A Guide for Evaluating the Metropolitan
Proposed Capital Program for 2000 Through
H. Carl McCall
Office of the State Deputy Comptroller for
the City of New York
I. Executive Summary
III. Operating Performance
IV. Prior Capital Programs
V. The Need for Further Investment
VI. Financing the Next Capital Program
Following decades of deferred maintenance and capital investment,
the downstate regional mass transportation system was on the verge
of total collapse by the late seventies. By forging a partnership
among business, government and riders, governmental leaders have
enabled the Metropolitan Transportation Authority (MTA) to invest
$34 billion over the last 18 years to rebuild the system.
The regional mass transit system, which is vital to the region's
economy, has undergone a remarkable transformation. For example,
subway cars now travel eight to ten times farther before breaking
down, and an automated fare collection system gave the MTA the ability
to offer creative discounts and to eliminate two-fare zones. As
a result of these and other factors, ridership is at its highest
level since the 1970s.
In 1995, however, the MTA was faced with a new crisis. More than
$1 billion in government subsidies for operations and capital reconstruction
were eliminated or sharply reduced, and it projected budget deficits
in the hundreds of millions of dollars.
At the time, the MTA had planned to present a new a five-year capital
program for the 1997-2001 period, but instead it extended the 1992-1996
program through December 31, 1999. Under the revised program, the
portion financed directly by the Federal, State and City governments
declined to 40 percent, compared with 58 percent for the first
three capital programs.
As was pointed out in the Comptroller's March 1996 report, the
MTA had little choice but to rely more on operating budget revenues
to finance the capital program. According to the MTA's latest figures,
revenue bonds will finance 42 percent of the 1995-1999 capital
plan, compared with 31 percent in prior plans. Greater reliance
on operating budget revenues could mean fewer resources for services
and to fund new labor agreements.(1)
While much has been accomplished over the last 18 years, more needs
to be done. Subway signals, passenger stations and train yards are
not expected to be restored to a state of good repair until at least
2020. Other components, such as elevated subways, have no target
date for restoration. Buses currently travel 24 percent fewer
miles before breaking down compared to the 1991 level. Trains operated
by the Metro-North Railroad travel nearly three times farther between
breakdowns than those operated by the Long Island Rail Road (LIRR),
and the LIRR continues to experience problems with short trains
and air conditioning. The demand for additional bus service is strong
and subway overcrowding remains a serious problem, and riders still
complain of dirty trains and passenger stations, and inaudible public
address announcements. Moreover, the MTA is considering a number
of proposals to expand the regional mass transit system.
The MTA shortly will propose a new five-year capital plan for 2000-2004,
a five-year plan for the operating budget, as well as an updated
status report on the condition of the system and the investments
needed over the next 20 years. When evaluating these documents,
the following issues should be considered:
State of Good Repair: The new five-year capital
plan should maintain, or even accelerate, the rate of progress toward
a state of good repair.
Maintenance: Adequate funding should be allocated
to properly maintain capital investments to prevent premature deterioration
and to obtain the full benefit.
Performance: The operating budget should be closely
tied to monthly performance goals for service, reliability, and
Expansion: The MTA should show how major expansion
projects will be financed to completion, since most will take longer
than five years to complete.
Planning: The capital program should be part of
a larger regional effort to stimulate economic development and reduce
air pollution. New York State, New York City, the Port Authority
of New York and New Jersey, the private sector and others must better
coordinate their efforts.
Accountability: Riders should be told how the
capital and operating plans will affect services, and whether a
fare hike will be needed. Riders already support over 70 percent
of the cost for New York City buses and subways, 48 percent
for LIRR and 56 percent for Metro-North, far more than comparable
It is estimated that the MTA's next capital program will cost at
least $15 billion over the next five years. How the MTA finances
a program of this magnitude will have serious implications for riders
and the region.
The Federal government has already authorized a generous increase
in funding for transportation, in particular mass transit, and the
MTA could receive as much as $5.3 billion over the next five
years. New York City, which receives many of the benefits of the
regional mass transit system, is prepared to meet its commitments
under a 1986 agreement with New York State and will provide $870
million through 2004. While perhaps as much as $2 billion can be
financed by the MTA itself through asset sales and other management
actions, as much as $7 billion will have to come from New York State
and from bonds financed with operating budget revenues.
