John Petro
Keeping the Trains Running
The Brookings Institution weighed in on the MTA's budget crisis in Friday's Newsday. The op-ed points out that New York is not alone in its mass transit woes, that transit agencies across the country are feeling the pinch of the recession. This was a big story at the end of last year, as the combined strain of record ridership, higher fuel costs, and declining revenue in the form of sales taxes and gas taxes all came together to drive transit agency's budgets into the red. There were calls back then for the federal stimulus package to cover operating expenses. However, only capital expenses were eventually included in the final bill. The Newsday op-ed echoes this call:
"The federal rules could be changed to allow transit agencies to spend their transit capital stimulus dollars on operating expenses. Certainly, agencies have capital needs as well, but particularly in these stressful economic times they should have the short-term flexibility to use those federal dollars to meet their immediate problems."
I agree that transit agencies should have the authority to use stimulus funds for operating assistance. Many agencies are cutting services and laying off employees, both of which will only exacerbate the economic recession. Transportation For America lays out the case for operating assistance here.
The Newsday editorial does not make the argument that I made recently on New York Public Radio, namely that the federal government needs to reevaluate its funding formulas for the capital needs of transit systems. After all, the MTA's current budget crisis is really due to a lack of federal and state funding for its capital needs. Since the state has walked away from its responsibility to fund the system's repair, maintenance, and expansion, and since the federal government does not pay its fair share of mass transit investments, the MTA was forced to borrow for its capital needs. This puts pressure on the MTA's operating budget since debt payments come out of the operating budget.
I am hopeful that this year there will be a major realignment of federal transportation funding priorities. President Obama continues to stress the need for the U.S. to invest in rail projects. However, the New York congressional delegation needs to be leading the charge for such a change. Regions like New York are well-positioned to make the case for the benefits of a strong transit system, in terms of economic development and environmental sustainability. They should team up with representatives and senators from other districts that have had recent transit success, such as Charlotte, North Carolina, which is witnessing a very successful introduction of light rail rapid transit.
The op-ed talks about how much stimulus money will be going to the MTA. The figure is at $1.3 billion. So where is the money going? What effect will it have on the MTA's budget? Good questions.
The MTA has not yet decided where the stimulus funds will be going. The New York Metropolitan Transportation Council (the New York region's MPO) just ended its public comments period. A list of projects being considered is here. A large portion of the funds could go towards rehabilitating train stations along the D Line in Brooklyn ($243 million). Other large items are the Fulton Transit Center and the Second Avenue Subway (no mention of the 7 Line extension).
What effect will the stimulus have on the MTA's budget? It's difficult to say. Some of these items were already included in the 2005-2009 Capital Plan, so presumably the bonds for these projects were already issued. However, in the leadup to the recession, the MTA was experiencing cost escalations. The stimulus funds will cover some of these cost increases. Overall, the federal funds will help the MTA speed up its program of bringing the system up to a state of good repair and to take care of items that would have fallen under the Authority's next capital plan. In other words, the funds will help the MTA, but not help it address its current crisis.
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Posted at 11:26 AM, Apr 27, 2009 in
Urban Affairs
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