 |
| (Cartoon: Mark Burrier) |
The MTA is funded through a large number of different mechanisms, including fares paid by riders, a litany of taxes and fees, and other direct subsidies from the state, New York City, and local governments. Of the dedicated taxes, some (including the petroleum business and motor fuel taxes) are levied statewide, but most taxes are imposed on only the 12-county MTA region, which includes the five boroughs of New York City, and the seven suburban counties served by the MTA (Nassau, Suffolk, Westchester, Putnam, Dutchess, Rockland, and Orange). These MTA-region taxes include the 0.375% sales tax, MTA corporate tax surcharge, mortgage recording tax, payroll mobility tax, and more... With the exception of the urban tax, which is imposed on commercial property and apartment building transactions only in New York City, all of the MTA dedicated taxes are levied evenly across all 12 counties, irrespective of actual benefit derived from the MTA's services (so someone who owns a business in the Financial District pays MTA dedicated taxes at the same rate as someone who owns a business on Fisher's Island, 20 miles from the nearest MTA facility).
The disparity between what a particular part of the region pays into the MTA and what it gets out of the MTA in terms of transportation services is sometimes referred to as the value gap. And while reports or news stories about the suburbs getting a disproportionate share of MTA funding are common, the value gap is not as large as some suggest.
Several studies have tried to formally quantify the value gap over the past several decades (usually as one or more counties (often Rockland and Orange) contemplate making an exit from the MTA region), and those reports have generally found no significant disparity between inputs and outputs in any one part of the MTA region. The most recent study of this nature was conducted by Rockland County in 2012, and estimated the value gap for the outer Hudson Valley counties to be less than $42 million. Similar studies were also performed in 1988 and in 1999. The MTA performed a county-by-county cost-benefit study in 2008 that did not identify any major disparities between contributions and expenditures in any one part of the region.
Operating budget
In 2015, NYC Comptroller Scott Stringer performed a detailed analysis of New York City's full contribution to the MTA, including all of the indirect contributions the city and its residents make to the MTA. Sticking to the operating side of the budget to start, the Comptroller valued the city's total contribution to the MTA at $10.1 billion in FY 2014. Laying aside the consideration that figure includes sales and other use taxes paid by suburban residents while they are working in or visiting New York City, payroll taxes companies pay for suburban residents, and property and other taxes paid by businesses in New York City not owned by residents, the Comptroller's figures indicate that roughly 72.7% of the funding for the MTA's operating budget comes from New York City, meaning that the balance comes from the suburbs.How does that compare to what the MTA spends? According to the MTA's budget documents, approximately 68.5% of the MTA's money is put towards NYC Transit, MTA Bus Company, and the Staten Island Railway. This accounts for $7.95 billion in direct operating expenditures and $1.62 billion in debt service costs. Add to that another 5.1% of the MTA's operating budget for the operation of seven bridges and two tunnels in New York City, and you get roughly 73.6% of the MTA's expenditures going to New York City. The two railroads together (LIRR 12.5%/$1.5 billion, Metro-North 11.1%/$1.3 billion splitting $494 million in debt service costs) consume just 23.6% of the MTA's overall operating budget.
So even if you assume that New York City derives absolutely zero value from the railroads operating within their borders (and bringing hundreds of thousands of suburban commuters into the city each working day), the MTA's operating budget expenditures are already tilted somewhat in favor of the city, though the gap is small. Once you include the value of the railroad service in New York City (which the Comptroller pins at $426 million for the LIRR and $156 million for Metro-North), the scale shifts even further:
With the railroad service within NYC included, roughly 78.5% of the MTA's money is being spent on services or facilities within New York City, compared to the 72.7% of the funding NYC and its residents contribute. That means for the 27.3% of funding put up by the suburbs, only 18.7% of the MTA's money is being spent on railroad service in the suburban counties. The Comptroller estimated that there is a $255 million gap between what NYC pays in and what it gets out, though that figure does not account for MTA HQ and other consolidated overhead staff. Either way, even at the worse case scenario, the city's value gap is less than 2% of the overall MTA operating budget.
So the notion that the suburbs receive a disproportionate share of the MTA's operating budget expenditures is bunk, and, if anything, the suburbs get shortchanged under the current MTA's current spending schemes. Comparisons of subsidy per passenger are misleading, because they do not take into account the large ridership disparities between NYC Transit and the railroads. Because NYC Transit has roughly ten times as many daily riders as the two railroads do combined, the subsidies that are provided are spread out over a larger number of people. But when you look at the amount of dollars spent in absolute terms, as shown above, the story told by the total dollars and cents being spent in one area or another is much different.
Capital budget
On the capital side of the budget, the story is a bit different, as there are different funding sources at play. For the MTA's 2015-2019 Capital Program (the one we are currently working through now), received roughly a little more than one-fifth of its funding from the federal government. After much controversy at the adoption of the plan, the state agreed to pick up a larger portion of the plan's pricetag than they normally do (in the prior two 5-year capital programs, the state only contributed 11.5% and 2.2% of the funding, respectively). Though, to date, only a small amount of the funding pledged by the state has actually been disbursed to the MTA. As part of the agreement in 2016, New York City increased their contribution to $2.7 billion, representing the source for 8% of the funding. Nearly one-third of the MTA's current capital program is being financed through the sale of MTA/TBTA bonds, and the debt service costs for those bonds are carried in the operating budget figures presented above.