It remains to be seen whether New York State will continue to help
the rebuilding effort. The New York State contribution, including
proceeds raised from bonds backed by new sources of revenue authorized
by the State in past years, declined from nearly 19 percent during
the first two capital plans to 7 percent in the 1995-1999 plan.
The size of the State's contribution to the next capital plan, whether
in the form of direct subsidy or by authorizing new revenue sources,
may very well decide how large and when a fare hike will be needed,
the pace of progress toward restoring the system to a state of good
repair, and whether the regional mass transit system undergoes a
The Metropolitan Transportation Authority (MTA), created by the
New York State Legislature in 1965, is charged with developing and
implementing a unified mass transportation policy within the Metropolitan
Commuter Transportation District (the District), which includes
New York City and the adjoining counties of Dutchess, Nassau, Orange,
Putnam, Rockland, Suffolk, and Westchester.
The MTA Board has a Chairman and 16 other voting members, two non-voting
members and four alternate non-voting members, all of whom are appointed
by the Governor with the advice and consent of the State Senate.
Four of the members are recommended by the Mayor of New York City.
Seven others are recommended by the County Executives from the seven
adjoining counties. The chairperson and the five remaining members,
two of whom must reside in New York City, are appointed directly
by the Governor.
The MTA oversees the operation of subway and bus lines in New York
City through its affiliate the New York City Transit Authority (commonly
referred to as "NYCT"). A subsidiary, the Staten Island
Rapid Transit Operating Authority (SIRTOA), operates a rapid transit
line on Staten Island. Both NYCT and SIRTOA are organizations covered
under the Financial Emergency Act because, by law, New York City
may elect, and in some circumstances is required, to provide financial
assistance to these organizations should they incur operating deficits.
They therefore each operate under a four-year financial plan which
is prepared annually and updated periodically.
The commuter rail and bus lines are operated by three other MTA
subsidiaries: the Long Island Rail Road Company (LIRR), the Metro-North
Commuter Railroad Company (Metro-North), and the Metropolitan Suburban
Bus Authority. In addition, the MTA operates a system of intrastate
toll bridges and tunnels through the Triborough Bridge and Tunnel
Authority. Surplus toll revenues from the TBTA's seven bridges and
two tunnels assist in financing public transportation.
Following decades of deferred maintenance, the MTA's rail and surface
transportation network was on the verge of collapse by the end of
the 1970s. Thousands of commuter railroad passengers were regularly
inconvenienced due to cancellations or forced to stand in overcrowded
railroad cars due to the vast number of train breakdowns. Subway
riders were subjected to record numbers of derailments and track
fires, which threatened passenger safety. The subway car fleet and
numerous stations were covered with graffiti, evidencing a lack
of managerial control over the subway system. On-time performance
declined as tracks, switches, tunnels, and other equipment were
pushed beyond their normal useful life spans.
These problems, together with the City's economic recession from
1969 to 1977, resulted in a decline in subway ridership of 1.2 million
passengers during the average weekday in the 1970s. The decline
contributed towards increased motor vehicle use, which in turn,
exacerbated long-standing traffic and environmental problems. Finally,
in 1981, when the situation had reached crisis proportions and serious
concerns were expressed about the potential impact on the economy,
the State Legislature declared a "transportation emergency."
In 1982, soon after the transportation emergency was declared,
New York State, New York City and the Federal government cooperatively
launched an extraordinary effort that has been credited with saving
the mass transportation system. During the last 18 years, about
$34 billion has been allocated for improvements aimed at replacing
and restoring equipment and facilities. The two commuter lines and
NYCT have purchased thousands of railroad cars and buses, and upgraded
the infrastructure, such as replacing track. Today, a sizeable portion
of the transit system is in a state of good repair and ridership
is at its highest levels since the early 1970s.
In March 1996, the Comptroller issued a report that showed that
there had been a large reduction in government support for the downstate
regional mass transit system, and that New York State had practically
eliminated its support for the MTA capital program.(2) The report also discussed how greater reliance
on the operating budget revenues to finance the capital program
would place enormous pressure on the operating budget.
