(Bloomberg) -- The nation’s largest mass-transit system faces a potential $27 billion funding gap in its next capital budget that would replace thousands of rail cars, strengthen the system against extreme weather and increase accessibility, according to a report from New York’s comptroller.
The Metropolitan Transportation Authority, which runs New York City’s transit network, is set to release its 2025—2029 capital plan at its monthly board meeting later this month before submitting it to the state legislature by Oct. 1. MTA officials have said that spending program will probably exceed the current $51.5 billion capital budget.
The multi-year capital plan aims to modernize a subway system that’s more than 100 years old, improve service and attract more riders. The bulk of the spending would keep its aging infrastructure safe and in working order, called a state of good repair.
Financing such upgrades and maintenance projects is the challenge: The MTA could face an estimated $27 billion funding gap in a capital budget of $57.8 billion, which is on the lower end of the MTA’s overall needs, according to the report from Thomas DiNapoli, the state’s comptroller. That shortfall varies depending on how much additional funding state lawmakers direct to the MTA. DiNapoli projects the MTA could use as much as $92.2 billion of capital investment in the next five years, according to the report.
“The choices that the MTA and the state make in the coming months will determine the future of the transportation system for years to come,” DiNapoli said in a statement Thursday. “Understanding the options and what’s at stake is key for all stakeholders and riders in particular.”
MTA officials and state lawmakers will be looking for funding sources for the capital plan while they also try to resolve a $15 billion deficit in the current budget after Governor Kathy Hochul paused a tolling initiative called congestion pricing that would charge most motorists $15 to drive into Manhattan’s central business district during peak periods.
Hochul has said she is considering moving forward with the tolling plan but lowering the $15 fee and finding other sources of revenue for the MTA to make up for reduced collections from congestion pricing.
While the MTA must rehabilitate a system with subway signals from the 1930s, upgrade power substations and renovate the Grand Central Terminal train shed, it’s also extending the Second Avenue subway to 125th Street and working to make the system more resistant to heavy rains, flooding and record heat levels. MTA officials have said the next capital plan needs to include $6 billion to combat climate change.
DiNapoli’s report gives some ideas of where to find additional funding for the 2025—2029 capital plan. A possible 10% increase on certain levies — payroll mobility tax, corporate franchise surcharge, sales tax, petroleum business tax and mansion tax — would create a potential $11.6 billion of bonding capacity, according to the report. The state has directed $150 million to help support the MTA’s finances after the pandemic. Borrowing against that amount annually would offer $2.3 billion in bonding, according to the report.
DiNapoli also estimates the MTA could have as much as $3.8 billion of additional bonding capacity if it were to eliminate fare evasion, increase ridership by 5% and double the anticipated 4% fare hike in 2025.
The MTA has $47.4 billion of debt outstanding, as of July 24, according to MTA data.
“We appreciate this serious analysis from the comptroller, and intend to lay out a detailed capital plan this month that will follow the same needs-based approach taken in his report.” John McCarthy, the MTA’s head of policy and external relations, said in an emailed statement.
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