MTA’s message as budget implodes: we still need congestion pricing

The New York Metropolitan Transportation Authority will “reprioritize and shrink” its capital plan and look to borrow more in the capital markets — likely at higher costs — now that and is still waiting for the Federal Highway Authority to send its final letter of approval. 

Although Hochul said she was “committed” to the MTA’s planned capital improvements, the agency can no longer afford them, Lieber said. The agency paused awarding any new contracts in April due to the lawsuits and the pause will remain. 

Congestion pricing revenue and subsequent bond issuances were supposed to create $15 billion for the MTA, roughly half of the remainder of the 2020-2024 capital plan. About 70% to 75% of that plan was for maintaining a “state of good repair,” Lieber said.

The agency cannot even afford all of the state of good repair projects it had planned, Lieber said, and is prioritizing the ones most necessary to safety. He added that some employees’ salaries are paid in part by the capital plans. 

Capital improvements like new subway cars, electric buses, and upgraded signal systems will not happen without a funding source. The MTA will continue with some elevator installations as required under a disability settlement, but not as many as were planned, Lieber said. 

The agency is also focused on maintaining funding from federal grants, like the $3.4 billion for phase II of the Second Avenue Subway expansion. Lieber has been in communication with New York’s senators and representatives to ensure these grants are not at risk. 

Even after paring down the capital plan, the MTA will need to issue debt. The debt will be issued sooner than planned, and under the MTA’s transportation revenue credit rather than its congestion pricing credit, so near-term debt service costs will be higher, Lieber said. The agency is analyzing how this will affect its operations budget. 

“If we are borrowing money earlier, to make up for the money we don’t have, that has an impact on the operating budget, because that debt service goes over to operating,” Leiber said.

The MTA had $46.7 billion of outstanding debt as of May 20 and its debt service payments were $2.7 billion last year, 15.7% of its total revenue.

The MTA’s transportation revenue credit is rated A3 with a positive outlook from Moody’s, A-minus with a positive outlook from S&P and AA from Fitch. After the governor’s announcement, Moody’s and S&P released statements that the loss of congestion pricing will be credit negative for the MTA, but no agencies have updated their ratings.

The MTA will hear a report on the revisions to the capital program at its June 26 board meeting — where the board originally planned to deliver the final authorization for the tolls. 

The next capital plan is due in October. Unless Hochul allows congestion pricing or the legislature comes back for a special session, the MTA will not have a new revenue source by then.

Lieber also expressed personal frustration with the governor’s decision. 

“As much as I want to understand, our job at the MTA is not to be political analysts,” Leiber said.
“The governor plays on a statewide and national field, and sometimes, that means we don’t look at things exactly the same.”

“To the folks who are frustrated that this reversal took place, I can relate,” Lieber said. “And I want to emphasize, I am incredibly moved by how New Yorkers — transit advocates, but regular New Yorkers as well — have turned out in full force and raised their voices to show support for transit and for the MTA.”