Who Runs the MTA?
The mass-transportation authority’s governance structure is an expensive fiction.
Subway riders stuck on yet another delayed train may be skeptical of a new explanation that New York governor Andrew Cuomo offered on Tuesday: that the problem with the Metropolitan Transportation Authority, which runs the city’s subways, buses, and commuter rail, is that no one is in charge. Cuomo proposed to fix this deficiency by putting himself in charge, which prompted some subway observers to ask: isn’t he already? Actually, he’s not, and to think so is to miss a big reason for the transit system’s abysmal performance.
It’s broadly assumed that New York State controls the MTA: indeed, Cuomo said as much last December, upon opening the first three stations of the Second Avenue Subway. Mayor de Blasio concurred last month. “If you like something happening in our subways or don’t like it”—and there’s a lot not to like lately, with delays crippling entire subway lines for hours on a regular basis —“you talk to the governor. He’s in charge and he should just own up to it.”
But the MTA is not an agency of state government, such as, say, the Department of Agriculture or the Department of Financial Services. The governor makes appointments to head up those divisions, and the state senate approves (or disapproves) his choices. If the governor determines that his subordinate is doing a bad job, he can ask that person to leave and start the process over. The chain of accountability is clear: if you don’t like what’s going on at the state’s Department of Environmental Conservation, you can and should blame the governor.
The MTA is different. Legally, it is an independent corporation, run by a board of directors. As the MTA told its bond investors as recently as February, it is “a corporate entity separate and apart from the state, without any power of taxation.” The MTA board has 14 voting members—six recommended by the governor directly, including the MTA’s chairperson and CEO, and four recommended to the governor by the mayor (the remainder come from other downstate New York counties) and approved by the state senate. The board’s job includes “reviewing, approving and monitoring fundamental financial and business strategies and major actions” as well as “assessing major risks facing the MTA.” The board approves the MTA’s five-year investment plan, including major projects such as the Second Avenue Subway.
Though board members and the chairperson are appointed by the governor, they do not report to him. He can’t fire them if they vote against his wishes; he can’t dismiss the chairman for contrary management decisions. Board members and the chair serve six-year terms, meaning that a new governor can’t fire them upon taking office. Board members and the chair, then, serve as a check and balance against the governor’s executive authority. They are supposed to look out for the MTA’s long-term interests, protecting the corporation and its riders no matter who is in political office.
The problem is that this governance structure doesn’t work in practice as well as it does on paper. The MTA’s chairmen aren’t mythical independent creatures who stand up to elected officials who want to do things that aren’t in the MTA’s best interests. And the board members have neglected their legal duty to the MTA and its riders. For instance, the board has signed off on a five-year capital plan that the MTA cannot pay for; the $32.5 billion plan calls for $9.9 billion in new debt, increasing the MTA’s current $37.9 billion borrowing burden by more than a quarter. Yet the board has added new projects to the capital plan, such as a nearly $2 billion third track for the Long Island Rail Road that Cuomo wants, without demanding to know how the state will pay for them without cutting back on subway service. The MTA faces a $400 million annual deficit in three years’ time.
The MTA’s labor costs have increased by 27 percent, after inflation, in the past decade. Yet the board has never questioned the management’s labor strategy. Projects to upgrade subway signals so that the MTA can run trains more quickly and reliably are years behind schedule. But the board has never asserted any real discipline over construction-timetable estimates.
There is a practical reason why the MTA’s board cannot be truly independent. The MTA depends on the state for money. The board could refuse to sign off on capital projects that the MTA cannot afford until new revenues or cost savings materialize. But the governor and the legislature then could retaliate by withholding a significant portion of the MTA’s revenues. The MTA depends on $6.7 billion in annual taxes and subsidies for its $15.9 billion budget; fares and tolls only bring in $8.9 billion.
Now, Cuomo, citing the MTA’s “current crisis,” wants to assert even more power. Tuesday, he asked the state legislature for authority to name two additional board members and to give the chairperson an extra vote. (In advance of such changes, he also asked Joe Lhota, who ran the MTA as chairperson and day-to-day executive director in 2012 before quitting to run for mayor, to come back as the chairperson but not as full-time chief.) The board changes, if the legislature agrees to them, would give Cuomo a majority of board appointees. The MTA’s board structure, drawn up in 1965, “left no one in charge,” Cuomo said. “Let’s fix the fundamental and initial mistake—put someone in charge. The state is the obvious entity.”
Maybe, but under the MTA’s official structure, the governor could name 50 board members and still not be legally “in charge.” If Cuomo truly wants control, why not abolish the MTA’s corporate structure and make it just another state agency, with its director accountable only to him? What is the point of a board with no autonomy?
The obstacle is the MTA’s debt—amassed entirely off the state’s books. New York State owes less than $3 billion in general-obligation debt, an amount dwarfed more than twelvefold by the MTA’s own obligations. New York keeps its debt levels low because the state, under its constitution, must go to the voters for authorization to borrow. The MTA does not face this constriction.
A commuter trapped on a subway train stuck between stations occupies the worst of both worlds: he can’t undo his decision to board the train, walking to his destination instead; and he can’t move forward. The MTA is in a similar spot: it’s ruled by an independent board that isn’t really independent—though it has all the authority it needs to approve big-ticket spending priorities, issue more debt, and greenlight astronomical labor costs, all of which are helping to make New Yorkers’ commutes a daily torment.
Photo by Andrew Burton/Getty Images
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