Reinventing the Rail

In May Gov. Andrew Cuomo gently suggested to Metropolitan Transportation Authority chief Tom Prendergast that the MTA convene a “transportation reinvention commission” to “make our subways and our entire transit system ready for the challenges of the next century.”

The MTA’s biggest “challenge” is having no money for capital investment—not next century, but right now. The commission can offer useful suggestions. But it will take political courage from the governor to fix this problem.

The authority, rather than treating this task as busywork, has put together a credible group. For example:

• NYU prof Dall Forsythe, working as an arbitrator five years ago, argued for an austere contract with the MTA’s largest labor union, the Transport Workers Union, calling “the wage increases” awarded by the arbitration panel’s majority “simply too high in this environment of economic decline.”
• Tri-State Transportation Campaign’s Veronica Vanterpoolhas been far from shy in criticizing Gov. Cuomo’s Tappan Zee Bridge project.
• American Isabel Dedring, deputy mayor for transport in the London mayor’s office. 
• David Waboso, of the London Underground, bear witness to London’s biggest transportation change in the past decade: charging motorists $18 a day to drive into or within the city’s core. The money goes to transit.
• Enrique Peñalosa, when he was mayor of Bogota, Columbia, carved out space for bus and bike riders at the expense of car drivers. His philosophy: An “advanced city is not one where even the poor use cars, but rather one where even the rich use public transport.”

So what can they come up with?

First, they can make clear that any separation between the day-to-day operating budget ($13.6 billion a year) and the longer-term capital budget ($23.9 billion over five years, not including post-Sandy repairs) is a fiction. The MTA must make room for $2.3 billion in debt payments in this year’s budget—payments for pastcapital budgets. The more the MTA must spend each year in labor costs (particularly pension and health benefits), the less it has for capital investments. Every $100 million “saved” in the operating budget can support more than $1.5 billion in new long-term debt. It says a lot about New York’s status quo that the dozens of “expert” witnesses that gave testimony before the commission last week pretty much ignored labor costs—but the commission is still free to present its own ideas independent of expert suggestions. 

Second, the commission can suggest that the MTA reduce its reliance on borrowing for capital spending, anyway. The MTA surely can’t avoid new borrowing for capital spending. But the fact that it borrowed for more than half of the current capital budget is worrisome. (The rest came from federal and state sources.) Debt has already doubled over the past decade, to $33.9 billion.

The commission should prod the MTA into a policy of borrowing for new projects (phase two of the Second Avenue Subway) or for projects that substantially increase capacity, such as better signals. But the MTA should avoid borrowing for projects that are the equivalent not of buying a house but painting it: rehabilitating stations, for example, or replacing tracks. As E. J. McMahon of the Empire Center has noted, the MTA could use some of the state’s $3.3 billion windfall from the BNP Paribas bank settlement to ease its dependence on debt.

Third, the commission can suggest corporate-governance fixes—similar to what other folk are recommending the Port Authority of New York and New Jersey do to maintain their independence from elected officials. Cuomo, New York City Mayor Bill de Blasio and suburban elected officials should direct the MTA’s broad strategies—whether to build a new subway and where—but they should not interfere in tasks like labor negotiations or toll and fare increases. To ensure a little political independence, the commission could suggest that governors appoint each MTA chairman (or lady) to full six-year terms—not the two-year term Prendergast got.

Finally (for now), the commission can point out that better management of the streets can alleviate and delay (although not eliminate) the need for mega projects. Reliable bus service and safe bike lanes can ease subway crowding.

However, though the reinvention commission will likely generate a lively report, it can’t do much without gubernatorial support. It’s the governor who must determine not to give in to vote-rich unions. (And the mayor controls the city streets.) The biggest test may be what the governor does if the reinvention commission—just in time for election day—revives the idea of charging people to drive in Manhattan to help pay for capital investments.

Remember what happened to the corruption Commission and the tax commission.

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal and a Chartered Financial Analyst (CFA) charter holder.