As New York’s Metropolitan Transportation Authority prepares to submit its five-year capital plan, a report by state Comptroller Thomas DiNapoli said serious questions linger on the operating side.
DiNapoli’s
“This is a critical moment for the MTA and for riders,” DiNapoli said. “As everyone agrees, the MTA needs to transform itself into a more efficient organization, improve service and modernize the system.”
It is undergoing a transformation plan, enacted as part of New York State’s fiscal 2020 budget.
“We appreciate the comptroller validating what we have been saying for a long time, that the MTA is facing a dire financial situation,” said MTA communications director Tim Minton. “This is why the MTA is undergoing a historic structural transformation that will save hundreds of millions of dollars every year.”
The MTA, one of the largest municipal bond issuers with roughly $43 billion of debt, intends to sell $102 million of Triborough Bridge & Tunnel Authority Series 2019B taxable general revenue refunding bonds later this week, with JPMorgan as lead manager.
Twice in 2018, S&P Global Ratings downgraded the MTA’s workhorse credit, its transportation revenue bonds, landing at A with a negative outlook. Last December, Moody’s Investors Service revised its outlook on those bonds to negative from stable while affirming its A1 rating.
Fitch Ratings has maintained its AA-minus rating since upgrading from A in June 2017.
Its latest financial plan projects budget gaps that spike to nearly $1.6 billion in 2023 from $392 million in 2020. These estimates, however, already assume successful implementation of the MTA’s proposed budget reduction program, according to DiNapoli.
Excluding that program, he said, the gaps are much larger, escalating to $1.9 billion by 2023 from f$705 million in 2020. “Although not as large as the gaps projected by the MTA during the Great Recession, they are still large by historical standards,” DiNapoli said.
The MTA expects the transformation plan to yield up to $535 million in savings annually by 2022, the top end of the range consultant AlixPartners LLP provided. The authority, however, has yet to hire a chief transformation officer or other critical staff, or estimate the overall implementation cost.
Its board in two weeks is expected to submit its 2020 to 2024 capital program — the development of which critics say is shrouded in secrecy — to a state review board. The request could reach $50 billion.
MTA officials last week touted a spike in on-time subway performance to 84% from 69%. “The data speaks for itself,” said New York City President Andy Byford told reporters at the Fulton Center station.
Rider advocacy groups are pressuring Cuomo and the MTA for more transparency in their capital program bucket list.
“New state resources for the MTA’s capital program, such as congestion pricing, and federal funding are expected to contribute $32 billion to the MTA’s 2020-2024 capital program, but additional funding will still be needed to modernize the subway system,” DiNapoli said.
DiNapoli also reported that even before considering the next five-year capital program, outstanding debt is projected to reach $41.8 billion by 2022, up 19% from 2019. Debt service, he said, would increase by 31%, exceeding $3.5 billion by 2023 when debt service will represent nearly 20% of total revenue.
As of June, the MTA has committed just 65% of the funds for its 2015-2019 capital plan and finished just 25% of its projects.
Separately, auditors from the MTA's Office of Inspector General released a
"The use of sound, statistically valid methods is essential for producing reliable estimates of both the current levels of evasion and the trends over succeeding quarters and years," Executive Deputy Inspector General Elizabeth Keating told MTA officials.
The authority is facing new challenges while undoing decades of missteps, said Mitchell Moss, director of New York University’s Rudin Center for Transportation.
“The MTA has now gotten a lot of competition from Uber and Lyft,” Moss said.
According to Moss, the MTA’s biggest mistakes include not acquiring Penn Station and not systemizing work rules.
