Derailing Transit with Debt
New York City's transportation agency has gone a long way toward fixing its finances. Now its challenge is to resist the temptation that has crippled Boston's transit system.
A new report from the New York State comptroller's office finding that the finances of New York City's Metropolitan Transportation Authority (MTA) have improved is good news. Financial troubles forced MTA service cuts in 2010.
But state Comptroller Thomas P. DiNapoli stresses that "risks and challenges remain." Greater Boston's Massachusetts Bay Transportation Authority (MBTA) is the transit industry's poster child for the consequences of failing to manage those risks and challenges wisely.
The New York report pointed to ridership growth resulting from a brightening regional jobs picture as a main driver of the improvement in the MTA's finances. That ridership growth is no doubt aided by $4-per-gallon gasoline.
One major advantage the MTA has over other transit agencies is how it's funded. Recognizing that customers just want to get where they're going as quickly and reliably as possible without regard for transportation modes, about two thirds of the toll revenue generated by New York's Robert F. Kennedy Bridge (formerly the Triborough Bridge) funds public transportation. The authority expects to generate up to $450 million annually from raising fares and tolls by 14 percent over the next three years.
But the comptroller's report also warns that the MTA will need at least $20 billion in its 2015-19 capital program to keep the system in good repair. No source has been identified for that revenue.
Despite this $20 billion hole, the MTA has announced that it will expand and restore some of the service that was cut in 2010. MTA officials should take a long hard look at Boston's MBTA before moving forward with unfunded capital expenditures.
Boston is one of the nation's slowest-growing metropolitan areas. But for about a quarter of a century, the MBTA has been America's fastest-growing major transit system. The expansions were undertaken without new revenue sources to fund new construction or the increased operating and maintenance costs.
The results have been predictable. MBTA is $8.6 billion in debt; by next year, the annual cost of servicing that debt will be $525 million. In his 2009 MBTA review, Boston business leader David D'Alessandro wrote: "A private firm faced with this mountain of red ink would likely fold or seek bankruptcy."
Deferred maintenance is another byproduct of uncontrolled debt, and D'Alessandro found a maintenance backlog of over $3 billion. More than $500 million in maintenance work currently rated "critical" in terms of safety remains unfunded.
New York's Metropolitan Transportation Authority benefits from a wise funding stream that reflects the real needs of its customers rather than an outdated silo approach. But its revenue is far from unlimited. To maintain its recently improved financial condition, the MTA must fund basic operating and maintenance needs before it commits to expansion. Boston's roadmap is a path that New York would follow at its peril.