Nicole Gelinas, senior fellow for the Manhattan Institute for Policy Research, talks with Bond Buyer senior Northeast reporter Paul Burton about New York regional transit, including a new LaGuardia Airport, the MTA capital plan and prospects for new Hudson River tunnels.
BURTON: Hi, I'm Paul Burton and our guest today is Nicole Gelinas. She is a Senior Fellow with the Manhattan Institute for Policy Research and the author of the book After the Fall: Saving Capitalism from Wall Street and Washington. Today we are going to talk about all kinds of public transportation in the New York City region, air, subway, train tunnels. Nicole, you and I have a lot to talk about. Let's get to it. Welcome. Thanks for coming back and joining us.
GELINAS: Good morning, Paul. Thanks for having me back.
BURTON: Let's start with LaGuardia. We all agree we're happy there's a new LaGuardia. Let's face it, it's a garbage dump the way Penn Station is, is the air equivalent of Penn Station. A couple of weeks ago, we had Vice President Joe Biden in town along with Governor Andrew Cuomo and they announced a new airport. Lots of jingoism, cheerleading, chest-thumping. Nicole, let's look beyond that, let's look beyond the cheerleading. When you look at the proposal in its totality, what questions jump out at you?
GELINAS: It's a good proposal and the short story is we need a new Central Terminal at LaGuardia. The airlines have decided that they want this and they want to pay for it. The airlines will pay the $4 billion cost whether directly or whether through the fees that they pay to the Port Authority. It kind of split between this, but remember, the airlines make the half a billion dollars profit a year for the Port Authority. There is money there that usually goes to subsidize things like the bus terminal, the path trains to New Jersey and now some of this money will go back into the Central Terminal.
It's pretty straightforward. It's not that different than a company building an office building. The airlines that we are going to use the terminal have decided that they want this and decided they're going to foot the bill for the $4 billion cost. It's really not a government project. It just happens to be on government land. It's pretty simple compared to most mass-transit projects that don't pay for themselves.
BURTON: What are the loose ends? Maybe the connecting train and will MTA have to foot the bill for it?
GELINAS: The loose ends are exactly what you said. The governor has said he wants to have an air train to LaGuardia similar to the way we have the air train to JFK. That's a project that the governor has said could cost 500 million. Other people, including the MTA Chairperson, have said it could cost a billion dollars. That is not part of the Central Terminal plan. Remember, the plan to build the terminal at LaGuardia, it's not something that the governor just came up with.
This has been around for a good half a decade. Companies have been doing the design works and the bids in where they were looking at two years ago. This is a project that's been around for a while. The train connection is new and that's not something that anyone has said, "Who was going to pay for it? How they're going to build it?" And so forth. That's probably the biggest loose end and would it be an MTA projects, would it be a Port Authority project? Probably make more sense for it to be Port Authority project, but no one has stepped in and said, "Hey, we want to pay for this."
BURTON: Speaking of MTA and speaking for paying for things, we have a capital plan that's still not completely funded and we have this little triangular drama among the governor's office, the mayor's office, and the MTA. I ran into Dick Ravitch up in Boston last weekend at a conference and the first thing he said is, "What a mess." And it is a mess. A couple of questions, Nicole. Is the city really going to quintuple its contribution to the MTA Capital Plan? Secondly, can Governor Cuomo come up with that eight billion that he said he's going to put in the budget? That's not given either.
GELINAS: Right. When the Governor came out, I guess three weeks ago now, and said, "I've got a plan for the MTA." The state will put in eight billion. The city will put in three and there's the capital gap. The MTA is supposed to spend about $30 billion on capital funding. They had had a 12 to $14 billion gap and the Governor said, "Here's the money." The money is not found. The Governor just said, "We're going to come up with this." He didn't say how the state is going to come up with it. If we're lucky, the economy will keep doing well, we'll continue to have this state and city budget surpluses and some of the money can come from there.
Of all people, Bill de Blasio has been warning lately, "We're due for a cyclical recession at some point." Maybe not now, maybe not next year, but sometime during the five years in which the MTA needs to spend this money. It would not be unusual for us to have a recession and all of those surpluses go away. Will they do congestion pricing? Will they do some other kind of revenue? Nobody has said right now. We are just depending on continuing to be very lucky economically.
Will the city put in this $3 billion? The mayor has not jumped at this opportunity, but we're seeing a tale of two states right now. The Controller just came out with a report that said New York City is doing very, very well with a record number of jobs, record budget surplus, and so forth. The rest of the state is not doing well. It's very difficult for Cuomo to ask other state voters to put in more money without having the city directly put in more by itself.
De Blasio's whole mayoralty is built around inequality, but New York City is the most unequal part of the state, if you will. We're the ones who owe more money to the rest of the state under de Blasio's theory of the rich should give to the poor.
BURTON: Let's get to the Hudson River tunnel project. We have two governor's who can't play in the same sandbox, it seems. The other day, US Senator Chuck Schumer came out with a proposal for a Development Corporation, not unlike the Moynihan thing, to see if we can jumpstart this whole thing and put in a revenue stream. What's your take on that?
GELINAS: You notice we've been building Moynihan for 15 years or more at this point. It's a very modest project, much scaled down from what it was supposed to be and it is still being built. I'm not sure if that is the plan that we want to follow. We need a tunnel now, not 20 years from now, but there's a few problems with this.
Schumer thinks he's being very forward-looking and saying, "We don't need the states and the federal government to come up with the money. We can create this corporation, and the corporation will pay for it." But the corporation needs money. They need a revenue. They can't borrow debt unless they have a revenue. That revenue has to come from Amtrak, from New York from New Jersey, or from the federal government or a combination of all of these places. He just added an extra layer to this problem. He didn't really solve any problems.
Who should pay it? Well, the tunnel is used by people from New Jersey who work in New York City. Cuomo's voters don't care. They don't live in New Jersey. That's why Cuomo hasn't shown much of an interest in this. Christie, unfortunately, he got money from the federal government to build the tunnel. You were looking at 10 years ago. He canceled that project five years ago, but he spent the money anyway. The federal government is not going to want to give New Jersey more money for the same projects. There's obviously a problem, which is why no one has started construction on the tunnel.
BURTON: One common theme for the talking points we just went over is political fragmentation. We have two governors, a big city mayor, Port Authority, MTA, the federal government, Amtrak, and they all seem to bump into each other.
GELINAS: Yes. That is a problem. Everyone can blame everybody else. One more thing about Amtrak, this is not just a problem of a lack of money. Yes, we need money. We're going to need $15 billion, maybe a little less, maybe more. Probably more, but another problem is the work rules and other issues that push up the cost of construction. Amtrak has been doing work with the MTA on east side access, bringing Long Island Railroad over to Grand Central.
The Amtrak work rules where they want to do the work on weekends, but seniority and the union contract means workers can choose not to work on weekends. You can't shut down the trains in the middle of the week. These work rules, lack of being able to hire more people and put them on these jobs, this has added years and years of delays and hundreds of millions in cost overruns. If we don't take a look at these work rules and other issues, we're going to have the same problems on the Hudson tunnel.
If Schumer actually wants to do something productive, have a hearing and figure out, yes, we want to pay these guys well, but we need people to be working at nights and on the weekends. We probably need a lot more of these trained people to be working
BURTON: Lots to talk about and write about for sure. Nicole, thanks much for joining us today.
GELINAS: Thanks, Paul.