The Partnership for New York City submitted the following testimony for the New York State Senate hearing on MTA’s finances and projections.
Thank you for the opportunity to testify today. Over the past two decades, I have participated in several MTA commissions and many hearings. The issues are always pretty much the same: shortage of revenues to support operations and need for more funding for capital improvements; structural inefficiencies that are built into labor contracts, procurement processes, and civic service rules; and political pressures that interfere with cost-effective and professional management of the system.
Today, these chronic challenges have been magnified by the pandemic. We face a precipitous fall in ridership and public health and safety concerns about conditions in the subways and around transit hubs. The MTA has received generous federal aid to offset pandemic losses, but still projects operating deficits in the years beyond 2023, even with modest fare and toll increases that will be necessary to avoid cuts in service.
Most employers are doing everything they can to induce the city’s 1.2 million office workers to return to the workplace, but a recent Partnership survey indicates that only 75% of workers will return by January 2022. Many professionals will work remotely at least part of the time, resulting in some permanent dislocation of commuter activity, especially impacting ridership of Metro-North and the Long Island Rail Road. We believe that subway and bus ridership will ultimately rebound, assuming fears of COVID-19 and threats to personal safety are resolved, but utilization may not follow the Manhattan-centric design of the current regional transit system. In the future, auxiliary office operations are likely to be set up in other boroughs and the suburbs, closer where employees live. Transit design will need to reflect changing demands.
The business community has consistently supported a balanced approach to MTA budget issues through a combination of controlling costs and increasing productivity, on the one hand, and raising fares, tolls, and taxes on the other. In the past, we have advocated for the mobility payroll tax, congestion pricing, and borrowing to meet capital needs. During the next few years, congestion pricing will come on line, making further tax and toll increases unlikely to be tolerated. Hopefully the federal government will enact a national infrastructure program and adjust the formula for transit subsidies to provide some increased assistance, but we will also need to see aggressive cost-cutting and moderate fare increases.
In 2018, the legislature created the Metropolitan Transportation Sustainability Advisory Workgroup, which I chaired. The workgroup included bipartisan representatives of the legislature as well as appointees of the governor and the mayor. We interviewed dozens of experts and learned what other regional authorities have done to reduce costs and generate revenues. Among other things, we recommended setting up a unit dedicated to strategic partnerships that would seek to optimize income from rents, advertising, sale of air rights, tax increment financing and other entrepreneurial activities. Today, the MTA raises only about 3% of its revenues from commercial sources. The time seems right today to convene a follow-up group to help the MTA act on some of these proposals, as well as reforms that are politically difficult but necessary.
Aside from fiscal challenges, the MTA also faces personnel and management issues. The transformation process put in place by Governor Cuomo in response to the 2018 “Summer from Hell” has proven to be an expensive distraction. The promised consolidation and streamlining of support functions has done more to confuse than clarify roles and responsibilities. The positive narrative that the MTA started to build in 2019 around modernization of the signal system, a fully funded capital program, progress on station accessibility, and improved customer communications and services has been undermined by management upheavals, service cuts, and safety concerns. One bright spot has been the successful reorganization of the capital program management under now Acting Chairman & CEO Janno Lieber, who will hopefully be empowered to carry out similar reform measures throughout the system in his new role.
In 2018, the Partnership for New York City and the MTA created the Transit Innovation Partnership, a nonprofit initiative to apply private sector expertise and resources to address the issues facing the transit system. For the past three years, we have drawn upon the expertise of industry and academics to solve problems identified by the MTA on a pro bono basis. We initially worked on modernization of signals and data collection systems. When the pandemic hit, the focus shifted to finding best in class products for cleaning and ventilation. To leverage private investment in transit improvements, we recruited West Monroe, a prominent consulting firm, to help the MTA Construction & Development team and NYC Transit re-engineer the process for approving private development contiguous to transit facilities. As a result, the MTA now has an online portal to manage a process that is generating significant fee income and resulting in privately funded upgrades to MTA facilities. Developers are willing to pay more because approvals that formerly took years to secure are being completed in 45 days.
We also set up a Transit Tech Lab which has provided access to cutting edge products from companies around the world at no cost to the MTA. Examples include products that help blind or hearing-impaired riders navigate the system, transponders that allow buses to travel faster, and software that anticipates bus breakdowns before they happen. One participating company helped the authority redesign system-wide bus routes in two boroughs in a third of the time it would have taken without their software. A Brooklyn company, Work & Co., created the award-winning live subway map, again on a pro bono basis. Transit Tech Lab projects have not only generated significant monetary value, they have empowered MTA staff to work across divisions to produce better solutions at less cost.
For too long, the MTA has been held back by a governance and regulatory structure that discourages innovation. During the COVID crisis, MTA management and operating staff demonstrated their resourcefulness and dedication. Given the freedom to make hard decisions, they moved quickly and creatively to resolve issues, such as closing the subways at night for deep cleaning and maintenance. The discretion that was accorded MTA management due to the COVID emergency should be maintained. Access to and use of external resources like those available through the Transit Innovation Partnership should become a central feature of MTA culture and practice.
In the future, the city will be increasingly dependent on mass transit. The people responsible for its operations need our support and encouragement. When Andy Byford resigned, he made clear it was because he was not allowed to do his job, and he was not just referring to our former governor’s interference, but to the board, the bureaucracy, and the complex system of legal, regulatory, and contractual constraints that envelope the authority. As concerned legislators, I would urge you to do what you can to make the MTA and its agencies easier for professionals to manage and allow the executives of the MTA to do their jobs.