Streams

MTA's Debt and Disrepair

Tuesday, April 28, 2009

The state Senate is expected to vote on a rescue plan for the MTA Wednesday. Even though an earlier version promised to end the MTA’s woes for some time to come, it is looking more and more like a short-term fix. WNYC’s Matthew Schuerman reports.

REPORTER: The highest station in the subway system, at Smith and Ninth Streets in Brooklyn, is also one of the most notorious. It is balanced precariously, 90 feet in the air, on an aging trestle over the Gowanus Canal.

RUSSIANOFF: It’s a schlep. The escalators go out and it’s a misery climbing up here and of course the station--is you know peeling paint the paint, the roofs leak...

REPORTER: Gene Russianoff, of the Straphangers Campaign, an advocacy group, keeps his on eye on run-down stations. The MTA originally planned to overhaul this one three years ago. It was supposed to cost, when combined with repairs to the trestle it sits on, about 130 million dollars.

RUSSIANOFF: This station we’re standing in now, Smith and Ninth Streets, opened in 1933. It’s already celebrated its diamond jubilee.

REPORTER: Last year, because other projects ran over budget, the MTA had to drop the Smith and 9th rehab from its current five-year capital plan and push it into the next one.

RUSSIANOFF: So much of the system is so old you are dealing with 80 year old signals ….

REPORTER: The only problem is, it’s unclear just how much money will be in the next capital plan too.

RUSSIANOFF: … Sometimes 40 year old trains.

REPORTER: The fate of the Smith and Ninth rehab says a lot about the difficulty the MTA has in getting projects funded. Experts say the authority could do a better job estimating how much these jobs will cost, and keeping them on schedule. But Charles Brecher of the Citizens Budget Commission says a bigger problem is that the MTA borrows too much. About half of their debt goes for the regular replacement of train cars and other recurring needs, rather than long-term investments like the Second Avenue Subway.

BRECHER: The difference would be borrowing to buy the house versus borrowing to do regular repairs on the house, fixing the gutters, repairing the stoop, stuff that happens as part of regular wear and tear.

REPORTER: The borrowing costs hundreds of millions of dollars a year in interest, and forces the MTA into set payments, even when their revenues fall. That leads to a situation like today. Of this year’s 1-point-8 billion dollar operating deficit, one billion dollars of it is due to debt service.

SMITH: They always come back …

REPORTER: To much of the public, and to elected officials like Senate Majority Leader Malcolm Smith, it seems like the MTA is irresponsible.

SMITH: … and whether it’s inflation or cost of production they indicate that their numbers are off and they need more.

REPORTER: MTA Chief Executive Lee Sander agrees it would be nice to get ahead of the cycle of debt. But he says he doesn’t have the money.

SANDER: The problem that occurred in 2000 was that the state and the city withdrew their financial support for our capital program, again, which was mostly the core program, and so we had to borrow to finance it, and there was no money to finance it.

REPORTER: But the MTA’s reliance on debt began well before the year 2000, and continues today, according to former MTA Chairman Richard Ravitch.

RAVITCH: As I have said many times publicly the decision in the last five years to keep borrowing without the legislature adding any money is another reason they’ve got a hole.

REPORTER: last fall recommended a new payroll tax, the revenues from which would be put in a lockbox only for capital projects. But as the MTA’s finances have worsened, legislators opened the lock box. The latest version empties it entirely.

MTA officials said Monday that they expect their deficit will reach 1-point-8 billion dollars this year. It’s not clear that the current version of the rescue plan will cover that hole. Even if it does, there won’t be much left over to keep the MTA from borrowing heavily yet again.

For WNYC, I’m Matthew Schuerman.

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