Reinvent This: Cuomo Cuts Future Investment to Pay for MTA Labor Deals

When Governor Cuomo smiled for the cameras to announce labor deals with the Transport Workers Union and Long Island Rail Road unions, he promised they wouldn’t push already-planned fare hikes any higher. The unanswered question was: How much will this cost, and how is he going to pay for it? Now we know: The governor’s MTA is moving money away from investments in the system’s long-term upkeep, widening a $12 billion hole even as a panel of experts studies ways to pay for needed improvements.

He appointed a commission, but will Governor Cuomo do what it takes to fund the MTA's future? Photo: Diana Robinson
He appointed a commission, but will Governor Cuomo do what it takes to fund the MTA’s future after cutting capital plan funds to pay for labor deals? Photo: Diana Robinson/Flickr

Yesterday, the MTA released its proposed 2015 budget and four-year financial plan. It reveals that labor deals, including expected settlements with Metro-North workers, will cost the authority at least $1.28 billion through 2017.

Over the same period, the MTA is expected to save $635 million through higher revenue from taxes, tolls, and fares, and better than expected savings on para-transit, energy, health care, and debt service. It’s also continuing internal cost-cutting measures. The net result: There’s a new $645 million hole in the MTA’s budget over the next three years.

How to fill it? The authority is cutting its long-term contributions to pensions and other retiree funds, and will even dip into existing funds this year. That covers most of the gap. The rest will come by cutting the contribution the MTA makes to its capital plan, which funds both big expansion projects and state of good repair for reliable buses, trains, and stations.

The MTA’s contribution from its operating budget to its capital plan is a down payment on the next round of planned investments. City, state, and federal dollars are less certain, and they’re secured later to fund the majority of the program.

In February, the MTA said it planned to contribute $370 million each year from its operating budget to the capital program. If it used these funds to issue bonds, it could leverage $6.5 billion over eight years. Thanks to the new labor agreements, that number has been cut by more than one-fifth, down to $290 million a year. The MTA says this will cost the capital program $1.5 billion.

Comptroller Tom DiNapoli, assuming the MTA would contribute what it said it would earlier this year, warned last week that the capital program faces a $12 billion gap. Yesterday, that gap got $1.5 billion wider. That’s not chump change: The MTA has identified $26.6 billion in capital needs over the next five years.

Paying for the capital plan with more debt brings big risks. The MTA has already increased its debt load to record levels to pay for capital investments. In fact, 17 cents of every dollar the MTA spends in its 2015 budget goes to debt service, costing the authority $2.4 billion a year. That’s about how much it costs to operate Metro-North ($1.2 billion) and Long Island Rail Road ($1.4 billion) combined. Without changes to the status quo, paying off that debt will ultimately fall to straphangers, since fares and tolls comprise a majority of the MTA’s operating income. In other words, by pushing costs to the capital program, the labor agreements could result in a fare hike — just not right now.

It doesn’t have to be this way. The governor has appointed a “transportation reinvention commission” to study, among other things, ways to fund the capital program. It’s set to release recommendations in September, less than a month before the MTA sends its next five-year capital plan to the state. With the latest cut to the capital plan’s funding, the need for other sources of revenue just became even more pressing.

  • Samuel L Bronkovitz Presents

    By now its pretty obvious on all counts – from transit policy to marijuana policy, from corruption to courting elites – that Cuomo is a NE Republican, waving the right flags for PR and fucking over anyone that isn’t rich. A shame the WFP ended up endorsing him; but the woman that had bubbled up, Zephyr Teachout, is going strong. Vote for her in the primary!

  • BBnet3000

    Doesn’t WFP always endorse the Democrat? They don’t run their own candidates afaik.

  • lop

    Usually, not always.

    Letitia James in 2003 ran for city council as WOR, defeated the democrat nominee, first third party win since the 70s.

