Regular maintenance, accessibility upgrades and expansions like the Second Ave. subway are all at risk following Gov. Hochul’s decision to suspend the state’s congestion pricing program, according to a report issued Tuesday by state Comptroller Thomas DiNapoli.
“The MTA will be forced to put off badly needed investment in expansion and improvements to the system. Those choices will directly affect riders,” DiNapoli said in a statement.
“The MTA’s decisions should ensure the basic maintenance of the system — safety, reliability and frequency — until it identifies realistic and sustainable replacement revenue,” the comptroller added.
The report comes on the heels of a Daily News analysis, published this week, which found that even if the MTA were to delay all new rolling stock purchases, forgo modern signal upgrades, and again delay work on the Second Ave. subway, the agency would still have $2 billion more in repair and replacement costs than it can afford.
The state’s plan to charge motorists $15 or more a day for driving in Midtown and lower Manhattan was expected to generate $1 billion a year in revenue for the MTA. That money, in turn, was to be used as collateral to issue $15 billion in bonds to fund the current capital plan.
Now, with $15 billion less to pay for large-scale repairs and improvements, the MTA’s budget gurus are expected to present a bare-bones version of the current capital budget to the agency’s board on Wednesday — with deep cuts expected in system expansion projects and planned subway car purchases.
Sources familiar with the ongoing budgetary triage say that the next phase of work on the Second Ave. subway — a project so historically subject to delays it’s become a multigenerational punch line since the 1970s — is likely to be delayed again.
If it is, a federal grant of $3.4 billion toward the project could be lost.
DiNapoli estimated that the MTA will have to cut a massive $17 billion chunk from the current capital budget in order to maintain transit service at current levels.
The comptroller also warned Metropolitan Transportation Authority leadership against borrowing additional money to fill the $15 billion budget gap.
“There would be important implications for the authority’s bond ratings if the agency were to use existing revenue sources to issue additional, unanticipated debt,” he wrote. “Declines in the authority’s bond ratings would not only result in higher borrowing costs but create additional costs for future capital programs.”
Currently roughly 15% of the MTA’s operating budget is spent on paying back already-issued bonds. Should the agency borrow against the operating budget to a greater degree, DiNapoli said, it could cross the 20% threshold, an important safety margin for bond rating agencies.
Jai Patel, the MTA’s deputy chief financial officer, said Monday that she expected the agency to issue an already-scheduled $8 billion tranche of bonds earlier than planned, in an attempt to fill some of the $15 billion congestion pricing hole.
DiNapoli said that move is expected to increase short-term debt service costs, paid for out of the MTA’s operating budget, by about $100 million annually.
Hochul has repeatedly sought to assure New Yorkers that she is working with lawmakers to find an alternate source of funding for an as yet unspecified portion of the $15 billion MTA planners had expected.
Two such plans — one that would have raised the payroll tax on New York City employers and another that would have pulled $1 billion out of the state’s general fund — were shot down by state legislators within days of the governor’s surprise announcement suspending congestion pricing.
