MTA's $15B funding gap could spur fare, toll hikes, says DiNapoli report

The state's chief fiscal watchdog Tuesday warned that a $15 billion shortfall in Metropolitan Transportation Authority capital funding could lead to further fare and toll hikes.

In his annual report on the MTA's financial outlook, state Comptroller Thomas DiNapoli suggested that the agency borrowing billions of dollars, as it has done before, to finance its proposed $32 billion 2015-2019 capital plan could lead to larger-than-planned fare hikes. The MTA already is poised to raise fares by 4 percent in 2015.

"Over the coming months, the MTA will have to work closely with its funding partners to close the $15 billion gap in its capital program," DiNapoli said in a statement. "Additional borrowing could increase pressure on fares and tolls, and while the MTA should look for opportunities for savings, deep cuts could affect the future reliability of the transit system and jeopardize expansion projects."

In a statement, the MTA acknowledged the importance of funding its next capital plan, which includes major maintenance, improvement and expansion projects through 2019, including the East Side Access plan to link the Long Island Rail Road to Grand Central Terminal.

"The MTA network is a $1 trillion asset and is the engine that drives the New York economy," MTA spokesman Adam Lisberg said. "The comptroller's report emphasizes how critical it is for all the MTA's stakeholders to engage in a dialogue about how to fund the Capital Program to renew, enhance and expand the MTA network."

DiNapoli's report cautioned that every $1 billion the MTA borrows increases its debt service by $70 million -- "an amount comparable to a 1 percent increase in fares and tolls." The MTA's planned fare hike next year will be its fifth since 2008.

Even before any new borrowing, the MTA's outstanding debt is expected to reach $39 billion by 2018, more than twice as much as in 2003, according to the report.

SEE PHOTOSLIRR trains and commuters through the years

Veronica Vanterpool, executive director for the nonprofit Tri-State Transportation Campaign, agreed that the MTA should not borrow its way out of its "$15 billion hole," and instead called on the state to come up with new revenue streams for the MTA, such as tolls on now-free East River crossings.

"What we're seeing is that any new potential revenue sources are often met with opposition," Vanterpool said. "The real issue is that our investment in our transit network is really not commensurate with the needs of our region."

After the 2008 economic collapse that contributed to steep fare hikes and unprecedented service cuts, DiNapoli said the MTA "is in better financial condition thanks to its own efforts and a stronger economy."

Still, the report admonished the MTA for "a culture of acceptance regarding excessive overtime," which will reach $801 million this year, a record. The report notes that the MTA has blamed weather events, including 2012's superstorm Sandy and heavy snowfall last winter, for some of the increases.

The report also noted that new contract agreements with workers, including those in eight LIRR unions, will increase MTA costs by $1.5 billion through 2018.

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.