What The Downgrading Of MTA Debt Means To You
THE COMMUTE: If you have been reading Bensonhurst Bean, as you should be doing, you already know about the downgrading of MTA bonds from A+ to A by Fitch, the smallest of the three rating agencies. Joe Teutonico did a fine job summarizing possible impacts. One could only speculate what the long-term effects will be for you the rider. Higher interest rates for future borrowing resulting in further delays in completion of Phase 1 of the Second Avenue Subway, perhaps. Phase II completion from 63rd Street to Hanover Square is already in doubt. We may land another man on the moon before the Second Avenue Subway is extended to Brooklyn or a new subway is built in Sheepshead Bay.
The downgrading is certainly not good news for the MTA or transit riders, nor is Governor Cuomo’s stalling on signing the Lockbox Act making it much more difficult for Albany to raid transit funds. The only thing that could make matters worse would be if the payroll tax to help fund the MTA enacted in 2009 were also removed as some lawmakers have suggested. If the Lockbox Act is not signed, and the parole tax is discontinued, the MTA would indeed be in dire financial straits, worse than it is now. Other funding sources would have to be found. That would once again open up the debate for congestion pricing or tolling the free East River bridges, neither of which would be good news for commuters.
How Did We Get Ourselves into this Mess in the First Place?
The rationale of borrowing for capital projects is that when it is time to pay off the bonds, the project will be completed and will be generating new revenue. The theory is good but not what happened in practice. Not all capital projects generate new revenue such as a new signal system or rebuilding existing stations like on the Brighton line, but that didn’t stop the MTA from borrowing for those types of projects, not that they had any choice in the matter because the politicians saw to it that funding was not available from other sources. Voters passed several bond issues to build a Second Avenue subway that still eludes us while those bonds still had to be paid off. The MTA’s debt service has continually increased to the point that it amounts to 16 percent of its operating expenditures going up to nearly 18 percent in just three more years.
In the 1950s, in order to maintain an artificially low fare of 15 cents for 13 years, because Mayor Robert Wagner wanted to be reelected, he shifted capital monies designated to build the Second Avenue subway to the operating budget. In the 1960s, New York City began a program of deferred maintenance, the full impact of which was not felt until the late 1970s and early ’80s when the subway system was on the brink of collapse. Governor Pataki greatly increased the MTA’s reliance on borrowing as a means of funding all types of capital programs including ones that do not generate additional revenue in order for the system to catch up on much needed maintenance including overhauling subway cars and purchasing new equipment.
Because of so many years of neglect, it is now necessary to close down parts of the system on up to a dozen different lines at a time on a single weekend, something that was unheard of years ago. When I was growing up, I can’t remember a single instance of any subway line being closed for maintenance. An express may have operated temporarily as a local, but that was it; no shuttle buses necessary.
Other Future Impacts
Higher interest rates for the MTA’s future borrowing could be on the horizon, only worsening the debt situation. Or instead of borrowing more, additional operating monies could be shifted to the capital budget as Governor Cuomo has already done. However, that money would have to be replaced one way or another or else there will be have to be more massive service cuts. Fares may have to rise at a faster pace and all discount programs and monthly passes could be in jeopardy including free bus and subway transfers. Capital projects could be halted or severely delayed and the system fall back into a state of disrepair canceling out all the progress made over the past generation. This is of course a worst-case scenario. It would be disastrous if any of the above should come to pass because of all the ramifications that it would entail.
What Can Be Done
Politicians need to recognize the importance of a good mass transit system and fund it accordingly, not to steal dedicated transit funds to meet the State’s other obligations. The MTA needs to be more efficient and care more about its riders, the subject of a different discussion. Select Bus Service is no substitute for mass transit expansion and you should not be brainwashed into thinking that it is.
The MTA is not considering any new subway expansion in the foreseeable future other than completing the first phase of the Second Avenue subway and East Side Access and that in itself is wrong. Prioritized plans should be in place just in case the economy turns around and additional funding somehow becomes available. A plan in itself could give politicians an impetus to pressure the federal government to help fund new projects. No plans make it appear that we wouldn’t know what to do with mass transit money if we had it.
When discussions of expanding the subway system were occurring decades ago, the question was always “Should we build a Second Avenue Subway or extend the Nostrand Avenue line?” for example. The answer of course was Manhattan is more important than Brooklyn, and you know the rest. The question should have been: “Which lines do we need?” It never should have been a question of building one line or another. By comparison, when Major League Baseball requested the city’s assistance in rebuilding Yankee Stadium and Citifield to replace Shea Stadium, did any politician dare to suggest that we could only afford to float bonds or make city improvements for only one new stadium and the other would have to wait 10 more years? Of course not.
Enacting the Lockbox Act into law is only a first step. A long-term funding solution for mass transit must be found, which must include more aid from the federal government. Barack Obama promised to help rebuild the aging infrastructure of large American cities when running for election. That would include highways and mass transit. However, that promise was not kept.
Until our elected officials realize that providing aid to mass transit is just as if not more important as facilitating the building of new sports stadiums for example, the MTA will never be able to dig its way out of its current financial mess. Where is it written that sports stadiums need to be replaced every 30 years, while it is perfectly okay for the subways to utilize 100-year old signal systems? New stadiums are sexy and make money for their owners. There is nothing sexy about a new signal system. Mass transit is the lifeblood of the city. If it is allowed to crumble, either physically or through service deterioration, so will the entire city.
The Commute is a weekly feature highlighting news and information about the city’s mass transit system and transportation infrastructure. It is written by Allan Rosen, a Manhattan Beach resident and former Director of MTA/NYC Transit Bus Planning (1981).