MTA Identifies $2 Billion in Savings — Now Comes the Hard Part

The MTA has found another $2 billion in capital program savings that it says won't harm riders. Unless the state steps up and funds transit, however, there won't be a way to close the remaining $9 billion capital deficit except at riders' expense. Image: ##http://online.wsj.com/article/SB10001424053111903461104576458471310303488.html?mod=googlenews_wsj##MTA via WSJ##

Jay Walder’s surprise resignation announcement last week overshadowed some important news about the MTA’s finances: The agency has identified $2 billion in savings in its capital program [PDF], which maintains and expands the transit system, but expects $1 billion less in federal assistance. That brings the total gap in the five-year, $26 billion capital plan to $9 billion that must be accounted for by the end of the year. This enormous deficit will define the political context in which Governor Andrew Cuomo chooses Walder’s replacement.

First the good news: The cuts do seem to trim fat, not muscle. The $2 billion in savings come largely from reduced construction costs due to the weak economy and more efficient operations. Though the cutbacks will include changes to how tracks and train cars are maintained, the transit agency says that riders should not be negatively affected.

The efficiency-finding is encouraging, but the bad news is that unless Albany fulfills its responsibility to fund transit, enormous fare hikes or spending cuts that will hurt riders are still looming.

The biggest savings, worth $800 million, come from reduced construction costs due to the weak economy. Another $150 million will come from reductions in administrative costs and payroll.

The savings also include 10 percent spending cuts on both transit vehicles and tracks. In the past, the MTA would use broken tracks as an opportunity to work on entire sections of the system; now, the agency will instead fix only the broken piece. That means more frequent but smaller repair jobs. The MTA will also eliminate replacement bus service during track outages where an alternate subway route is available (this change, at least, will affect riders).

The MTA intends to save another chunk by overhauling the way it buys trains and buses. By changing the design standards it puts out to vendors to better match how the MTA actually uses its vehicles, the theory goes, the MTA will be able to reduce maintenance costs.

“Our rolling stock initiative is less about extending the useful life of trains and buses,” explained an MTA spokesperson, “and more about being smarter about how we partner with suppliers and being smarter about how we review design specifications to ensure we’re not making cars too heavy or doing other things that cause other expenses down the road.”

“This $2 billion seems to be all about good management,” said Hope Cohen, the associate director of the Regional Plan Association’s Center for Urban Innovation, who said that these cuts likely won’t hurt riders. “Anything more significant or controversial will be coming later.”

The $2 billion in savings come on top of a previous $2 billion in cuts to the MTA’s current five-year capital program, proof that under Walder, the efficiencies to be found in the transit agency’s spending were being found.

Even assuming these savings materialize as promised, however, an enormous hole remains in the capital program. Albany funded only the first two years of the program after refusing to include bridge tolls in the 2009 MTA funding package.

As things stand today, Governor Cuomo and the state legislature have five months until the essential work of maintaining and expanding the transit system can no longer be paid for. Where the revenue will come from to cover $9 billion in unfunded construction and repairs remains to be seen.

“We recognize that there’s no appetite for new taxes in New York today,” Walder said in a statement last week. But restructuring those taxes in the form of a 32 percent fare hike would prove just as politically toxic, though the howls would come from a different set of New Yorkers. None of the other options — enormous service cuts, a halt to basic repairs and construction projects like the Second Avenue Subway, or road pricing — could be enacted without stirring up significant opposition. There’s a big fight coming no matter what.

The need to replace Walder complicates the politics of the capital plan. In choosing who will run the MTA, Governor Andrew Cuomo will also choose, to an extent, how the agency responds to its enormous deficit. If Cuomo wants to fight for transit riders and secure the needed funding for the MTA, he can entrust a competent leader with the task of making that case to the legislature and the voters. If Cuomo wants the entire capital deficit to fall on relatively low-income transit riders, he can choose someone who will go along with massive fare hikes and absorb the public’s outrage.

Advocates and elected officials alike have called on Cuomo to appoint another experienced transit professional to replace Walder. Cuomo also needs to give the next MTA chief a job description that includes strengthening the region’s transit system, not managing its decline.

  • carma

    the hard part is as follows.  wow.  we managed to cut $2B.  but there still is a whopping $9B that needs to be cut.  its almost as bad as when you are out of a job, and you merely cut the cable bill to save money.  i hate to say it.  the MTA is looking really shitty either way.

    and why are we saying : “fall on relatively low-income transit riders”.  As a person of high income who primarily gets around by mass transit.  its just not low income.  but ALL INCOMES who have to somehow find extra money to pay more for less.

    mass transit is something used by ALL incomes.  not just low income.

    bankruptcy SHOULD be an option open on the table.  although not favorable.  the other alternatives are $2.50 subway/bus fares with no discounts, to be followed up with $3.00 subway/bus fares with no discounts.

    These are your only other options that i can see.  letting the system rot will only make things worse for the future.

    with all that said, thats why i think walder actually DID a GOOD job during his short tenure of doing more with less.

  • Larry Littlefield

    “Though the cutbacks will include changes to how tracks and train cars are maintained, the transit agency says that riders should not be negatively affected.”

    Hmmm.  OK the cost of capital construction and car purchases had inflated, and the MTA had added hugely to costs to ‘benefit riders” every time a politicians said “boo.”  So lots of money could be cut from the capital plan.

    And in addition the MTA had overbought cars, and can probably slow down car purchases by keeping existing ones on the road longer.

    But beware.  No one is going to announce deferred maintenance.  Did they announce more garbage left to rot on the subways?  No.  But that doesn’t mean it isn’t happening.

    Moreover, how much of the savings are for New York City Transit, and how much for the commuter railroads?

  • carma

    Larry, dont forget, the commuter railroads should also be maintained as they keep a LOT of long islanders and westchesterites off the road.

    i totally agree the mta waaaay overbought cars.  as i mentioned, those r32’s had another 15 years of life before they can be retired.  the r40’s/42’s were a different story as those were rusting throughout and most were held up by duct-tape.

    you can even blame a lot of the rusting due to the power acid washing to remove graffiti of the 70’s/80’s.  worse hit were the 40’s/42’s as those primarily ran on the lines where graffiti was the worst/still is the worst.

  • Press Office

    Official Statement on Transportation Funding by Gov. Andrew Cuomo

    My administration has adopted a principled approach to new transportation funding. Here is the principle.  Taxes will not be raised. Therefore, gas taxes will not be raised no matter how many bridges fall in the Hudson. The word MetroCard does not include the word “tax.”  MetroCard prices will be raised as much as needed. Using this consistent and principled approach we will raise transportation funds without raising taxes.

    Thank you.

  • Andrew

    The R32’s are still running, but they’re showing their age.  At some point it becomes more expensive to keep a car going than to replace it.

  • carma

    the r32’s are at a midlife crisis.  they wont run forever, but they still have life.  the biggest problem they face are overheated a/c units.  they run mostly on the C and being completely in an enclosed underground line doesnt help the a/c.  while im not an expert on how much it costs to repair these ac units, it still would be cheaper than to buy a new subway car.  afterall, the bodies of those stainless steel people movers are still in good shape.

    lets also consider those new r160 a/c units.  at best its mediocre.  the vents on the coolers only cover half the car.  the front and back ends hardly have any cool air at all b/c there are no vents.

  • I agree lousy airconditioning and really poor seating design.

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