This report updates and builds upon those findings. The current
report discusses recent performance trends, progress toward rebuilding
the mass transit system, the importance of expansion, financing
the next capital program, and offers a guide for evaluating the
soon to be released five-year operating and capital plans.
In many respects, the regional transportation system operated by
the MTA is enjoying a period of unprecedented success and fiscal
stability resulting from the massive infusion of $34 billion in
capital funds over the last 18 years. The rebuilding effort, the
largest public works program in history, is now yielding many of
the results expected when it was launched, as demonstrated by some
of the key operating statistics discussed below.
The introduction and rapid success of the MetroCard and associated
discount pricing alternatives have complimented the operating improvements.
MetroCard is a $700 million automated fare collection system,
in place at all subway stations and aboard all buses, which provides
the technical capability to eliminate two-fare zones, and allows
for a free transfer between subways and buses. The MetroCard also
allows the MTA to offer volume discounts, such as the popular $15
MetroCard, which provides 11 rides for the price of 10. An unlimited
monthly MetroCard and other flexible variations also has been made
available to riders. LIRR and Metro-North offer "mail and ride"
programs where customers can obtain a joint railroad ticket/MetroCard
and receive a 9 percent discount on their commutation fare. MetroCard
has played an important role in attracting new riders, particularly
on the buses, but an improved economy, better services, and a rise
in tourism also have played a part.
A. New York City Subway
The New York City subway system is by far the largest in the nation
and first began operation in 1904. Today, NYCT operates and maintains
a fleet of nearly 6,000 subway cars, 656 miles of mainline track,
and 468 passenger stations.
Ridership: Average daily weekday
and weekend subway ridership declined until 1992 when it began a
period of steady growth (see graph). Average daily weekday ridership
totaled more than 4 million trips in 1998, an increase of 25 percent
over the 1991 level, and weekend ridership totaled 3.5 million trips
in 1998, an increase of 40 percent over the 1991 level. Preliminary
July 1999 data show ridership continuing to grow and averaging nearly
4.2 million on weekdays and 3.7 million on weekends. The large increase
in weekend ridership indicates that NYCT is attracting discretionary
riders back to the system. Subway ridership is nearing the level
that existed in the 1970s, but it is still only slightly more than
half the 1946 level when New York City was an industrial town with
around the clock weekday and half-day Saturday work shifts, and
there was less reliance on the automobile.
Reliability: After years of frequent
breakdowns, subway car reliability has steadily grown as a result
of new car purchases and major overhauls. In 1998, subway cars traveled
an average of 81,000 miles before a breakdown, a tenfold increase
since 1982 (see graph). While some subway car lines enjoyed averages
as high as 162,000 miles, some were as low as 44,000 miles. In 1999,
the distance subway cars traveled before a breakdown continues to
grow and averaged 84,000 miles through July 1999.
Safety: Felonies committed in the subways declined from
18,000 in 1990 to about 4,800 in 1998 (see graph). The reduction
in crime in the subways has been greater than the widely heralded
overall reduction in crime in the City and is a major factor contributing
to the increase in ridership during the evening. Data for the first
eight months of 1999 show an 10.5 percent reduction in the number
of reported felonies.
Passenger Comfort: A 1998 survey by the Straphangers
Campaign found that 7 percent of subway cars are "dirty"
or "heavily dirty," slightly worse than the 1997 figure.(3)
In a "line-by-line" comparison, only three subway lines
(the "R," "B," and the "7") had 50 percent
of their cars rated as "clean" or "extraordinarily
clean." The percentage of subway cars rated clean on the other
17 subway lines ranged from a low of 1 percent on the "E"
line to 38 percent on the "5"line. Riders should begin
to see some improvement next year because New York City and the
MTA have agreed to assign about 1,000 welfare recipients enrolled
in the City's Work Experience Program to clean subway cars and stations.
The Straphangers Campaign also has reported that public address
announcements were absent, useless, garbled, or inaudible during
two of every three delays and re-routings.(4) While the recent
increase in ridership is a welcome development, it has contributed
to severe overcrowding on some lines, especially the Queens Boulevard
and Lexington Avenue lines.
