Much of 2005 Transportation Bond Act Money Remains Unclaimed
Second Avenue Subway trust fund may not be enough in face of higher construction costs
June 13th, 2008
Last April, former Gov. Eliot Spitzer (D) was the latest politician to wield a pickaxe in what has become a series of groundbreakings for the Second Avenue Subway, the elusive “T” line promised to overcrowded commuters since the days of black and white movies. But the project has always been put on hold, first by World War II, next by fiscal crises in the 1970s.
The money kept disappearing.
But this time was supposed to be different. The 2005 Transportation Bond Act was supposed to guarantee the T. And though the Bond Act money has not disappeared, not much of it has been claimed, and the security it was supposed to provide for the plans has all but evaporated.
In 2005, voters approved $2.9 billion in bond money, half of which was to go to the Department of Transportation for highway repairs and other projects Upstate. The other $1.45 billion was to go to the Metropolitan Transportation Authority (MTA), and would be split between routine replacement of old subway cars, track and other repairs, and Second Avenue Subway and East Side Access. Now, three years later, the MTA is just beginning to spend their share of Bond Act money, most of which has not yet been allocated. The MTA had spent $135 million through May, or less then 10 percent of what is available.
The state comptroller's office, which sells general obligation bonds to investors and gives money to the MTA as needed, does not consider MTA's spending pace unusual. The MTA does not expect any problems in spending all its money by 2016, seven years after the end of its current capital program.
The Transportation Bond Act is not the only money on the table for the Second Avenue Subway. Last year, the federal government added $1.3 billion to past federal, state and local commitments. None of these allotments came with time restrictions on access. Despite all the cash already lined up, the MTA said it still needs billions more, largely due to higher expenses.
“The MTA along with most public and private sector construction agencies are seeing rapidly rising construction costs,” said MTA spokesman Aaron Donovan, pointing to the 9 percent increase in construction costs in the past several years.
This prompted the MTA's late-February announcement that all expansion projects—the Second Avenue Subway, East Side Access, Fulton Street Transit Center, South Ferry Terminal—were behind schedule and over budget.
The cost of completing Second Avenue Subway's first of three phases, all but paid for, is now expected to rise by another $500 million to $4.3 billion, an increase of 13 percent. The cost of East Side Access, by comparison, has skyrocketed by 67 percent.
The MTA had been relying on congestion pricing fees to help plug a $4.5 billion gap in its next capital program. Next year marks the end of the MTA's current capital program, which overlaps with the new one, slated for 2008-2013. At $29.5 billion, the new program will be the highest in the history of the MTA's capital programs.
Even with congestion pricing, which failed in April, the MTA still had no plan to generate an additional $11 billion to $13 billion to meet its goals. That money will be needed for everything from core repairs to expansion projects, and could derail future Second Avenue Subway construction phases.
With the situation so dire, some have even discussed the possibility of a new state transportation bond to spread the MTA's financial burden across the state. So far, nothing suggests that idea has generated much support.
Neysa Pranger, a spokesperson for Regional Plan Association, said a new bond would be a tough sell to the public.
“There is the perception that you have bought and paid for these programs over and over again,” she said.
Instead of a state bond, Pranger echoed others who say the Legislature should come up with a broad-based tax to raise money for the MTA. Some new revenue streams could include a scaled back congestion pricing program, increases on a petroleum tax that is invisible to consumers at the pump, a fee paid by homebuyers and mortgage brokers called the recorder tax, higher tolls and fares.
But the state of the MTA's finances has moved Gov. David Paterson (D) to change course from an earlier stance that advocated spending cuts across the board earlier this year.
In April, Gov. Paterson appointed former MTA head Richard Ravitch to a blue ribbon panel to recommend new ideas for funding. The full panel of business and transportation leaders was announced in June. They are expected to deliver their conclusions in the fall.
For now, the machines are working on the East Side, and construction on the Second Avenue Subway continues. If history or the MTA's current financial situation is any guide, though, that first T ride may still be a long time coming.
The money kept disappearing.
But this time was supposed to be different. The 2005 Transportation Bond Act was supposed to guarantee the T. And though the Bond Act money has not disappeared, not much of it has been claimed, and the security it was supposed to provide for the plans has all but evaporated.
In 2005, voters approved $2.9 billion in bond money, half of which was to go to the Department of Transportation for highway repairs and other projects Upstate. The other $1.45 billion was to go to the Metropolitan Transportation Authority (MTA), and would be split between routine replacement of old subway cars, track and other repairs, and Second Avenue Subway and East Side Access. Now, three years later, the MTA is just beginning to spend their share of Bond Act money, most of which has not yet been allocated. The MTA had spent $135 million through May, or less then 10 percent of what is available.
The state comptroller's office, which sells general obligation bonds to investors and gives money to the MTA as needed, does not consider MTA's spending pace unusual. The MTA does not expect any problems in spending all its money by 2016, seven years after the end of its current capital program.
The Transportation Bond Act is not the only money on the table for the Second Avenue Subway. Last year, the federal government added $1.3 billion to past federal, state and local commitments. None of these allotments came with time restrictions on access. Despite all the cash already lined up, the MTA said it still needs billions more, largely due to higher expenses.
“The MTA along with most public and private sector construction agencies are seeing rapidly rising construction costs,” said MTA spokesman Aaron Donovan, pointing to the 9 percent increase in construction costs in the past several years.
This prompted the MTA's late-February announcement that all expansion projects—the Second Avenue Subway, East Side Access, Fulton Street Transit Center, South Ferry Terminal—were behind schedule and over budget.
The cost of completing Second Avenue Subway's first of three phases, all but paid for, is now expected to rise by another $500 million to $4.3 billion, an increase of 13 percent. The cost of East Side Access, by comparison, has skyrocketed by 67 percent.
The MTA had been relying on congestion pricing fees to help plug a $4.5 billion gap in its next capital program. Next year marks the end of the MTA's current capital program, which overlaps with the new one, slated for 2008-2013. At $29.5 billion, the new program will be the highest in the history of the MTA's capital programs.
Even with congestion pricing, which failed in April, the MTA still had no plan to generate an additional $11 billion to $13 billion to meet its goals. That money will be needed for everything from core repairs to expansion projects, and could derail future Second Avenue Subway construction phases.
With the situation so dire, some have even discussed the possibility of a new state transportation bond to spread the MTA's financial burden across the state. So far, nothing suggests that idea has generated much support.
Neysa Pranger, a spokesperson for Regional Plan Association, said a new bond would be a tough sell to the public.
“There is the perception that you have bought and paid for these programs over and over again,” she said.
Instead of a state bond, Pranger echoed others who say the Legislature should come up with a broad-based tax to raise money for the MTA. Some new revenue streams could include a scaled back congestion pricing program, increases on a petroleum tax that is invisible to consumers at the pump, a fee paid by homebuyers and mortgage brokers called the recorder tax, higher tolls and fares.
But the state of the MTA's finances has moved Gov. David Paterson (D) to change course from an earlier stance that advocated spending cuts across the board earlier this year.
In April, Gov. Paterson appointed former MTA head Richard Ravitch to a blue ribbon panel to recommend new ideas for funding. The full panel of business and transportation leaders was announced in June. They are expected to deliver their conclusions in the fall.
For now, the machines are working on the East Side, and construction on the Second Avenue Subway continues. If history or the MTA's current financial situation is any guide, though, that first T ride may still be a long time coming.
