. Its 21 members include four from upstate counties Dutchess, Putnam, Rockland and Orange who each have one-quarter vote and chafe at the nickname “quarter pounders.”
De Blasio’s most visible ally on the board is his own transportation commissioner, Polly Trottenberg. She is one of three mayoral appointees; one such position is vacant.
Trottenberg, a former undersecretary for policy at the U.S. Department of Transportation, confronted Prendergast at last month’s board meeting when the chairman suggested New York City Transit projects could bear the brunt of any truncated capital plan, because the city at the time hadn’t contributed enough.
“I think it is punitive and pretty divisive,” she said.
The agreement also prohibits raids on “lockbox” transit accounts. New York State the past few years has dipped into the transit cookie jar for roughly $270 million to help replenish its general fund.
Speaking at a Citizens Budget Commission breakfast on Wednesday, City Council finance committee chairwoman Julissa Ferreras-Copeland said council members are still examining details.
“The commitment that the mayor has identified is something that we are trying to figure out,” she said. “Obviously we don’t expect it in the November plan; it will probably be more so reflected in [the next fiscal] year where we see some of the capital adjustments.”
CBC president Carol Kellermann called the MTA a circulatory system of the region.
“It is a state entity, it is a regional entity. If I could rewrite, I would have New Jersey chip in, since I work at Penn Station and I see the people coming off New Jersey Transit and going right into the subway,” she said at a recent infrastructure conference sponsored by Politico magazine.
Tom Wright, president of the independent urban think tank Regional Plan Association, suggested separating “state of good repair,” or basic maintenance, from expansion costs in capital plans.
“We’ve got to move ahead on both maintaining the system and expanding it,” he said at the conference. “We’ve got to find a way to manage state of good repair and keep that going, and new projects probably ought to find dedicated revenue sources the way [the No. 7 subway] extension was done to pay for them.”
“Dick Ravitch once told me depreciation is not some accounting concept. It’s actually train wheels that wear down and wiring that needs to be replaced. It’s hardware; it’s physical infrastructure that kind of needs to be replaced on a 30-to-40 year basis,” Wright said.
“If the MTA is what Tom Prendergast calls a $1 trillion asset, we should be spending on the order of $25 billion a year just to make sure that we can turn things over on a timely basis.”