B. New York City Bus
New York City Transit operates and maintains a fleet of over 4,100
buses on approximately 230 local and express routes with more than
14,000 bus stops throughout the City.
Annual bus ridership reached 626 million in 1998, an increase
of 138 million riders, or 28 percent, since 1996 (see graph).
The introduction of free transfers between buses and subways has
been a major factor in the growth in ridership. Preliminary July
1999 data show ridership continuing to grow, with average daily
ridership at its highest level since 1980.
Reliability: The average distance
a bus traveled before a service interruption declined by 40 percent
between 1991 and 1995 (see graph). While the average distance has
improved in recent years, it remains 24 percent below the 1991 level.
Delays in the receipt of new buses is the primary reason the bus
fleet is less reliable than during the early 1990s.
Other Issues: A recent report by the Straphangers
Campaign concluded that despite modest improvements, such as cleaner
buses, more announcements, and more correct and legible bus maps,
service grew more irregular in 1998 with the increase in ridership.
The report found that bus bunching or gaps in service occurred 60
percent of the time on 40 key routes between October 1997 and September
1998, about the same as the prior year. While the MTA has significantly
increased bus service, the Straphangers Campaign has repeatedly
pointed out the need for larger increases and for New York City
to give greater priority to buses on congested city streets.(5) NYCT has been slow to add compressed natural gas
or clean fuel buses that would reduce air pollution, especially
particulate emissions from diesel engines.
C. Long Island Rail Road
The Long Island Rail Road is the oldest and largest commuter railroad
in the country, carrying more than 144,000 people each day. It comprises
nine branches, stretching from the eastern tip of Montauk, Long
Island to Pennsylvania Station in midtown Manhattan. The LIRR operates
and maintains a fleet of more than 1,100 passenger rail cars and
locomotives, 595 miles of track and 124 passenger stations.
Ridership: Ridership exceeded 80 million in 1998
(see graph), the highest level in nearly two decades. Assuming the
economy does not weaken, ridership should continue to grow with
the introduction of new equipment. New cars will replace those over
30 years old and dual mode locomotives will eliminate the need to
transfer from diesel to electric trains at Jamaica before traveling
to Pennsylvania Station. During the first half of 1999, ridership
showed a slight gain due to an increase of 5 percent in non-commutation
Reliability: LIRR trains are traveling
14 percent fewer miles before breakdowns compared with the 1992
peak (see graph). Moreover, the LIRR is far less reliable than Metro-North,
which averages 70,000 miles before breakdowns compared with 28,000
miles for LIRR. The discrepancy is attributed to delays in receiving
new cars, as well as failing to perform required mid-life overhauls
during the mid-1980s.
On-time performance averaged about 90% over the last ten years
(see graph), compared with 95 percent for Metro-North. According
to the MTA, a train is late only if its actual arrival time is six
or more minutes later than scheduled. On average, trains arrived
nearly 14 minutes late during the first six months of 1999, about
the same as last year. In addition, on-time performance varies by
branch. For example, on-time performance ranged from 85 percent
on the Greenpoint/Ronkonkama line to nearly 96 percent on the
Long Beach line during June 1999.
Passenger Comfort: "Short" trains continue
to be a problem for the LIRR, particularly during peak evening hours.
According to the Long Island Rail Road Commuters Council, riders
graded service as "C+"for the third straight year, complaining
mostly of dirty trains, inadequate public address announcements,
and broken air-conditioning. A report by the MTA Inspector General
found that during the summer of 1996 railroad cars were in service
for 4 days with significant temperature control problems before
being detected and that they remained in service for another 7 days
before being repaired.(6)
In some cases, it took as long as 20 days to detect and repair air
conditioning problems. The Inspector General warned that the need
for repairing climate control systems on the LIRR's aging fleet
will increase before the entire fleet is replaced or overhauled
D. Metro-North Railroad
The Metro-North Railroad is second only to the LIRR in size. It
operates and maintains 851 rail cars and locomotives, 744 miles
of track, and 117 passenger stations. Metro-North's territory covers
two boroughs of New York City, five suburban counties in New York
State, and two in Connecticut. The three main lines run into historic
Grand Central Terminal, which recently underwent a major renovation.
