NYMTA unveils bold plan to fill capital gap

The Metropolitan Transportation Authority (MTA) today announced an “innovative and pragmatic financing strategy” to fill a $$13.6 million funding gap that looms in the final three years of its 2010-2014 capital program.

In addition to ongoing savings expected to yield nearly $2 billion in savings by 2014, MTA proposed this bold new plan:

“Innovative federal loan: The MTA has applied for a $2.2 billion federal loan that benefits from low Treasury rates and utilizes longer maturity bonds that are appropriate for new infrastructure projects with long useful lives.

“MTA revenue bonds: The federal loan would be complemented by $4.7 billion in MTA revenue bonds.

“Manageable debt level: Existing capital funds—protected by ongoing MTA cost-cutting—would be used to repay the federal and MTA debt, creating no additional burden on the operating budget. In addition, during the period this debt would be issued, the MTA will be repaying $6.2 billion of existing debt.

“Ongoing local partnerships: In addition, ongoing support from the State, City, and Port Authority add another $1.7 billion.

“Asset sales and other resources will provide an additional $.89 billion. Along with federal grants ($4.1 billion), these sources provide the $13.6 billion needed to fully fund the remainder of the MTA Capital Program.”

The survival plan for the capital program was revealed as TA announced its preliminary new budget for 2011-2015.

“We recognize that there’s no appetite for new taxes in New York today, and that makes it all the more important that we find ways to make these investments as efficiently and effectively as possible,” said Chairman MTA Chairman and CEO Jay H. Walder (pictured at left). “At the same time, we continue to pursue innovative and pragmatic ways to move investments forward with our federal, state, and local partners, because we can’t afford to eliminate or defer any of these critical projects.”

The plan is preliminary; the MTA board will vote on a final budget in December.

“By keeping our focus on making every dollar count, this financial plan brings stability back to the MTA’s finances,” said Walder.

The 2012-2015 Financial Plan relies on four key components: a continued focus on cost cutting; a three-year zero wage increase initiative that reflects new fiscal realities; continued implementation of biennial 7.5 % fare/toll increases in 2013 and 2015; and continued receipt of dedicated taxes and subsidies.

The plan builds on $525 million in recurring savings achieved in 2010, with savings targets increasing in each year of the plan and reaching $799 million by 2015. Savings of $623 million in 2011 are being achieved by pursuing better ways of doing business including: rebinding health care contracts; rationalizing and consolidating IT functions; overhauling procurement practices; and improving inventory management.