The Metropolitan Transportation Authority (MTA) has been slow to reverse the deterioration in service and its financial plan entails considerable risk, according to an analysis released today by New York State Comptroller Thomas P. DiNapoli. The Comptroller's annual report on the MTA's financial outlook highlights the challenges facing the MTA.

"Our regional transit system is in crisis. Service has deteriorated on the city's subways and buses, the Long Island Railroad and Metro-North. Subway ridership has fallen notwithstanding the largest job expansion in New York City's history," DiNapoli said. "Despite an infusion of $836 million in state and city funds, there has been little improvement so far in subway service. Riders are leaving the system in frustration and deserve better, especially considering the proposed increase in fares."

Despite planned fare and toll increases of 4 percent in 2019 and again in 2021, and another round of budget reductions, the MTA projects operating budget gaps that total $262 million in 2020, $424 million in 2021 and $634 million in 2022. The MTA is asking the state to authorize new sources of funding to close the gaps, but those resources are not assured.

New York City Transit has proposed a ten-year initiative with a cost of up to $40 billion to modernize the subway system, but funding has not been identified. The MTA is seeking billions from the state and city to help fund its 2020-2024 five-year capital program, which could include the first five years of the subway modernization program. It is also seeking federal funding for extending the Second Avenue Subway.

The largest risk to the operating budget may be the assumption that the current economic expansion will continue uninterrupted. The MTA also expects subway ridership to resume growing in 2019 after falling for three consecutive years. While subway service has improved marginally, it remains far below riders' expectations and the improvement may not be enough to persuade riders to return in the face of higher fares. Additional risks include the source of more than $300 million in unspecified annual savings and the cost of future labor agreements.

Given the poor execution of prior capital programs, it remains to be seen whether the MTA can manage a program of the size under consideration for 2020-2024. During the past three five-year capital programs, for example, the MTA committed less than 80 percent of the resources in each five-year period. The 2005-2009 capital program was just 83 percent completed 13 years after its start date.

In response to the deterioration in service, the MTA has begun corrective action plans to improve safety, reliability and service on the subways, buses and commuter railroads. While these efforts have not yet resulted in significant improvements, the MTA hopes riders will see the benefits in the coming months.

The Subway Action Plan, which is designed to improve subway service, has gotten off to a slow start. With three months remaining in the 18-month program, the MTA had committed a little more than half (58 percent) of the $348.5 million in capital funds made available for needed actions. For example, the MTA had yet to commit $117 million for signal upgrades. The hiring of additional maintenance workers has also lagged.

The cumulative impact of the 2015-2019 and prior capital programs has placed a heavy burden on the MTA's operating budget. Debt service is projected to reach $3.3 billion by 2022, an increase of 26 percent in just four years. By 2022, debt service is projected to consume 18.6 percent of total revenue and 36.5 percent of fare and toll revenue.

The three-year decline in subway ridership has had a significant impact on the MTA's operating budget. Subway and bus ridership in 2019 is projected to be 236 million rides lower than the MTA projected three years ago, which could result in a cumulative revenue loss of $822 million from 2016 through 2019.

DiNapoli's report also found:

Subway weekday on-time performance fell from 87.7 percent in 2010 to 63.4 percent in 2017, the lowest since at least 1991. While the weekday average rose slightly to 65.3 percent through August 2018, the weekend average continued to decline because of repair work.

LIRR had its worst on-time performance (91.4 percent) in 18 years in 2017. In 2018, on-time performance has further deteriorated, averaging 89.9 percent through August. Preliminary data for September 2018 shows some improvement, but it was still lower than one year earlier.

While LIRR delays attributed to Amtrak have declined by 51 percent through August, the number attributed to the LIRR itself have increased by 22 percent.

Metro-North on-time performance has also fallen, from 97.8 percent in 2009 to 93.4 percent in 2017. Performance has worsened in 2018 to 90.9 percent through August 2018.

Neither the LIRR nor Metro-North will meet the deadline to have Positive Train Control operating system-wide by the end of 2018, although both have made substantial progress. Both railroads expect completion by December 2020.

Annual subway ridership has declined for two consecutive years and had fallen by 2.8 percent through July 2018. (Weekday ridership fell in 2017 for the first time since 2009 and is expected to drop again this year, the first two-year decline since 1992.) The MTA believes the decline results from poor service, service disruptions from repair work, fare evasion, and increased competition from for-hire vehicles, such as Uber and Lyft.

The average distance that subway cars travel before breaking down was 121,000 miles last year, a small improvement over 2016, but well below the record of 178,000 miles reached in 2005. Almost one-third of the MTA's subway cars are more than 30 years old.

The operating budget cost of East Side Access is estimated at $652 million through 2022 without any offsetting passenger revenue during this period. The cost of operating East Side Access in 2022 ($246 million) accounts for more than one-third of the MTA's budget gap in that year.

The average subway and bus fare has risen 53 percent since 2007, nearly three times faster than the rate of inflation. Fares and tolls are scheduled to rise 4 percent in 2019 and again in 2021.

Debt outstanding is projected to increase by $7 billion between 2017 and 2022 to reach $41.9 billion excluding the impact of the 2020-2024 capital program.

When the Subway Action Plan was first proposed in July 2017, the MTA had planned to add 2,800 subway maintenance workers by the end of 2019, but it now plans to add just 1,249. As of July 2018, the total number of subway maintenance workers had increased by 927 employees.

Read the report, or go to: https://osc.state.ny.us/osdc/rpt8-2019-mta-financial-outlook.pdf

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