Ridership: Annual ridership on Metro-North
has increased steadily from about 55 million during the 1988-1992
period to 65 million in 1998 (see graph). Ridership grew by nearly
3 percent during the first seven months of 1999.
Reliability: The mean distance between breakdowns
grew steadily during the early part of the decade, but then experienced
setbacks. Reliability exceeded 60,000 miles for the first time in
1997 and has averaged about 70,000 miles during the first eight
months of 1999. On-time performance has averaged about 95 percent
since 1991 (see graph), also better than the LIRR.
In FY 1981, the State Legislature enacted the Transportation Systems
Assistance and Financing Act of 1981 (the 1981 Act). The Act calls
for the MTA to present its capital program projections in detailed
five-year plans, and also created a Capital Program Review Board
(CPRB) to approve all such plans and periodic amendments. There
are four voting members of the CPRB, all of whom are appointed by
the Governor. The members include a New York City representative,
recommended by the Mayor, whose voting powers are limited to matters
pertaining to NYCT and SIRTOA. Two members recommended by the Majority
Leader of the State Senate and the Speaker of the State Assembly,
and a remaining member appointed directly by the Governor. There
are also two non-voting members whose appointments are based on
the recommendations of the Minority leaders in the State Senate
and Assembly. All capital plans and amendments must be unanimously
approved by CPRB voting members.
The Act also authorized NYCT to pledge its revenues to the MTA
so that the MTA could issue special obligation bonds and notes to
finance a portion of the NYCT's capital needs. In addition to these
revenue bonds, which are backed by farebox and other operating budget
revenues, numerous other revenue sources were identified to help
finance the MTA's capital program. These included bonds payable
from State appropriations (service contract bonds); TBTA bonds secured
by bridge and tunnel toll revenues; bonds supported by certain dedicated
transit taxes (e.g., a supplemental tax on petroleum businesses)
and funds from the Federal, State and City governments.
The MTA had been expected to present a new five-year capital program
in October 1996 for the 1997-2001 period. Instead, the MTA extended
the 1992-1996 program through December 31, 1999. Under the revised
program, the portion financed directly by the Federal, State and
City governments declined and the portion financed with revenue
bonds grew. As shown in the graph on the next page, the Federal,
State and City governments directly financed 58 percent, on
average, of the three capital programs approved for the 1982 through
1996 period. In sharp contrast, direct government contributions
supported 40 percent of the renovations scheduled in the 1995-1999
Perhaps most telling is that the State's direct contribution,
which averaged 15 percent during the first two capital programs,
was eliminated in the 1992-1996 program and comprised only 1 percent
of the 1995-1999 program. In its place, the State authorized two
new sources of revenue to help support the capital program: a 0.25 percent
tax on certain real estate mortgages within the MTA transportation
district (1987) and a statewide supplemental tax on petroleum businesses
(1993). In total, the State contribution, including both its direct
contribution and the proceeds raised by borrowing against the new
State tax revenues, declined from nearly 19 percent during the first
two capital plans(7)
to 7 percent in the 1995-1999 capital plan (see graph).
The major goal of the MTA's capital programs has been to restore
the entire mass transit system to a state of good repair which,
in essence, means that all commuter trains, buses and subway cars
are being replaced and/or overhauled according to proper replacement
cycles, and that all other equipment and facilities are being maintained
in good operating condition. The MTA divides its capital projects
into distinct categories, such as rolling stock, including commuter
rail cars, subway cars and buses; passenger stations; track; and
signals/communications. The graphs below show the progress the MTA
has made over the last 18 years toward a state of good repair, with
the dates a state of good repair was, or is expected to be, achieved
for each major category as of 1997.
NYCT achieved a state of good repair for buses in
1983; mainline subway track in 1991; subway cars in 1992; and mainline
switches in 1997 (see graph). The MTA estimated in 1997 that with
the investments made during the 1995-1999 capital program it will
achieve a state of good repair for signals on the IRT subway line
in 2003 and restore more than 80 percent of the bus depots and subway
substations. However, the MTA still has a long way to go to achieve
a state of good repair in a number of other areas, such as signals
on the IND and BMT subway lines, subway stations, and train yards.
