New York's Metropolitan Transportation Authority, one of the largest municipal issuers with $34 billion of debt and facing myriad immediate challenges, is under pressure to overhaul itself for its long-term benefit.
For now, MTA's annual budget and four-year plan is before its board, officials are holding public hearings throughout the region on fare and toll increases, and its proposed $32 billion capital program that has a $15.2 billion shortfall. A state review board two months ago rejected its $32 billion capital plan, without ruling out any of the elements or projects it contained.
While dealing with immediate needs, the MTA must also come to grips with the distant future, a panel appointed by Gov. Andrew Cuomo found. The 24-member Transportation Reinvention Commission, co-chaired by former federal transportation secretary Ray LaHood and former Federal Aviation Administration chief Jane Garvey, called on the authority to recraft its business model in a
"This report shows that while difficulties lie ahead, none of them are insurmountable," said MTA Chairman Thomas Prendergast.
Mitchell Moss, the director of New York University's Rudin Center for Transportation Policy & Management, said the report planted a seed.
"This is the beginning of thinking long term about the agency as a key asset of the region. It highlights what needs to be done," said Moss. "Most reinforcing was the centrality of the MTA to the economy of the region and the state."
MTA officials argue that the authority is a $1 trillion asset for the New York region, making the scale of its capital program necessary. In that context, they say, a $30 billion capital program is merely 3% of the asset value, spread over five years.
Gene Russianoff, an attorney and chief spokesman for the Straphangers Campaign subway ridership lobbying group, served on the panel. A key commission principle for MTA funding, he said, was that all who benefit from New York's transit system should help pay for it. That includes riders, road users, businesses, property owners and developers, he added.
In addition, said Russianoff, investments could center on bringing first-rate bus rapid transit to dense corridors, leveraging off-peak capacity on available commuter lines, and working with regional transportation agencies.
Russianoff and other panel members also touted greater transparency. "Opportunities include information on board budget packets, real estate holding and transactions, contracts, spending and professional service agreements, which should be published online in a machine-readable format," the report said.
Funding for the 2010-2014 capital program relied more heavily on bonding than previous programs, but that also must change, according to the panel. "Taking advantage of historically low interest rates, the MTA has been able to realize significant savings in debt service expenses, but new revenue sources must be identified to support future capital programs," the report said.
Those sources, said the panel, could including value capture, cap-and-trade programs, and vehicle user fees such as parking fees and congestion pricing. It cited domestic and international systems - notably, Washington, London, Paris and Vancouver, British Columbia -- that have used these options while facing similar challenges.
The 2010-2014 capital plan involved a mix combination of self-generated revenues and savings, biennial fare and toll increases under the 2009 state aid package that included the payroll mobility tax, bonds, dedicated taxes and federal grants. "But these existing sources fall short of what will be needed for sustaining a truly great regional transportation system in the years ahead," said the report.
Moody's Investors Service assigns an A2 rating to the MTA's primary credit, transportation revenue bonds. Fitch Ratings and Standard & Poor's rate them A and AA-minus, respectively.
Moss said the report was short on particulars about what funding would work best.
"One area that lacked clarity was the financing. I don't think that was very clear," he said. "It also highlighted the high costs of construction without articulating what can be done about it."
The commission in July held three days of public hearings, though in the shadow of touch-and-go drama of Long Island Rail Road contract negotiations. The MTA and LIRR that week reached a settlement that barely averted a strike.
Talking points for the panel covered changing outer-borough demographics, innovative technology, public-private partnerships and a possible tri-state regional tax to offset escalating debt.
"The fundamentals of the MTA were established 100 years ago to get people in and out of Manhattan," said Moss.
The panel's report called for maximizing underused or abandoned rights of way in the city to "offer a new service that could run on a frequency that is comparable to a subway line." That pleased one outer-borough state assemblyman, Democrat Phillip Goldfeder of Queens.
"Support for reactivation of the rail line continues to grow and this new report by leading transit experts is a huge step in the right direction," said Goldfeder, who is leading the push to reactivate the abandoned Rockaway Beach rail corridor. According to Goldfeder, restoring that service would fill a glaring need for north-south transit in his borough.
The rail line, said Goldfeder, could also provide a necessary complement to the A train, which Hurricane Sandy knocked out of service in October 2012. Goldfeder has asked Cuomo to direct a portion of the $5 billion from the budget surplus created by settlements and fines from major financial firms to help restore Rockaway branch.
Cuomo earlier this year cited the need for alternative access to Manhattan in his push to add four Metro-North Railroad stations in the East Bronx.
The commission also suggested the MTA revise its capital financing model. The current, statute-mandated approach depends on political agreement for new funding for each successive five-year capital plan, which the panel called inconsistent with long-term needs.
"I think we've proposed and done very responsible budgets, [but] my biggest fear is the process that's been imposed upon us as a board," Jeffrey Kay, a board member since 2006, said at the November monthly meeting.
"There's a mish-mash here," Kay added. "The process is flawed. We have a capital plan and we have an operating plan and they don't always operate in sync because state law doesn't allow us to operate in sync, and we hold our own destiny in one hand and not in another."
Tweaking the capital program could also involve the predictable funding of megaprojects over many years instead of multiple five-year programs, the panel said. For that reason, dedicated revenues flowing directly to the MTA are preferable to annual appropriations.
"In the past, voters have approved transportation bonds issued by New York State to fund MTA improvements. This option should be considered for funding future capital plans and the revenues issued to the MTA upon approval by the voters," the report said.
