New York Metropolitan Transportation Authority (MTA) Chairman Pat Foye recently announced that he was placing advancing the MTA $51-billion 2020 - 2024 Five Year Capital Plan on hold for 60 days. It is time for the MTA to admit that the $51-billion 2020 - 2024 Five Year Capital Plan is dead due to the short and long term financial impacts of the coronavirus. This unanticipated crises has impacted the various anticipated funding sources that made up the $51 billion. It is disappointing for the MTA to maintain the position "it is my way or the highway" for keeping the capital plan in place. Even prior to the outbreak, the $51 billion funding assumptions were never realistic. Due to the economic recession as a result of COVID-19, many billions anticipated from congestion pricing, real estate transfer, internet sales, along with other city and state taxes, will be lost.
New York Governor Andrew Cuomo and NYC Mayor Bill de Blasio are each responsible for contributing $3 billion toward the $51-billion plan. Both Albany and NYC City Hall face budget shortfalls in the billions. Unforeseen financial problems are bound to adversely impact their respective contributions. Don't be surprised if both fail to include any of these promised dollars included in the New York state April 1, 2020 - March 30, 2021 and New York City July 1, 2020 - June 30, 2021 budgets. They will both wait until 2024 or the last year of the capital program to contribute the lions share of these dollars.
There could be a $15-billion shortfall without congestion pricing. With less than seven months to go, even Chairman Foye has finally admitted that implementation of congestion pricing will miss the January 1, 2021 start date. Progress with the Federal Highway Administration's completion of an environmental review necessary to advance this process is incomplete. The MTA has never received approval from the federal government on the congestion pricing plan. If approved, NYC would become the first major city in the U.S. to implement a congestion toll to help reduce traffic, cut pollution and support mass transit. It will not happen without the federal determination that the plan complies with the National Environmental Policy Act. We don't know if Washington is still awaiting any outstanding information from the MTA to complete the review and future approval process.
The MTA Traffic Mobility Review Board will determine pricing. This board is suppose to be made up of one chairperson and five members. Both Gov. Cuomo and Mayor de Blasio never announced their respective members. Are they stalling in making these critical appointments? Details of who will pay have yet to be made public. Elected officials behind the scenes continue lobbying for exemptions. Issuing of more exemptions will result in less MTA revenue. The MTA Traffic Mobility Review Board, which decides the costs for congestion pricing, will be meeting behind closed doors to work out these critical details. This is inconsistent with both Cuomo's and deBlasio's respective promises to conduct the most open and transparent administrations in the history of state and municipal government. The final recommendations for tolling are supposed to be announced before the end of November 2020.
Even when congestion pricing starts, due to the economic downturn as a result of COVID-19, nobody knows how much of the anticipated $15 billion will actually be raised. We could be in an economic recession well into 2021. As a result, the MTA could have to cut billions from the current capital plan .
Two major credit rating agencies, S&P and Fitch Ratings downgraded future MTA bond offerings. Fitch removed the agency’s long-term rating from Rating Watch Negative status. The Rating Outlook is now Negative. This will add to the cost of borrowing representing a growing percentage of the MTA budget.
The MTA $51-billion 2020 - 2024 Five Year Capital Plan is no longer financially viable. The only solution is either reductions in scope of work or postponement of some capital projects and programs into the MTA 2025 - 2029 Five Year Capital Plan.
Here are some projects that the MTA should consider deleting from the current five-year capital plan. This would not be in the words of Chairman Foye "gutting our hard-fought capital plan."
There has been no progress in convincing the Federal Transit Administration (FTA) to provide between $3 billion in New Starts funding for the Second Avenue Subway Phase 2 under a Full Funding Grant Agreement in 2020. According to the FTA February 2020 New Starts report for federal fiscal year 2021 (October 1, 2020 - September 30, 2021), the MTA anticipates approval to enter final design and engineering. With less than seven months to go, this approval has yet to be secured. This would be followed before the end of 2020 with a Full Funding Grant Agreement from FTA. This would provide up to $3 billion in federal dollars toward the $6.9 billion total cost for Second Avenue Subway Phase 2. The MTA has budgeted $4 billion of local funding within the previous $32 billion 2015 - 2019 and current Capital Plans to be used toward the $6.9 billion Second Avenue Subway Phase Two. This project benefits a small percentage of the 5 million daily transit riders. There is also $1.5 billion for the Bronx East Metro North Access to Penn Station. Suspension of the one percent Arts in Transit expenditure requirement for capital projects could free up millions. Implementing these suggestions plus the end of wasting millions on transportation feasibility studies for future system expansion projects that will never happen in our lifetime preserves the core MTA capital program.
It may not make sense for the MTA to fund a contract for $91 million to bring on board even more consultants. Their task is to assist the MTA's Transformation Office to decide how to cut 2,700 jobs. Laying off workers, while at the same time significantly increasing the number and dollar value of capital projects and programs defies logic. The numbers just don't add up. MTA has a Human Resources department. Why not assign this work to in-house resources already available? There are better ways to spend $91 million. Every dollar must be spent prudently.
Do not initiate any new system expansion projects until each operating agency, NYC Transit bus, subway and Staten Island Railway, MTA bus, Long Island Rail Road and Metro North Railroad have reached a state of good repair for existing fleet, stations, signals, interlockings, track, power, yards and shops makes more sense. Funding these projects gives you a better return on the dollar. Ensure that maintenance programs for all operating agencies assets are fully funded and completed on time to ensure riders reliable service.
The MTA must make the difficult financial decisions everyone else does. Given the current financial crises faced by all levels of government, the MTA should consider postponing funding these projects until the next 2025 - 2029 Five Year Capital Plan. It will not in the words of MTA Chairman Foye "gut our hard-fought capital plan."
Transit riders, advocates and elected officials have good reason to be concerned if the MTA continues to remain in denial and refuses acknowledging what everyone else already knows.
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Larry Penner is a transportation historian and advocate who previously worked 31 years for the Federal Transit Administration Region 2 NY Office. This included the development, review, approval and oversight for grants supporting billions in capital projects and programs on behalf of the Metropolitan Transportation Authority, New York City Transit bus and subway, Long Island Rail Road and Metro-North Railroad, MTA Bus and NYC Department of Transportation.