These components are not expected to be restored to a state of good
repair until at least 2020. Currently, only 122 of NYCT's 468 subway
stations have been restored. For other components, such as elevated
subways, there are no target dates to achieve a state of good repair.
According to the MTA, the LIRR achieved a state of good repair
in all areas, except line structures, by 1994. However, as discussed
earlier, delays in the delivery of new train cars and locomotives,
and the decision to put off major rail car overhauls has contributed
to a deterioration in performance.
While Metro-North has yet to achieve a state of good repair in
a number of areas, service has been more reliable than LIRR and
has experienced fewer breakdowns. Shops and yards, and stations
will not be restored until 2000, and line structures not until 2010.
The MTA and other regional transportation agencies are studying
or implementing new projects to expand and improve the regional
rail network to solve chronic transportation problems, access to
New York's airports and renovating the Farley Post Office for use
as a train station, reminiscent of the old Pennsylvania Station.
Expansion projects underway or under consideration by the MTA include:
- completing the Second Avenue subway, which was abandoned during
the 1970s fiscal crisis, to relieve overcrowding
on the Lexington Avenue Line. The project could take as long as
15 years to complete at an estimated cost of $3.5 billion to $15
billion depending on the route;
- providing LIRR commuters access to the East Side of Manhattan
via the Grand Central Terminal;
- providing Metro-North commuters access to the West Side of Manhattan
via Pennsylvania Station;
- establishing a rail link to LaGuardia Airport by continuing
the existing "N"subway line. Two possible routes under
consideration would cost between $1 billion and $1.8 billion;
- completing the 63rd street tunnel connector project
by 2001 to relieve overcrowding on the Queens Boulevard subway
lines on trips between Manhattan and Queens.
The MTA is expected to release by October 1, 1999 its proposed
capital program for 2000 through 2004, which will be subject to
review and approval by the CPRB. As part of the approval process,
the State Legislature must also authorize any increase to the current
cap on the amount of MTA bonds that can be issued to help finance
the next capital program.
The MTA intends to release a new twenty-year capital needs assessment
at the same time it releases the new capital program. The needs
assessment will provide an estimate of the investment needed over
the next twenty years in the regional mass transit system. The last
publically released needs assessment was issued on May 25,1990 and
covered the 1992 through 2011 period. That assessment estimated
that NYCT required an investment of $25 billion and the commuter
lines an estimated $10 billion in constant 1988 dollars to restore
the system to a state of good repair. In addition, the assessment
estimated that between $13 billion to $16 billion would be required
for expansion initiatives during that period.
By most accounts, the MTA will propose a capital program for the
2000-2004 period with a value of between $15 billion and $18 billion.
The challenge facing the MTA will be financing a program of that
magnitude. As shown earlier, the portion of the 1995-1999 capital
program funded by the public sector declined significantly because
New York State virtually eliminated its direct contribution. As
a result, the MTA has had to rely to a greater extent than ever
before on revenue bonds, increasing pressure on the operating budget.
Federal funding for mass transit capital projects is expected to
not only continue, but to increase significantly over the next few
years. The recently enacted Transportation Equity Act for the 21st
Century (TEA-21) will authorize a record $218 billion for highways,
bridges, and transit nationwide during the six-year period FFY 1998-2003.
One major change in TEA-21 from the previous Federal surface transportation
act (ISTEA) is the creation of guaranteed spending authorization
by segregating Federal gas tax revenues within the Federal budget.
This will ensure that new Federal gas tax revenues will be spent
on transportation. This is particularly important for transit. Under
ISTEA, Congress appropriated only 76 percent of the authorized transit
funds. Under TEA-21, 88 percent of the transit authorization is
guaranteed. This significantly improves the certainty of Federal
funding for transit.
As shown in the table below, New York State's funding
authorization totals $14.8 billion under TEA-21, an overall
increase of 44 percent compared with the level made available under
ISTEA. Federal transit funds are apportioned among states by a formula
that takes into account population, population density, and extent
and usage of transit systems. Under these formulas, the New York
State Department of Transportation estimates that the MTA could
receive as much as $5.6 billion over the six year period, assuming
full funding is provided for the LIRR East Side Access project.
