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MTA needs $25B more for transit system upgrades, state comptroller says

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The New York Metropolitan Transportation Authority, the nation’s largest mass-transit provider, faces a potential $25 billion funding shortfall on future infrastructure upgrades to improve subway service and strengthen its system against extreme weather events, according to New York’s comptroller.

The MTA, a state agency that operates New York City’s subways, buses and two commuter railroads, is set to release its 2025—2029 capital program by Oct. 1. If that spending plan is the same size as the MTA’s current $51.5 billion capital budget — and the agency has said it most likely will — it will need to deal with a $25 billion gap as certain revenue sources are already committed, Comptroller Thomas DiNapoli said Thursday in his annual update on MTA’s debt profile.

The MTA needs to upgrade a more than 100-year-old system to help attract more riders and provide an essential service for New York City’s 8.3 million residents. Its multi-year capital budget pays for subway station renovations, signal upgrades, accessibility improvements and sustainability programs to protect against flooding, heavy rains and extreme heat. MTA officials last month said the next capital budget will need to include $6 billion to address climate change. 

MTA officials and state lawmakers will need to find new funding sources for the next capital plan. In 2019, the legislature approved a new congestion pricing initiative — which has yet to begin — and a levy on high-end real estate sales to help fund a combined $25 billion for the 2020—2024 capital program.

“The MTA’s capital program is critical to winning riders back to public transportation and increasing fare revenue. When capital projects are delayed, repairs and upgrades are put off, causing parts of the system to deteriorate further,” DiNapoli said in a statement.

The MTA earlier this year was forced to sideline some capital projects because of a legal battle with New Jersey over the new congestion pricing toll, which will charge most drivers $15 to enter Manhattan’s central business district. The toll is expected to bring in $1 billion a year that the MTA will bond against to raise $15 billion for its current capital plan.

“We are pleased the state comptroller recognizes how important capital investments are to the MTA’s future,” Kevin Willens, the MTA’s chief financial officer, said in a statement. “As we’ve said for some time, it is critical that the capital budget is sufficiently funded with dedicated resources so the MTA can continue to provide frequent and reliable service, while also delivering on projects to modernize the transit system.”

The MTA had $46.7 billion of debt outstanding as of April 24 and is set to pay about $2.8 billion in debt service this year, according to the agency. DiNapoli estimates the transit provider’s debt will increase to nearly $60 billion in 2028. Principal and interest payments, including for debt that’s repaid through a lockbox and not through the MTA’s operating budget, will reach $5 billion by 2031, according to the report.

“if new capital funding is not forthcoming or additional revenue is not found from increased ridership or better-than-anticipated tax subsidies, the MTA will have to make a choice between maintaining the required level of its state of good repair capital projects and balancing its operating budget,” according to the report.

The MTA has $46.7 billion of outstanding debt, as of April 24, according to MTA data. It’s set to pay $2.8 billion in principal and interest payments this year.

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Michelle Kaske, Bloomberg News , 2024-05-09 17:57:37

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