OP-ED: New York State Comptroller DeNapoli's NY MTA debt audit is terrible news

New York State Comptroller Tom DiNapoli's recently released "Annual Update: Metropolitan Transportation Authority's Debt Profile" is a must read for commuters, taxpayers, transit advocates, transportation reporters, New York Metropolitan Transportation Authority (MTA) board members and elected officials. It is one way to learn more about how growing debt could adversely impact the MTA's $54 billion 2020 - 2024 Five Year Capital Program ($51 billion for transit and $3 billion for bridges and tunnels), maintenance of assets and level of service.

Figure 1 MTA 2020 - 2024 Capital Program Funding Table from this report tells the story. DiNapoli forecasts "$15 billion in Congestion Pricing Revenue is not expected until 2023." This represents the fourth year of a five-year program. I don't see how it is possible to capture five years of toll revenues ($1 billion per year leveraging $3 billion or $5 billion over five years leveraging $15 billion in support MTA’s $51 billion 2020-2024 five year capital plan) when you implement the program three years late. A three-year delay could easily equal a shortfall of $9 billion. Does this mean that the MTA will have to reduce the $51 billion capital plan to $42 billion?

Referencing $7.775 billion in federal formula funding "No funding authorization after September 2021" doesn't tell the whole truth. Every five years, Congress passes a new five-year authorization act. Periodically, due to a lack of consensus within Congress, this does not take place. What DiNapoli missed is that Congress historically roles over and extends the same level of funding from the last year of the previous five-year authorization into the next year. Since the Urban Mass Transportation Act was signed into law by President Lyndon Johnson in 1964, the Federal Transit Administration (formerly the Urban Mass Transportation Administration) has never failed to deliver funding on an annual basis.

The NY MTA received $1.4 billion in FTA formula funding in 2020. It is on target to receive $1.5 billion in FTA formula funding in 2021. Based upon my previous experience working for FTA, it is a safe assumption that NY MTA will receive the full $7.775 billion in FTA formula funding that is budgeted for the current five-year Capital Plan.

Another line item to draw your attention: Federal New Starts $2.905 billion, which is not yet approved for the $6.9-billion Second Avenue Subway Phase 2. It is only part of the tale. The MTA naively programmed receipt of $500 million from FTA New Starts program in the previous $32 billion 2015 - 2019 Five Year Capital Plan toward this project. It never came to pass. In the most recent FTA New Starts report to Congress, MTA forecast receipt of a FTA Full Funding Grant Agreement in 2020. This never happened. There is no way to predict when the MTA will actually obtain an approved $2.9 billion FTA FFGA to help finance this project. Part of the FTA review includes a detailed review of MTA's financial capacity to build and operate this asset while at the same time maintaining a state of good repair and running existing services.

New York State's $3 billion promised contribution to the Capital Program could be impacted by "State debt capacity issues." New York Gov. Andrew Cuomo, just like his predecessors, always instructs MTA to use all their FTA funding first, before contributing Albany's share. Historically, Albany waits till the last year of the five-year capital program before anteing up. Just as significant, is annual operating assistance to the MTA provided under the Statewide Transportation Operating Assistance program.

NYC has also promised a $3 billion contribution to the Capital Program. This has yet to appear. NYC also provides both capital and operating assistance for MTA Bus. (In 2005, NYC transferred management of buses, facilities and routes for the seven private franchised bus operators (Command Bus, Green Lines, Jamaica Bus, Triboro Coach, Queens Surface, New York Bus and Liberty Lines Bronx Express) to the MTA. The MTA subsequently created MTA Bus. This is a separate division from NYC Transit Bus and Manhattan Bronx Surface Operating Authority, Long Island Rail Road and Metro North Rail Road. MTA keeps separate financial books for MTA Bus, NYC also provides over $300 million in annual subsidies to the MTA for maintaining these services.

Growing NY MTA debt is a ticking time bomb that can't go on forever without exploding. Perhaps it is time for the NY MTA to deal with this today, rather than wait to a catastrophe tomorrow. Clearly the financial assumptions for the $51 billion 2020 - 2024 Five Year Capital Plan have never been realistic. It is time to make the tough decisions today and not wait until it is too late. Serious consideration must be given to postponing both the $6.9 billion Second Avenue Subway Phase 2 and $1.5 billion Metro North Bronx East Access to Penn Station projects. Maintaining a state of good repair and safety that more than 5 million pre-COVID-19 riders counted on is more important than system expansion projects. Second Avenue Subway Phase 2 and Metro North Penn Station Access provide potential benefits for a very small minority of MTA customers.

-------------

Larry Penner is a transportation advocate, historian and writer who previously worked for the Federal Transit Administration Region 2 NY Office. This included the development, review, approval and oversight for billions of dollars in grants which provided funding for capital projects and programs to the NY MTA, NYC Transit, Long Island and Metro North Rail Roads, MTA Bus, NYC DOT, NJ Transit and more than 30 transit agencies in New York and New Jersey.