    I think for governor they usually want to endorse the democrat because then people can vote their party without worrying that they’ve wasted the vote, it guarantees them ballot access in other elections. And running someone for an assembly district or state senate seat or city council might be easier to pull off, so there they’ll try their own sometimes, though usually that ends up just pushing the democrat to the left in the primary.

  • Emmily_Litella

    So the word ‘fracking’ is verboten on Streetsblog?

  • Samuel L Bronkovitz Presents

    Not sure I follow?

  • bolwerk

    Their usual strategy is the same as the old Liberal/Conservative Party (I’m dating myself :-O) strategy of trying to influence a major candidate or, barring that, run their own.

  • Bolwerk

    Cuomo is a member of American’s conservative republican party, which for some reason calls itself the Democratic Party (it originally was the Republican Party). It’s the party the pushes for the interests of the establishment and tries its best to keep a stable status quo. Drivers are the status quo. Subways we have now are the status quo, but more are disruptive.

    The radical liberals are the so-called Republican Party, which is not even meaningfully republican in any way. The GOP is more right-wing for sure, but it’s not more conservative.

  • Larry Littlefield

    “In February, the MTA said it planned to contribute $370 million each year from its operating budget to the capital program. If it used these funds to issue bonds, it could leverage $6.5 billion over eight years. Thanks to the new labor agreements, that number has been cut by more than one-fifth, down to $290 million a year. ”

    Ahem. Pay as you go capital funding is pay AS YOU GO capital funding. You don’t bond it, and spend the next 30 years of such revenue in just five or eight years.

    At the very least, the MTA should stop using capital money to fund the operating budget through “reimbursable” operating expenditures. To prevent a future system collapse, all ongoing normal replacement should be paid for in cash.

    The $290 million per year is a small portion of the $4.4 billion per year in ongoing normal replacement. That needs to be squeezed on both end — it needs to cost less, and someone other than the federal government has to put up cash.

  • Voting for Teachout

    Cuomo has no transportation agenda. Voting for Cuomo is voting for more corruption! Vote for Teachout! She was brilliant on NY1 tonight & spoke about train travel which Cuomo doesn’t do since he’s too busy hanging out with the 1% in fancy cars being driven around that he has forgotten about the regular folks and poor working stiffs.

    Teachout or Corruption.

ALSO ON STREETSBLOG

MTA-TWU Agreement: What’s the Plan Now, Governor?

|
The MTA’s financial situation became much murkier yesterday as Governor Cuomo announced that retroactive raises will be part of a labor agreement between the transit authority and the Transport Workers Union. Up until yesterday’s announcement, MTA leadership had insisted that the authority’s financial health depended on “three years of net-zero wage growth.” Keeping labor costs flat […]

Here Are Six Times the MTA Was a State Entity Under Cuomo’s Control

|
Yesterday on WCNY’s “Capitol Pressroom,” Susan Arbetter hosted Governor Andrew Cuomo for a discussion of the MTA capital program. Lately, the governor has been pushing City Hall to fund a greater share of the authority’s investment plan. Arbetter, pressing the governor, asked a simple question: “Isn’t the MTA a state entity?” “It’s not, actually,” Cuomo replied. “It [covers] a metropolitan downstate […]

How Did Straphangers Make Out in the Cuomo-de Blasio MTA Deal?

|
On Saturday, Governor Cuomo and Mayor de Blasio reached a deal to close the gap in the MTA’s five-year, $29 billion capital program, with the state pitching in $8.3 billion and the city contributing $2.5 billion. The agreement ends a drawn out political fight between the governor and the mayor. But enough about politics. How do transit […]

Sooner or Later, the Cuomo Fare Hike Is Coming

|
Earlier this week, Streetsblog contributor Charles Komanoff crunched the numbers to see what could happen if Governor Andrew Cuomo doesn’t follow through on his pledge to restore the $320 million in MTA funding cuts he signed into law on Monday. The cost to commuters, the economy, and public health, he found, could substantially outweigh the […]