(Photo courtesy of the MTA)

No Good Options For MTA To Manage Hole In Capital Funding

As the Metropolitan Transportation Authority (MTA) adjusts to the loss of $15 billion in congestion pricing revenue and decides which capital projects to cancel or delay, it must prioritize keeping the system in a state of good repair and it must be transparent about how the choices it makes will impact riders, according to a report released today by State Comptroller Thomas P. DiNapoli.

“The MTA’s decisions in the coming weeks and months will affect riders for years to come,” DiNapoli said. “The MTA will be forced to put off badly needed investment in expansion and improvements to the system. Those choices will directly affect riders. The situation compels the MTA to provide an honest and transparent accounting of what it can afford and which capital projects it will prioritize and why. The MTA’s decisions should ensure the basic maintenance of the system — safety, reliability and frequency — until it identifies realistic and sustainable replacement revenue.”

As the MTA reconsiders which capital projects to fund and which to put off, DiNapoli’s report estimates there are over $21 billion in projects that potentially relied on congestion pricing revenue and are under review. The work to be reprioritized can be divided by their purpose:

  • State of Good Repair: Line Structures, Depots and Yards. $1.78 billion.
  • Normal Replacement: Railcars and Buses, $2.75 billion.
  • System Improvements: Accessibility and Signal Modernization, $5.65 billion.
  • Network Expansion: Second Avenue Subway (SAS), $5.23 billion.
  • Administrative and Various: Communication, Power, Signal Modernization, $5.67 billion.

The report also estimates $17 billion in funding will have to be removed from the current $55.4 billion capital plan to meet the loss of congestion pricing revenue, inclusive of $2 billion in federal matching funds for SAS Phase 2. The MTA must work with its federal partners to move funding to those projects that will remain in its capital plan and update its agreements on SAS to retain matching funds with a future revenue source.

The MTA has fortunately suggested it will take a prudent and challenging step by not using bonds funded by existing revenue to cover its $15 billion hole. Increased borrowing of this kind could burden its operating budget, significantly increase debt service costs which currently take 15 cents of every dollar the MTA collects, and damage its bond rating by breaching its 20% debt service threshold.

The loss of congestion pricing revenue means the MTA’s current capital plan is likely to be smaller than its predecessor, adjusted for inflation and excluding the self-funding Bridges and Tunnels division. As a result, the plan represents a decline in investment in the metropolitan region’s vital transportation system.

This letter is from the desk of Thomas DiNapoli, New York State Comptroller.

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