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March 13, 2008

DiNapoli: MTA Will Need Up to $13.8B
More for Proposed Capital Plan

Congestion Pricing Would Contribute $4.5B to Plan

The Metropolitan Transportation Authority (MTA), working with its funding partners, must identify another $9.3 billion to fully fund its recently proposed $29.5 billion capital program for 2008-2013, according to a report New York State Comptroller Thomas P. DiNapoli released today. The report indicates that the funding gap could grow to $13.8 billion if City and State officials do not approve congestion pricing or provide alternative resources.

“The MTA is absolutely vital to the region’s economy,” DiNapoli said. “The system must be kept in good repair and crucial expansion projects must be completed as planned and on time. But the MTA can’t close the funding gap without the help of the State and the City. And the MTA should not rely too heavily on debt. Debt service is already placing increasing pressure on the MTA’s operating budget.

“The MTA has made a lot of progress in getting the system back to a state of good repair, but there is still more to be done. The MTA must also meet the challenge of maintaining the improvements and getting the system ready to support future growth and prosperity in the metropolitan region. We must invest in our future.”

The MTA’s $29.5 billion plan is its largest ever, and is about 36.6 percent larger than the current program, according to the DiNapoli report. The MTA has identified $20.2 billion in potential resources to fund its plan, which is divided into three tiers. The Tier 1 Core Program, which is designed to maintain the system in a state of good repair, is estimated to cost about $19.1 billion. The Tier 2 component of the plan would complete currently planned expansion projects, including the first phase of the Second Avenue Subway and East Side Access, and is forecast to cost about $5.5 billion. The third tier is expected to cost $3.2 billion for new capacity expansion projects.

DiNapoli’s report shows that four major capital expansion projects, such as East Side Access and the Fulton Street Transit Center, are costing more and taking longer than originally forecast. DiNapoli said the higher costs are troublesome in an environment of scarce resources, and his report cites concerns that some of the other potential funding sources identified by the MTA may not materialize in the amounts the MTA expects.

The MTA, for example, is counting on $600 million in additional State and City aid beginning in 2010, which the MTA’s operating budget assumed would be available to help narrow the projected budget gaps. The MTA is now proposing to use 43 percent of these resources to fund $4 billion in new debt to help fund the proposed capital program. The MTA also has not identified the sources of $500 million that it expects from the sale of assets and assumes the receipt of $590 million in federal funding for capital security projects, a level of funding that is much higher than received in the past.

The DiNapoli report also found:

  • The MTA has made impressive progress on restoring the system to good repair, which has helped spur a 37 percent increase in ridership over the past 10 years. The mean distance between failures on the subways has grown from 7,000 miles in 1981 to 150,000 miles in 2007.
  • If enacted, congestion pricing would add $4.5 billion to the capital program’s funding.
  • The MTA’s proposed capital program will drive significant economic activity. Every $1 billion of MTA capital spending generates 8,700 jobs, $454 million in total wages and $1.5 billion in economic activity in the metropolitan region.
  • Roughly 55 percent of New York City residents use the MTA to commute, the highest rate of mass transit usage in the United States. The Texas Institute of Transportation estimates that the metropolitan region saves about 216 million hours of potentially productive time and $4.2 billion annually through commuters’ use of public transportation.
  • Although a majority of City commuters use mass transit to and from the City, mass transit is responsible for only 12 percent of the City’s annual transportation carbon dioxide emissions and only three percent of total carbon dioxide emissions.
  • The cost of transportation construction projects has grown an average of 9.2 percent over the past three years for a cumulative increase of more than 27 percent, reflecting higher costs for steel, concrete and labor. The growth in construction costs is expected to slow to 2.6 percent during the new capital plan period as the economy cools.
  • The cost of MTA expansion plans has increased from original estimates of $9.3 billion to $13.3 billion, an increase of nearly $4 billion or 42 percent, and incurred delays that currently range from 14 months to six years.
  • The proposed plan assumes the MTA will issue $6.5 billion of new debt, which will help drive annual debt service costs to $2.5 billion by 2017, consuming about 20 percent of total revenue and roughly 43 percent of all fare box and toll receipts. For fiscal year 2008, the MTA’s $1.5 billion of debt service consumes about 15 percent of all revenue and about 28 percent of fare box and toll receipts.

Click here for a copy of the report.



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