Analysis finds improvements needed to prevent unplanned hike in New York toll, fare rates

Commuters in New York could face unplanned fare and toll rate increases to help modernize the state’s rapidly deteriorating mass transit system unless new sources of revenue are identified, according to a recent analysis of the Metropolitan Transportation Authority’s (MTA) financial plan.

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The analysis, released on Thursday by State Comptroller Thomas DiNapoli, found that MTA is contributing 43 percent of its funds to the 2015-2019 capital program, much more than other funding partners. That, coupled with the impact of previous capital programs, has burdened MTA’s operating budget and contributed to shortfalls that could have to be absorbed with unplanned rate increases.

“Although the MTA has invested more than $120 billion in capital improvements since its first capital program began in 1982, the pace of investment has not kept up with the need,” a release from DiNapoli’s office stated. “Some of the largest funding needs remain in the subway system, where signals, power, stations, repair shops, pumps and emergency ventilation equipment have not been restored to a state of good repair, and subway car purchases have been delayed. More than one-third of the 201 emergency ventilation plants in the subway system are more than 50 years old and have never been rehabilitated, including five that are more than 100 years old. Over half of the system’s tunnel segments are not protected by ventilation plants.”

The state committed $8.5 billion to the 2015-2019 capital program, but the source of $7.3 billion of that commitment has not been identified. Initially, the program had a $15 billion funding gap, and it took 17 months for the MTA, the city and the state to agree on a formula to address the gap. DiNapoli’s analysis found that the 2020-2024 capital program could present an even larger funding gap.

“The MTA projects a balanced operating budget through 2019, but it projects budget gaps in the following years, starting at $112 million in 2020 and growing to $493 million in 2021, despite planned biennial fare and toll increases of 4 percent in 2019 and 2021,” the release from DiNapoli’s office stated, noting that MTA already raised fares by 4 percent in 2017. “These estimates assume uninterrupted economic growth, $1.4 billion in unidentified cost savings and the restoration by the state of $65 million in annual funding to offset the revenue loss to the MTA from a reduction in the payroll mobility tax on small businesses.”

MTA proposed a two-phase Subway Action Plan in July. The plan calls for $836 million in initial investments to stabilize the system in 2018, followed by more than $300 million in recurring annual costs, which would account for the 4 percent unplanned increase in fares. Phase 2 calls for $8 billion in investments to modernize the system to be included in the 2020-2024 capital program. The MTA did not indicate how the $8 million would be funded.

“Without additional financial assistance, the MTA may have to raise fares and tolls faster than planned to maintain, modernize and expand the system,” the release said. “While the governor and the mayor have both expressed support for new revenue sources for the MTA, they disagree on the approach.”