New York group calls for Washington to tweak transit formula
Congress should modify the funding formula in any further COVID-19 rescue package to direct more dollars to higher mass transit ridership systems, New York-based Regional Plan Association said.
"It is crucial that funding goes directly to the agencies instead of being combined with state funding," think tank RPA said in a commentary. "The needs, funding and operations of these agencies are distinct from state budgets, and must be treated that way by Congress."
Under the proposed $3 trillion Heroes Act, which U.S. House of Representatives Democrats released Tuesday, a new round of emergency transit relief would include nearly $16 billion for operating assistance grants to support the transit agencies that require significant additional assistance to maintain basic transit services.
Of these amounts, $11.75 billion would be distributed by formula and $4 billion would be available to any grantee or subrecipient by application to the transportation secretary.
Also on Tuesday, a coalition of mass transit agencies and labor leaders called for $33 billion worth of transit aid and termed existing federal formulas ineffective.
“The traditional formulas don’t work in general but they particularly don’t work during the pandemic. This is a shared view," said Patrick Foye, chairman of New York's Metropolitan Transportation Authority.
Transit agencies have struggled with a double whammy. Plummeting ridership amid stay-at-home and social-distancing mandates, and revenue losses from sharp drops in tax receipts.
"The industry is having a big discussion about making sure that any sort of future funding is really trying to deal with revenue loss, whether it’s sales tax, farebox or any sort of revenue source," said Jeffrey Parker, general manager of the Metropolitan Atlanta Regional Transportation Association.
Also, said RPA, the U.S. Department of Transportation and Congress should pass congestion pricing for Manhattan's central business district, which New York State lawmakers approved as part of the fiscal 2020 budget. It has stalled, however, over environmental assessment procedures. MTA officials had expected the measure to provide $15 billion for its five-year capital program.
RPA, whose focus is on New York, New Jersey and Connecticut, ·said Congress should expand the Federal Reserve’s Municipal Liquidity Facility to cover large public authorities such as the MTA to increase their access to operating funds and help stabilize their bond ratings.
In the Northeast, multiple rating agencies have downgraded the MTA while the Port Authority of New York and New Jersey has received a negative outlook.
The MTA is carrying $45 billion of debt, including special credits. Debt service alone accounts for roughly 16% of the MTA’s annual operating budget over the past decade. It could rise to 20% by 2023.
Port Authority debt outstanding in 2018 amounted to $25.1 billion in bond and other asset financing obligations on which $859 million in net annual interest expense is due, according to RPA.
"Congress should work with New York and New Jersey to protect the agencies’ capital programs as a necessary tool for economic recovery, and encourage accelerated construction schedules to take advantage of decreased ridership, where appropriate," RPA said.
Rather than face the threat of reduction or cancellation, the capital plans for the MTA and the Port Authority, the Gateway tunnel project between Manhattan and New Jersey, and the yet-to-be-released capital plan for NJ Transit could all be major pieces of a national infrastructure stimulus package, RPA added.