30 Groups And Unions Ask NYS Legislature To Stop Budget Raids On Dedicated Transit Funds

$160M Proposed Statewide Raid in Governor’s Budget for FY 2022 Includes $145M from the MTA

Half a billion dollars held back from MTA in 2020 must also be repaid

Thirty watchdog groups, unions and transit advocates asked the State Legislature to reject budget raids on dedicated transit funds which would take more than $240 million over two years from the Metropolitan Transportation Authority (MTA): $145 million in FY 2022 and $98 million in FY 2021. These dedicated funds would be diverted to the state general fund during the worst financial crisis in the MTA’s history. The raids would also affect other state transit systems, for a total of $160 million in dedicated transit funds raided statewide in the proposed FY 2022 budget.

The groups said that raids on dedicated transit funds are a backdoor tax because riders may be forced to make up for this shortfall with a fare hike or service cuts. Fare hikes and service cuts will disproportionately harm low-income riders. The fare and toll hikes proposed by the MTA would raise $148 million for 2021, nearly the same amount as the raid.

The letter also asks the Legislature to ensure that the more than half a billion dollars withheld from the MTA in 2020 is fully repaid. Many of the same groups warned in April 2020 that state budget withholdings were a potential threat to MTA dedicated taxes. The state Division of the Budget withheld $524 million from the MTA in 2020 as part of “budget adjustments” and has said that $426 million will be repaid. However, $98 million is still at risk of raids and the Legislature must make sure these are repaid to the MTA. The withholdings contributed to a downgrade of the MTA by a credit ratings agency, Kroll, and exacerbated the MTA’s cash flow problems in 2020. Due to the lack of state and federal support, the MTA was forced to open its capital lockbox and borrow $3.4 billion from the Federal Reserve to plug holes in its operating budget.

The MTA’s financial picture is still troubled, and it is seeking $8 billion more from the federal government to close its gaps through 2024. For the state to raid and withhold hundreds of millions in dedicated funds risks securing these critical federal emergency funds. There should be no fungibility of state dedicated funds, and receipt of federal aid cannot be an excuse for the state to raid or withhold dedicated transit funding.

The letter is available here and in full below.

Senate Majority Leader Andrea Stewart Cousins
Assembly Speaker Carl Heastie

Re: Please Reject $160M Raids on Dedicated Transit Funds in One-House Budget Bills, and Ensure $524M in Withheld Funds Are Repaid to MTA from FY 2020-2021

Dear Majority Leader Stewart-Cousins and Speaker Heastie,

Our groups ask that the Senate and Assembly reject the proposed raids on dedicated transit funds in the Governor’s Executive Budget in your one-house budget bills. The Governor’s FY 2021-2022 budget would transfer approximately $145 million in MTA dedicated funds to the state’s general fund, as part of a $160 million total raid on statewide dedicated transit funds. Additionally, we ask that the Legislature ensure that all $524 million in withheld funds from FY 2020-2021 is repaid to the MTA, as well as all withholdings from other mass transit agencies.

Legislature Must Reject $160M Raids From State Mass Transit Systems to General Fund
According to the Assembly’s “Yellow Book” analysis, the Governor’s Executive Budget would divert $160 million from seven different dedicated mass transit funds to the state’s general fund. The MTA’s share of this is approximately $145 million. This includes raids from the Metro Mass Transportation Operating Assistance Fund (MMTOA – $107 million) and the Central Business District Trust Fund (from Internet Sales Tax funds – $6.5 million), among others. The raids take place in the Article VII Public Protection and General Government Legislation. They do not include a diversion impact statement, as required by the 2018 Transit Lockbox Law passed by the Legislature, which would show the impact on transit service.

Raids of dedicated transit funds are a backdoor tax on riders that the State Legislature must reject because riders may be forced to make up for this shortfall with a fare hike or service cuts. Fare hikes and service cuts will disproportionately harm low-income riders. The fare and toll hikes proposed by the MTA in November 2020 would raise $148 million for the MTA in 2021, an amount nearly equivalent to the raid. Toll increases were approved in February 2021 and fare hikes have been postponed, but are still on the table with the state dedicated fund raids.

Dedicated taxes are created by the Legislature to fund a specific purpose or program and are categorically different from the state general fund. In the case of dedicated transit taxes, they were created to provide stable operating support for transit agencies. Raiding dedicated transit funds breaks trust with the public, who pay these taxes with the understanding that they will fund transit service. Dedicated taxes have already declined due to the COVID-19 pandemic, and now would be raided for the state general fund — a double hit to transit agencies.

$524M Withheld from MTA in FY 2021 Must Also Be Repaid
The MTA has also had hundreds of millions of dollars withheld in 2020 through the “budget adjustment process” authorized by the FY 2020-2021 Aid to Localities legislation. Only on February 19, 2021 in response to a press inquiry did the Division of the Budget provide the total withholding amount for the MTA in FY 2021: $426 million to be repaid, with $98 million more potentially to be “cut” as part of “across-the-board” withholdings, for a total of $524 million ‒ half a billion dollars ‒ withheld from the MTA. It is unknown exactly when the $426 million will be repaid. It is also unclear if this $98 million “cut” is similarly a raid for the state general fund, adding to the FY 2022 raid of $145 million, for potentially about $240 million in MTA raids over a two-year period. These are funds that would be used for operating and maintaining the system, which the MTA will need to identify through other cuts and reductions, or fare and toll increases.

