City Journal Winter 2016

Current Issue:

Winter 2016
Table of Contents
Tablet Editions
Click to visit City Journal California

Readers’ Comments

Nicole Gelinas
How to Avoid Fiscal Derailment « Back to Story

View Comments (4)

Add New Comment:

To send your message, please enter the words you see in the distorted image below, in order and separated by a space, and click "Submit." If you cannot read the words below, please click here to receive a new challenge.

Comments will appear online. Please do not submit comments containing advertising or obscene language. Comments containing certain content, such as URLs, may not appear online until they have been reviewed by a moderator.

Showing 4 Comment(s) Subscribe by RSS
Maintaining a State of Good Repair (SOGR) requires replacing, restoring or rehabilitating about 1 percent of the entire system every year. That means spending 1% of the current replacement cost of all track, tunnels and cars, every year, year after year, or trains start falling off the tracks. These are "capital" projects, but the 1% costs reoccur every year, exactly like "operating" costs - essentially "Capital Maintenance."

Since the system has at least a Three Billion Dollar replacement cost, there needs to be $3 Billion in new funds for SOGR projects every year, year after year. For example, about 1/35 of the 6,000 subway cars should be replaced - every year. That's 170 subway cars, about $400 million dollars - needed every year. This can't be funded by MasterCard - Bond Issues - or else interest payments will strangle us in just a few more years.

The city and state have been shortchanging the MTA on SOGR capital maintenance since 1993. They have not been paying their annual share, relying on rolling over Bond Issues to make up the shortfall - which only works in the short term.

This bridge toll realignment plan is logical in itself, but it's no solution unless the SOGR and traditional annual operating costs are put on a Pay-As-You-Go Annual basis. Using toll or other revenues to cover bond issues only makes sense for New-Start system expansion projects. Not for SOGR annual capital maintenance projects.

Bridge tolls are only part of a good breakfast. There needs to be enough annual cash funding for operating and SOGR costs, before system expansion.
"the extension of the Long Island Rail Road from Penn Station to Grand Central Terminal"

East Side Access will bring people from Long Island directly to Grand Central Terminal via new tracks in Queens linking the existing LIRR lines to the 63rd St. Tunnel and a connection in Manhattan from the 63rd St. Tunnel to a new LIRR terminal deep below GCT. The project will not provide a ride from Penn Station to GCT.
Most plans for additional revenue for the MTA involve bonding it, and spending 30-plus years of future revenue in just five years. More tolls could allow Generation Greed to get through the 2015 to 2019 capital plan. Perhaps that is enough time for them to get out of town before leaving the city and state in ruins.

"More than two-thirds of its capital spending is devoted not to new projects but to maintaining a century-old system: replacing tracks and cables, buying buses, fixing escalators, and so forth."

Quite of bit of the borrowed money goes for operating costs that are just operating costs -- $600 million per year in "remibursable expenditures" or $12 billion (in today's money) over 20 years.

Before the deep early 1990s recession, the cost of operating service near capital projects was an operating cost, not a capital cost. That was changed as a fiscal ruse to get through a fiscal crisis, and then kept going in good times and bad.
"City Hall" is capitalized, dear.

Also, consider the economic processes that led to these budget impacts:

-- "Since Mayor Michael Bloomberg took office nearly 12 years ago, the debt that the MTA owes for capital projects has nearly doubled, from $16.7 billion to $32 billion."

-- "Why has the MTA relied so much on debt to fund its capital spending?"

The new construction projects, considered alone, make up 100% of the increases to borrowing. Fares and other income streams cover the health care and retirement outflows.

Please, avoid co-mingling the capital accounts with the current accounts. We know how every ill of the world has to be tied back to unions and collective bargaining, but some times a cigar is just a cigar.