Joint Statement on Pressing MTA Issues

Our groups have watched the swirl of activity around the Metropolitan Transportation Authority (MTA) with great interest. We remain extremely concerned about the financial health and general welfare of the MTA and would like to make these points to the Governor, Legislature and MTA Board.

1. Governor Cuomo must deliver the remaining $7.3B in “Direct State Payments” Budgeted to the MTA for the 2015-2019 Capital Plan.
2. “Rolling Over” current capital projects to the 2020-2024 capital plan amounts to a reduction in size of the current capital plan.
   

3. The MTA has dangerous levels of debt and will be paying more than 3x recommended levels by 2021. (MTA debt = 19% operating budget by 2021)
4. The MTA reorganization effort should be transparent and the public should have time to review and comment. Our groups have called upon Chairman Foye and the Governor and the Legislative Leaders to ensure that plans are released ASAP for public input.
5. The MTA’s Transit Asset Management (TAM) Plan and Twenty-Year Needs Assessment should be public documents and used to determine how much the 2020-2024 capital plan will spend on achieving a state of good repair.

Our groups are mindful of comments made by Larry Schwartz, an appointee of Governor Cuomo’s to the MTA Board, at the MTA Finance Committee meeting on June 24th. At the meeting, the MTA Board was considering a resolution to authorize additional bonds (see page 59 of the Board materials) to finance the MTA’s 2010-2014 and 2015-2019 capital plans. Mr. Schwartz said the following:

“We are at the tail end of our 5-year capital program, and as we all know, we were in our board briefings, we were told we will be receiving the next 5-year capital program in September. So one of the things I’ve already suggested is that all of the projects in the ‘future’ category be put on hold so we can review all these projects, one, to ask the question why they haven’t moved further along, two, whether any of these projects should be rolled over into the next five-year capital program, so there’s a lot of questions in terms of what these individual projects are, why they haven’t gone to the design or the construction phase, whether or not we should be eliminating these programs based on need…”

$8.3 billion in “direct state payments” was outlined for the MTA 2015-2019 capital plan in the 2016 budget as part of a high profile deal in which NYC was pressured to commit $2.5 billion. Yet to date, according to documents released by the MTA yesterday (see page 78), the state has given less than $1 billion to the MTA, with the rest to be given upon “exhaustion” of the MTA’s borrowing abilities. (Advocates in 2016 raised concerns about the state’s commitment given this condition.)

“Fiscal Exhaustion”
MTA CFO Bob Foran said in February to the State Senate that the MTA was nearing exhaustion. Therefore, the state currently owes the MTA $7.3 billion in direct aid to the MTA. Where is this money and when it will be paid to the MTA, which said it is currently committing $3 billion worth of state-supported projects?

Roll Over
2015-2019 capital plan projects are not eligible to be paid for with congestion pricing revenue, which will be put into a lockbox for 2020-2024 projects. Older projects rolled over into the 2020-2024 plan would be eligible, however. “Rolling over” 2015-2019 capital fund projects to the 2020-2024 plan would be a cut to the current 2015-2019 capital plan, and a cut in state aid to the MTA.

If the MTA Board intends to cut the size of the 2015-2019 capital plan, it should be explicit about its intentions and follow the regular process of a capital program amendment.

Debt
The MTA already has a dangerously high debt burden. Currently, MTA pays 17% of its operating budget for debt payments. It projects debt payments will increase to 19% of the operating budget in 2022. Public finance experts recommend that debt payments not exceed 6% of the operating budget (see a study on debt affordability by Pew Charitable Trusts on this topic). The MTA is at three times that. How much more is the MTA going to be expected to borrow?