The withholdings have also harmed the MTA’s credit ratings. Late payments of state dedicated funds was specifically cited in a downgrade by Kroll, a ratings agency, which said: “The delay of funds is inconsistent with KBRA’s expectation of uninterrupted State support of MTA operations…the timely release of State appropriated funds is critically important.” Withholdings of more than half a billion dollars added considerable strain to the MTA in 2020, given its cash flow problems resulting from huge drops in ridership. In the absence of both state and federal support in 2020, the MTA was forced to borrow $3.4 billion for operating expenses from the Federal Reserve, and plans to use $900 million for operating expenses through the end of 2021 from its capital lockbox.

Legislature Left in the Dark About Withholdings
Despite the disclosure of the total amount withheld from the MTA in FY 2021, the Division of the Budget has still not provided a list of all withholdings from calendar year 2020 for various recipients – individual state agencies, authorities, municipalities, and other service providers. The Legislature has been formally notified of less than 25% of these withholdings. MTA Chief Financial Officer Bob Foran said in response to press inquiries at the MTA’s January 2021 Board meeting that the MTA adjusted its 2020 budget to account for a $261 million loss from state withholdings. This amount is considerably less than provided by the DOB on February 19, 2021 of $524 million total that was not provided to the MTA in 2020 by the state from withholdings and potential cuts.

Raids on State Dedicated Funds Undermines MTA Case for Federal Funding
The MTA is facing the worst financial crisis in its history, and is seeking an additional $8 billion in federal funding to bridge its budget gaps in the coming years. For the state to raid and withhold hundreds of millions in dedicated funds risks securing these critical federal emergency funds. There should be no fungibility of state dedicated funds, and receipt of federal aid cannot be an excuse for the state to raid or withhold dedicated transit funding.

Again, we ask that the $160M in state raids mass transit raids in the FY 2022 Executive Budget be rejected in the Senate and Assembly one-house bills, and for the Legislature to ensure all $524M in dedicated funds are restored to MTA from FY 2021, as well as all withholdings from other state transit systems.

Thank you for your consideration of this matter. Should you wish to discuss this, please contact Rachael Fauss, Senior Research Analyst, Reinvent Albany, at rachael@reinventalbany.org.

Sincerely,

John Kaehny
Executive Director
Reinvent Albany

Libero Della Piana
Senior Strategist
Alliance for a Just Society

Ben Prosky
Executive Director
American Institute of Architects New York

Anthony Aprea
Executive Legislative Director
Association of Commuter Rail Employees (ACRE)

Edward Valente
General Chairman
ACRE Local 1

Joseph G. Rappaport
Executive Director
Brooklyn Center for Independence of the Disabled (BCID)

Susan M. Dooha, JD
Executive Director
Center for Independence of the Disabled, NY (CIDNY)

Susan Lerner
Executive Director
Common Cause New York

Robert Paaswell
CUNY Institute for Urban Systems
CCNY

Jean Ryan
President
Disabled In Action of Metropolitan NY

Peter Iwanowicz
Executive Director
Environmental Advocates NY

Mary Barber
Director, Regulatory & Legislative Affairs
Environmental Defense Fund

Andrew W. Sandberg
Asst. To President/Directing
General Chairman
IAMAW District Lodge 19

Miranda Nelson
New York Director
Jobs to Move America

LeeAnn Hall
Executive Director
Just Strategy

Laura Ladd Bierman
Executive Director
League of Women Voter of New York State

Dean Devita
President
National Conference of Firemen & Oilers, 32BJ, SEIU

Christopher Schuyler
Senior Staff Attorney, Disability Justice Program
New York Lawyers for the Public Interest

Julie Tighe
President
New York League of Conservation Voters

Jaqi Cohen
Campaign Director
NYPIRG Straphangers Campaign

Lisa Daglian
Executive Director
Permanent Citizens Advisory Committee to the MTA (PCAC)

Betsy Plum
Executive Director
Riders Alliance

Jessica Murray
Organizer
Rise and Resist Elevator Action Group

Anthony Simon
General Chairperson
SMART Transportation Division

Eric McClure
Executive Director
StreetsPAC

John Samuelsen
President
Transport Workers Union (TWU) International

Tony Utano
President
Transport Workers Union (TWU) Local 100

Danny Harris
Executive Director
Transportation Alternatives

William DeCarlo
National Vice President and
National Legislative Director
Transportation Communication Union

Felicia Park-Rogers
Director of Regional Infrastructure Projects
Tri-State Transportation Campaign

Cc.
Senator Liz Krueger, Chair, Finance Committee
Senator Leroy Comrie, Chair, Authorities Corporations and Commissions Committee
Senator Tim Kennedy, Chair, Transportation Committee
Assemblymember Helene Weinstein, Chair, Ways and Means Committee
Assemblymember Amy Paulin, Chair, Authorities, Corporations and Commissions Committee
Assemblymember William Magnarelli, Chair, Transportation Committee