Late last year, when Gov. Andrew Cuomo promised $8.3 billion to finance much-needed improvements to the MTA’s ailing infrastructure, transit advocates celebrated. But behind the scenes, questions loomed about where that money would come from and whether the MTA could still be ultimately stuck with the bill, a problem transit advocates say could lead to service cuts or steeper fare increases. Many of those same advocates looked for answers to those questions yesterday during Cuomo’s State of the State address and budget release.
So did Cuomo keep his promise?
The good news, according to the Straphangers Campaign, a rider’s advocacy group, is that Cuomo’s budget codifies his $8.3 billion commitment to help fund the MTA’s $26.1 billion capital plan. But the group’s chief spokesman, Gene Russianoff, says it doesn’t specify exactly where that money will come from, and only guarantees funding once the transit agency exhausts all of its other capital resources. “It seems a little loosey-goosey,” Russianoff says. “I don’t think this budget has more specifics than the speculation over the last couple months. But I don’t want to sound the alarm bells.”
One of the main concerns among transit watchers is that the state’s funding commitment would be made possible by a form of borrowing – known as service contract bonds – that let the MTA take on debt that the state agrees to pay off. There’s nothing wrong with service contract bonds in theory, says Russianoff, but he notes that there is always the possibility the state will shift money away from paying that debt and leave MTA with a hole in its capital budget, potentially forcing the agency to raise fares.
According to a Straphangers report issued last year, the MTA carries a whopping $34.1 billion in debt (more than the national debt of 30 countries) and spends roughly 17 percent of its operating budget paying it off. “While MTA bonds are sometimes backed by streams of real revenue,” the report notes, “most times these borrowings have only come with a promise to raise fares if needed to pay bond holders.” Still, Russianoff is optimistic about Cuomo’s plan: “I think it’s a win because the governor says he’s committed to it.”
But other transit experts are less impressed with Cuomo’s proposal. “They’re kicking the decision down the road,” says Charles Brecher, co-director of research at the Citizens Budget Commission. “What the bill says is that ‘we will give you this money, and we can [give] it to you as an appropriation from current revenue, or from the proceeds of bonds that we issue, or money that backs up bonds that you (the MTA) issue,’” he says. “It’s like an IOU. It doesn’t tell you where you’re going to get this money.” Still, Brecher acknowledges that uncertainty will probably not lead to immediate fare hikes beyond those already planned.
For its part, state says it doesn’t make sense to spell out exactly where the funding will come from, especially since much of that money won’t be supplied for years. “The Budget includes language to solidify the Governor’s $8.3 billion commitment to the MTA,” wrote Morris Peters, a spokesman for the New York State Division of the Budget, in a statement to the Voice. “As the MTA’s construction schedule requires, the proposal specifies that we will deliver funding based on the best options available at that time.” MTA spokesman Adam Lisberg declined to comment, saying only that the agency is still reviewing the details of Cuomo’s proposal.
The budget will ultimately need approval from the state legislature, though Russianoff says that isn’t a big concern. “I think they have enough support,” he says, while cautioning that “Nobody’s life or property is safe when the legislature is in session. And that applies to this, too.”
But despite some worry over the budget’s details, the Citizens Budget Commission’s Brecher points out that even if the funding stream were completely spelled out, it’s unlikely the plan will “reinvent the commuting experience,” as Cuomo promised yesterday. “This isn’t great,” Brecher says. “It’s just not a disaster.”