This is an increase of 47 percent compared with the level made available
under ISTEA. In addition, TEA-21 includes funding for specific projects,
such as converting the James A. Farley Post Office into an Amtrak
station adjoining Pennsylvania Station in New York City.
Federal Transportation Funding for New York
|Road and Highways
Other Mass Transit
Data Source: New York State
Department of Transportation
Under a 1986 agreement between the Governor, Mayor, and the Chairman
of the Municipal Assistance Corporation, New York City was required
to provide $105 million each year through 1995 to support the
NYCT capital plan. The City has continued to meet this obligation
and has allocated $105 million for mass transit in each year of
the current ten-year capital plan through 2009. While the City has
contributed additional amounts in past years to the MTA capital
program, the primary purpose of such arrangements has been to help
the City balance its operating budget. For example, the MTA provided
the City with a total of $250 million from farebox revenues during
1996 and 1997, which the City used to help balance its operating
budget. In exchange, the City issued $500 million in long-term
bonds to support the MTA capital program. Similarly, the City has
agreed to issue an additional $345 million in bonds in support
of the MTA's 2000-2004 capital program, but only if the MTA turns
over to the City the cash proceeds from the sale of the New York
Coliseum, estimated at $345 million. Although the City intends
to provide the MTA with a total of $870 million over the next five
years, the net benefit to the MTA is $525 million given the
According to Federal and State officials, the MTA can plan on receiving
about $4.6 billion in Federal funds over the next five years, a
generous increase over the current level. This amount would grow
to $5.3 billion if full funding is received for the LIRR East Side
Access project. New York City, which receives many of the benefits
of the regional mass transit system, is prepared to meet its commitments
under a 1986 agreement with New York State and will provide $870 million.
While perhaps as much as $2 billion will be financed by the MTA
itself through asset sales and other management actions, about $7
billion will have to come from New York State and from bonds supported
by operating budget revenues. In the 1995-1999 capital plan, the
MTA raised more than $5 billion through bonds financed with operating
revenues, but relying on the operating budget to finance such a
large portion of the capital program necessitated a fare hike.
It remains to be seen whether New York State, which made significant
contributions to the MTA's first two capital programs, will continue
to help the rebuilding effort. New York State's contribution could
come in the form of a direct subsidy or by authorizing new revenue
resources. In fact, the State authorized new sources of tax revenues
in 1987 and 1993 to help finance the MTA capital program. The two
former MTA chairmen who served from 1979 to 1990 and its former
counsel from 1981 to 1990 have suggested reinstating the commuter
tax to help finance capital improvements, which they estimate could
support about $6 billion in bonds.(9)
The size of the State contribution, regardless of its form, will
ultimately decide whether a fare hike will be needed to help finance
the 2000-2004 capital plan, the pace of progress toward restoring
the system to a state of good repair, and whether a serious commitment
is made to expand the regional mass transit system.
1. The current labor agreement with the Transport
Workers Union (TWU), which represents most transit employees, expires
on December 15, 1999. Return
2. Review of the Operating and Capital Plan
for New York City Transit and the Commuter Railroads, Report 6-96,
March 29, 1996. Return
3. Subway Shmutz II: Cleanliness in New York
City Subway Cars. Straphangers Campaign, February, 1999. Return
4. Say What? A Survey of Subway Car Announcements.
Straphangers Campaign, 1998. Return
5. Slow Going: New York City Transit Buses.
A Straphangers Campaign Report. April 1999. Return
6. Review of the LIRR's Performance in Providing
Adequate Temperature Control. State of New York - Office of the
Inspector General - Metropolitan Transportation Authority. December,
7. The MTA had initially planned to issue $1.5
billion in debt backed by State-authorized tax revenues during the
1992-1996 capital plan, but the issuance was reduced and delayed
until the 1995-1999 plan. Return
8. Assumes full funding of the LIRR East Side
Access project. Return
9. "Paying For All That Back and Forth,"
New York Times, July 24, 1999. Return