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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: MTA Faces Growing Risks to Its Capital Funding

Questions Leave Repairs, Maintenance and Upgrades in Doubt

May 9, 2024

New York state helped stabilize the MTA’s finances last year, but its capital program for maintaining and upgrading the regional transit system faces significant delays due to funding issues, which may also pressure its next capital plan, according to a report released today by State Comptroller Thomas P. DiNapoli.

“The MTA’s capital program is critical to winning riders back to public transportation and increasing fare revenue. When capital projects are delayed, repairs and upgrades are put off, causing parts of the system to deteriorate further,” DiNapoli said. “There’s more at stake than just delayed projects. If the MTA covers the shortfall in capital funds by using its operating budget to pay for more borrowing, less money would be available for day-to-day operations and goals, like increasing service.”

Capital Program Progress

As outlined in prior reports by DiNapoli, numerous parts of the MTA’s system are in poor condition, and the MTA relies on debt to pay for the capital improvement projects to maintain and repair the system.

Delays, uncertainties, and lawsuits around congestion pricing’s implementation have slowed down the MTA’s capital work. Before the pandemic, the MTA averaged $7.1 billion in commitments to capital projects (2016-2019). In 2022, it put a record $11.4 billion toward capital work. However, those commitments slipped to $8 billion last year and the MTA’s target for 2024, once estimated at $12 billion, is now less than $3 billion.

Congestion pricing was supposed to provide about $15 billion of the MTA’s current $54.8 billion 2020-2024 capital program. Implementation delays have pushed back much-needed projects, with $9 billion in 2024 work currently at risk.

Questions over where funding will come from rise ahead of the 2025-2029 capital program, which is scheduled to be released by Oct. 1, 2024, laying out the priorities for work and repairs to the system. Given the MTA’s repair needs, its plans for resilience efforts, and its expansion projects, it is likely that the program will be at least the size of the previous program.

If other dedicated capital revenue sources are not available, there could be at least a $25 billion funding gap in the next capital program, which would create pressure to increase debt and impact the operating budget. Without additional money from better-than-anticipated tax and fare revenues or added savings from cost efficiencies, the MTA would eventually have to raise fares or tolls or cut service to cover such a gap, which would negatively affect riders’ experience.

Debt and Borrowing

Long-term debt outstanding issued by the MTA and supported by its operating budget more than doubled from 2000 to 2010, from $11.4 billion in 2000 to $29 billion in 2010, as the MTA funded a significant portion of its capital programs with bonds. The pace of growth slowed to 22% from 2010 to 2019, to reach $35.4 billion, as state and federal support rose from the decade prior. Since 2019, however, debt has risen to accommodate increased capital spending, reaching $40.4 billion in long-term debt paid from the operating budget in 2023, a 14% increase.

The MTA’s total outstanding debt is expected to rise from $42.4 billion in 2023 to $59.9 billion in 2028. A small but growing portion of this is funded outside of the operating budget (known as capital lockbox debt and funded primarily by future congestion pricing revenues), which is projected to make up 5% of debt in 2023 and 32% in 2028.

Non-lockbox debt, which impacts the day-to-day operating budget, comprises $40.4 billion of all debt in 2023 but is estimated to decline to $38 billion in 2030 as the MTA increasingly relies on lockbox debt. This will not only help fund the capital program but also stabilize its operating budget by reducing the impact of annual debt payments on the operating budget.

Debt service, which is the amount the MTA spends to pay down debt each year (including for lockbox debt), is projected to reach $5 billion by 2031, an 83% increase over 2023’s $2.3 billion. Historically, about 16% of MTA’s annual revenue is spent on debt. Increased use of capital lockbox debt will keep that in check. If capital lockbox debt service and revenue were not kept separate from the operating budget, the MTA would be spending nearly 20% of its revenue on debt by 2031.

DiNapoli’s report calls on the MTA to explain how it intends to prioritize its needs so that its choices do not result in disinvestment in the system, noting that bringing riders back would be one of the most direct routes for the MTA to reduce its debt burden over the long term.

Annual Update: Metropolitan Transportation Authority’s Debt Profile

Related Work 
A Review of Capital Needs at the Metropolitan Transportation Authority (Feb. 2024)
Financial Outlook for the Metropolitan Transportation Authority (Oct. 2023)