State Comptroller: MTA Fare and Toll Hikes May Come Sooner

A subway train pulls out of the 14th Street station in Manhattan. Gary Hershorn/Getty Images

State Comptroller Thomas DiNapoli says that the Metropolitan Transportation Authority may have to raise fares and tolls sooner than it planned to if it does not identify new funding sources for the agency.

On-time performance on the Long Island Rail Road dropped sharply during the first half of 2017 and was on pace to become the worst year in 17 years, primarily due to an increase in delays linked to Amtrak-owned tracks, signals and switches as well as the LIRR, according to DiNapoli’s analysis of the MTA’s financial plan.

At the end of July, MTA Chairman Joseph Lhota unveiled the NYC Subway Action Plan and proposed that the city and the state split the cost of the $836 million first phase, which focuses on signal and track maintenance, car reliability, system safety and cleanliness and customer communications.

Gov. Andrew Cuomo has committed to paying for half of the cost, while Mayor Bill de Blasio says that there is already money in the state budget to finance it. De Blasio has proposed a millionaires tax to fund subway repairs and reduced fares for low-income New Yorkers, while Cuomo is drafting a congestion pricing proposal.

In the absence of a funding agreement, DiNapoli said, the MTA has been drawing on its reserves to commence the first phase.

“Maintaining, modernizing and expanding the largest mass transit agency in the nation is critically important to the future of the New York metropolitan region,” he said in a statement. “In the absence of adequate funding, the system could fall into further disrepair and riders could face unplanned fare hikes. The state and city need to find solutions to prevent these possibilities from becoming reality, and the MTA must make the best use of its resources.”

In a statement, MTA Chairman Joseph Lhota said that the MTA needs a steady income stream so it can continue to maintain a “state of good repair” and simultaneously upgrade and expand the system. He accused the state comptroller of creating unnecessary fear.

“We are extremely encouraged by the growing support for congestion pricing and we categorically reject the idea of any unplanned fare increases,” Lhota said. “Funding subway repairs will not come on the backs of riders and the comptroller is fear-mongering by injecting unplanned fare increases into the public discourse.”

The MTA expects a balanced operating budget through 2019 but it anticipates budget gaps in subsequent years, beginning at $112 million in 2020 and building up to $493 million in 2021, even with planned biennial fare and toll increases of 4 percent in 2019 and 2021, according to the report. The MTA increased fares and tolls by 4 percent this year.

The estimates are made under the assumption that there will be continuous economic growth, $1.4 billion in unidentified cost savings and that the state will restore $65 million in yearly funding to make up for the revenue loss to the MTA due to a reduction in the Payroll Mobility Tax on small businesses, the report said.

The MTA had anticipated that the first phase would be completed in 2019, but it now hopes it will be done by the end of 2018. DiNapoli said that the agency has still not explained how it will cover the cost of increased subway maintenance once it uses up state and city funds. Once the first phase is done, recurring costs could exceed $300 million a year — about the same as an unscheduled fare and toll increase of roughly 4 percent.

The second phase, which will cost $8 billion, will focus on long-term improvements such as better subway cars, a new signal system and modern communications technology.

The MTA is contributing 43 percent of the funds for the 2015-2019 capital program, a much larger proportion than any of its funding partners, the analysis found. The 2015-2019 program and previous capital programs have collectively placed a burden on the operating budget and led to higher fares and tolls. Debt service and other operating resources that support the capital program are expected to rise by 22 percent over the next five years to $3.5 billion, taking up one-fifth of MTA revenues, the report found.

DiNapoli also said that, before even taking the 2020-2024 capital program into account, outstanding debt is anticipated to hit $42.6 billion by 2022 — $7 billion more than five years earlier.

And the report indicated that even though the state has committed to contributing $8.5 billion to the 2015-2019 capital program, it has not yet identified the source of $7.3 billion of its commitment. DiNapoli said that the state could fulfill that commitment by using MTA bonds supported by an existing or new state revenue source. He also said that while Cuomo recently announced the state’s plan to give an additional $1 billion to the current capital program, the source of that funding has yet to be identified.

The 2015-2019 capital program had a $15 billion funding gap when it was first presented and that it took 17 months before the state, the city and the MTA could agree on a funding formula to close the gap, causing project delays, according to the analysis. And the 2020-2024 capital program could potentially have a larger gap if there are no concrete commitments from the state and the city or a new funding source.

State Comptroller: MTA Fare and Toll Hikes May Come Sooner