On the expenditures side, the scale does tip slightly more towards the suburbs,with NYC being the beneficiary of 69.4% of the MTA's capital funding this term (including the full amount pledged to phase 2 of the Second Avenue Subway and a share of the base program amounts for the railroads using the same proportions used above from the Comptroller's report), and the suburbs getting a 21.3% share (including the full amounts pledged to both the Main Line Grade Crossing Elimination project and Penn Station Access). East Side Access represents an additional 9.2% of the MTA's Capital Program expenditures, but more on that later.
There are a couple potential justifications towards tilting the scale slightly in favor of the suburbs on the capital expenditures side... The two railroads have the most room to grow, and could accommodate dramatic increases in ridership with significant modernizations and reductions in inefficiency and waste (though these improvements would need to be primarily operational in nature, not capital expansions). For service in the "transit deserts" of southeast Queens or the east Bronx, it would be much more practical for the MTA to expand capacity on the railroads to serve these areas (instead of building new subway lines). And this is what the MTA is doing, to some extent, with East Side Access and Penn Station Access (which will also include four new stations in the east Bronx), which will both deliver significant benefits to NYC despite them being railroad projects.
East Side Access
I separated out the costs for East Side Access in the breakdown in the previous section for a couple of reasons. East Side Access is commonly referred to as a "Long Island" project, primarily for the benefit of Long Islanders. But most of those people look past the benefits the project will bring to the city and the region as a whole. Improvements in capacity on the LIRR have the added benefit of providing additional space for riders from eastern Queens (at a lower overall cost than extending the subways to the city line), enabling Penn Station Access (for both Westchester, CT, and the stations four new stations in the East Bronx), and taking pressure of portions of the subway system, with fewer riders needing to cross the city from NY-Penn Station to NY-Grand Central or vice versa. While significant operational modernizations/improvements will be needed to make the most of these investments and provide service to NYC residents in these transit deserts at economical rates, the infrastructure investments lay the groundwork for these scope of service improvements.I think it's also important to treat differently the substantial cost overruns on this project. When first approved, the project was supposed to be completed in 2013 for a cost of $6.3 billion. Many years and many dollars past those marks, the work is still not expected to be completed for several more years, with the cost now expected to top as much as $12.0 billion and not be finished until 2023. The project that was sold to us by the MTA 15 years ago is radically different than what we have now, a boondoggle that's a decade late and nearly $6 billion over budget. Had the MTA been upfront with what would actually be involved with this project in terms of cost and schedule, the public discussion and support for this project would likely have been very different. The sins of MTA mismanagement are not automatically the sins of Long Islanders...to pin the full dollar value of the $6 billion in overruns on the shoulders of Long Islanders because ESA is perceived as a "Long Island project" unreasonable... No Long Islander asked for the project to be 10 years late and $6 billion over budget...while many advocated for the idea of a rail link to Grand Central in principle, East Side Access, while not a great design under the current plan, had a value at a particular price point and schedule, and overruns/delays change the value of that project. If it was impossible for the public to make an honest, arm's length assessment of the project's value before starting (because of the MTA's dramatic underestimation of what would be involved in such a project), it does not seem reasonable to blame a whole part of this region for those blunders.
Dollars spent vs. perceived value
With the way the MTA spends money, almost everyone's initial perception is to think the MTA spends all of their money on the services they don't use...that means if you live in the city, you think the MTA spends all of its money on the suburbs, and if you live in the suburbs, you think all of the money gets spent in the city. When you look at the actual dollars spent on the different services, in the different areas, the disparity between the city and the suburbs is not really that big at all (if a nontrivial disparity actually exists), but the misconceptions are reasonable.
Because the MTA does not do that great a job of effectively spending the public's money, it's easy to see these tremendous sums of money being shoveled into the agency and wonder where on earth it all goes. I think we certainly see this a lot more in the suburbs, where the railroads are much less efficient than the subway system. Our dollars spent on the railroads do not go nearly as far as they do on the rapid transit services in NYC, and that is an area that requires significant improvement. These problems are particularly acute in a couple of areas, like Metro-North's West of Hudson service or LIRR's poor service on the East End, and special focus needs to be applied to these areas to make sure that they are getting a fair shake of the funding that is going to the railroads and the suburbs.
While new revenues, and the occasional check on the distribution of existing revenues, are both important and great, it's critical that pressure and focus remains on improving operations and containing costs, so that all of these dollars can go much further than they do now. Whether it's modernizations to the railroads like expansions in electrification, proof of payment, or schedule pattern standardizations, efforts need to be made to contain costs, stem rising fares, and expand the scope of these services beyond the traditional Manhattan-bound commuting they have historically clung to.
