New revenue sources for its operating and capital budgets are necessary for the New York Metropolitan Transportation Authority to cover a widening outyear gap, chief financial officer Robert Foran said.

“We’re going to tell it to you and tell you again, we need to secure sustainable, recurring revenues,” Foran told board members Wednesday as the authority released its $17 billion operating budget for 2019.

The July plan projects the MTA’s deficit to spike to $634 million by 2022, even with expected 2% biennial toll and fare increases in 2019 and 2021; increased savings targets; and favorable re-estimates. Unachieved savings targets and no fare and toil hikes could push the gap to $1.6 billion over four years, Foran added.

Foran said the MTA expects to break even this year and next.

According to Foran, the combined 4% in fare and toll hikes, while consistent with previous plans over the last decade, falls short of projected Consumer Price Index inflators of 5.3% and 4.7% for 2019 and 2021, respectively.

“We’ve always had gaps,” said Chairman Joe Lhota. “But I think it’s really important that when we look at this, it shows a clear and urgent need for new and consistent revenues.”

The board must vote on the plan by the end of the year. The MTA’s operating budget is separate from its five-year capital plan. The MTA is one of the largest municipal bond issuers with nearly $39 billion in debt.

Funding uncertainty has long surrounded the state-run MTA, which operates mass transit in New York City. Constants include long-running problems such as high capital costs and city-state political feud over who should pay for the system.

Andy Byford, president of the MTA’s New York City Transit subdivision, has promised a full-fledged lobbying effort, including “a one-year long roadshow,” to obtain funding for his “Fast Forward” plan to modernize the subways.

“We still have – it’s still out there – Cold War signaling and 1960s subway cars. They’re still here and they have to go,” Byford said. “We have to make a compelling case and we have to prove ourselves as worthy custodians of the massive investments that will be required.”

The Fast Forward price tag could total nearly $40 billion over the 10 years. Gov. Andrew Cuomo and Mayor Bill de Blasio, longtime adversaries, bickered again recently when Cuomo said the city should contribute half the cost of Fast Forward.

Cuomo has favored, though tepidly, a congestion pricing plan that advocates say could generate $1.5 billion annually – and up to $15 billion through bonding – for mass transit, while de Blasio supports a millionaire’s tax. Either would need approval from state lawmakers.

Fast Forward funding needs involve the capital rather than operating budget, according to Foran, although a small component of the 2019 budget reflects some Fast Forward initiatives. Byford, meanwhile, has asked board members to act quickly on the next capital plan, for 202 to 2024. A state review panel must approve that request.

Highlights of the July financial plan, said Foran, include additional expenses of $1.5 billion to improve agency operations, including targeted programs to improve subways, buses and Long Island and Metro-North railroads.

The authority he said, has identified $1 billion in savings through 2022, including $706 million in unidentified savings from previous financial plans, and an $80 million, or 50% general reserve drawdown in 2018.

Ridership, meanwhile, continues to decline amid transit delays and the emergence of alternatives including for-hire vehicles such as Uber and Lyft. Subway ridership fell by 30 million passengers in 2018 to 1.72 billion.

The declines in subway and bus ridership were for the third and fourth straight years, respectively, said NYC Transit executive vice president Tim Mulligan. The respective drops were 1.7% and 5.1% for 2017, with year-to-date totals for this year down 2.1% and 4.4%, respectively.

Board member Peter Ward said Uber and Lyft usage extends to low-income passengers in the so-called “transportation deserts” in the outer boroughs.

“People are spending money they can’t afford to spend,” said Ward, who cited the Far Rockaway section of Queens and Staten Island borough. “That speaks volumes about the quality of [MTA] service.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.