Watchdog Testimony: MTA 2020-2024 Capital Plan Off to Slow Start Due to Delays to Congestion Pricing and COVID-19 Impacts

Good afternoon, Chair Paulin and other members of the Assembly. I am Rachael Fauss, Senior Research Analyst for Reinvent Albany. We advocate for more transparent and accountable state government – including for state authorities like the Metropolitan Transportation Authority (MTA).

Thank you for holding this hearing today, and for your continued oversight of the MTA concerning its finances and capital programs. Knowing that I have limited time today, here is a summary of the findings and recommendations from my full written testimony:

Overall, we are deeply concerned about the extremely high debt load the MTA is carrying. Paying back this borrowing is costing the MTA 20% of its operating revenues and directly takes money away from subway, bus and commuter rail service.

1. 1. Congestion pricing revenues remain essential for the MTA to make meaningful progress on its 2020-24 capital plan, particularly given the financial hit from COVID-19. Our August 2021 report found that funds for the 2020-2024 plan have come in at the slowest pace of the last three capital plans. And this trend has continued. Dedicated revenues like congestion pricing are essential to the survival of the MTA given its high debt loads. (See chart on page 4 of our testimony.)

1. 1. As fewer dollars came in, capital spending slowed in 2020 and 2021. After a high of $7.3B total spent on capital projects in 2019, the MTA spent only $6.2B in 2020, and $2.7B in the first half of 2021 on all of its capital plans. Congestion pricing revenues were originally budgeted to arrive in 2021, but are now delayed to 2023. It should be noted that “pauses” on capital contracts being let and workforce impacts due to COVID-19 also slowed spending. (See chart on page 6 of our testimony.)

1. 1. With the MTA considering possible amendments to the 2020-24 capital plan, the Legislature should ask the MTA to provide clear reporting of changes to individual projects. Chair Lieber stated at the November 2021 Board meeting that there may be two sets of amendments: one related to resilience/Hurricane Ida, and another due to the bipartisan infrastructure bill being signed. Additionally, the Penn Station improvements announced by the Governor on November 3, 2021 will also require a capital plan amendment.

1. 1. The Legislature should also ensure the MTA publishes an updated 20-year needs assessment with all proposed amendments to the 2020-2024 capital plan.

1. 1. The MTA should publish the international benchmarking report mandated by the legislature. This report has not been published, despite a law mandating the report be produced in 2020. This analysis is important because it informs the 20-year needs assessment and could help spotlight opportunities for more efficient capital spending.

1. 1. MTA debt remains at dangerous levels, and the impact of federal infrastructure dollars is still unknown. The MTA’s high debt loads were a major liability when COVID-19 hit and devastated the MTA’s fare revenues, and caused steep drops in its dedicated tax revenues. The MTA would have been bankrupted by COVID-19 but was saved by federal emergency aid. (See the table and chart on pages 9-10 of our testimony.)

1. 1. The Legislature should probe more deeply into what we believe is roughly a $200 million a year deficit that will be incurred by East Side Access. The latest financial plan from the MTA shows that the operating budget impact of East Side Access will be $167 million in 2022 rising to $255 million in 2025. The Legislature should ask the MTA for detailed numbers on ESA expenses and revenues to confirm the level of operating deficit, and to which MTA subsidiary these costs and revenues are assigned. The creation of the new ESA subsidiary further may make it very hard to attribute the costs in the future. (See the MTA’s charts on pages 11 and 12 of our testimony).

1. 1. The Legislature should pass legislation requiring independent approval and more detailed rationales for proposed public authority subsidiaries.

1. 1. The Legislature should publish its list of 2020-2024 “Set-Aside” Capital Projects, and consider redirecting Outer Borough Transit Fund allocations to transit service improvements.

1. Lastly, the Legislature should hold a 2022 hearing on implementation of the MTA Open Data Law. The new law requires the MTA to appoint a Data Officer, and publish a catalogue of datasets and schedule for posting the information within 180 days (or by April 2022), with all public datasets posted on the open data portal within three years. Release of more open data will allow the legislature, public and journalists to have better access to information related to MTA capital projects, spending, and contracts.

The full testimony with charts is available via PDF here.