The State of New York can no longer afford to maintain its 150,000 miles of highways and railroads; 17,400 bridges; and seven-million-passenger transit systems—and has “no credible strategy for meeting future needs,” the state reports.
Furthermore, the state’s long-term reliance on borrowing to make ends meet is coming home to roost in the form of a massive debt crisis that will strap the transportation system for the next 20 years, with ripple effects throughout the Northeast.
Those are among the grim litany of conclusions reported by New York Lt. Gov. Richard Ravitch in a new economic study of the state’s transportation infrastructure.
“New York State currently lacks the revenues necessary to maintain its transportation system in a state of good repair,” the report says. “Simply maintaining the State’s existing physical assets will take billions of dollars annually. Expansion of the transportation network … will take billions more.”
New York must confront the problem now or face “self-destructive backsliding” on its transportation investment, Ravitch warned.
“[T]here is an increasing risk that funding for infrastructure investments will be curbed to dangerous levels.”
Neither the Metropolitan Transportation Authority nor the state Department of Transportation “has adequate resources to cover its operating expenses and the level of new borrowing demanded by its proposed capital program,” the report says.
“New York, therefore, faces a choice: significantly higher taxes, fees, fares and tolls or a drastically diminished transportation program that could jeopardize safety and economic well-being.”
The crisis touches every mode of transportation, Ravitch said. MTA’s five-year, $28 billion plan, which began in October 2009, “faces a gap of at least $10 billion for its final three years.” On two current programs alone, he wrote, MTA is short $3.5 billion.
Borrowing to meet the five-year gap would require $700 million in additional annual revenues for debt service. Cancelling the two current projects would require repaying the federal government $1.5 billion. Meanwhile, the state is locked into project funding obligations that will probably mean cuts in MTA’s core program, Ravitch said.
MTA estimates that it will need $120 to $140 billion over the next 20 years “just to meet the repair and replacement needs of the system,” while DOT puts its 20-year maintenance price tag at more than $175 billion.
Substandard Pavement, Bridges
Meanwhile, sub-standard pavement conditions have “increased significantly over the past decade and will continue to worsen,” the study says.
Much of New York’s road and highway network, built for a 50-year life, is more than 56 years old, with bridge conditions already declining and “a wave of deteriorating bridges” likely in the coming years.
The Crown Point Bridge, which connects New York to Vermont, had to be blown up suddenly last year when it was found to be unsafe, Ravitch notes. The Tappan Zee Bridge, part of the Northeast highway Corridor, has passed its service life and must be replaced at a cost of about $10 billion.
Federal funding, the largest source of MTA and DOT funds, has limped along in a series of temporary measures since the Federal Transportation Act expired last year, the report says.
The squeeze is already creating a vicious economic circle, as agencies borrow more and extend maturity dates later to meet current needs. Meanwhile, deferred maintenance will mean more spending down the road, the report notes.
The current crisis is the result of mismanagement, political appearance and, above all, over-borrowing, Ravitch writes.
“New York has long failed to secure enough revenues to meet both the operating expenses and the capital requirements of its transportation system,” he wrote.
The state has long borrowed to cover operating expenses, a “disastrous” mechanism that drives up debt service and constricts borrowing capacity, the report notes.
The state’s Dedicated Highway and Bridge Trust Fund, created in the 1990s to fund DOT capital plans, is now paying out more than it is taking in.
The fund will spend $1.3 billion of its $2 billion budget for debt service and $973 million for non-capital expenses in FY2010, leaving only state general revenues for capital projects.
“New York now routinely issues State-supported debt to pay for projects that could be considered regular maintenance, such as common bridge and sign repairs, simple repaving, and lane marker striping,” the report says.
“Today, the growth in the State’s debt service payments far outstrips its available dedicated revenues.”
When the economic bubble of the mid-2000s briefly blessed MTA with a surplus, the agency spent it on “fare holidays” and subsidies to hold down fares. Later, when the economy and tax revenues tanked, “MTA found itself without enough revenues” to operate and pay its debt service. The result: The agency nearly doubled its debt load in eight years.
From 2000 to 2002, MTA was able to restructure its debt, which reduced its payment, but “resulted in a dramatically larger debt burden and debt service payments in future years,” with repayment dates “backloaded” into the 2030s, the report says.
“Short-term fiscal and political relief came at a long-term cost,” Ravitch observes.
Spending More, Getting Less
The upshot: New York is “spending more than ever before on its transportation program but getting less,” the report says. “New Yorkers will begin to see conditions in the DOT system decline in the coming years.
“The agency simply cannot keep pace with the demands of an aging system. If New York State fails to devise a realistic blueprint for the years after 2011-12, it can expect the deterioration in conditions to accelerate, resulting in increased safety risks, traffic delays and associated costs.”
Blueprint for the Future
New York needs “a long-term blueprint that explains how it will meet its transportation needs,” the report says. If long-term planning is impossible, the state “should at the very least have a five-year blueprint.”
Going forward, the state must refocus its transportation program “to emphasize state-of-good-repair, safety and security, more efficient and cost-effective project delivery, and better regional planning.”
Agencies should work together to maximize the economic impact and sustainability of each project, and politicians must level with constituents about the choices.
“State transportation officials must be clearer about what the public is buying with each dollar and what the trade-off is for every dollar not spent,” the report says. “It simply will not be possible for the State to fund every desirable project.”
The report also urges the state to:
• Streamline environmental reviews “for projects with a demonstrably positive environmental impact”;
• Make greater use of Design-Build contracts, to reduce construction costs;
• “Get serious about pricing its transportation network effectively”; and
• Explore the creation of special taxing districts for certain megaprojects that will dramatically benefit one area.
Finally, Ravitch notes, the infrastructure crisis is not limited to transportation.
“It also confronts the State in the areas of energy, drinking water, and waste and sewer water treatment systems."
“But the field of transportation powerfully illustrates the scope and gravity of the challenge.”