A funding gap roughly half the size of the plan itself casts a huge shadow over the $32 billion capital program New York's Metropolitan Transportation Authority has proposed.
The Capital Program Review Board, which consists of top state officials, rejected the four-year plan late last week. Both parties acknowledge a "dialogue" is under way.
"This veto is made without prejudice to any particular element or project that is contained in the proposal," board chairwoman and state transportation Commissioner Joan McDonald wrote MTA Chairman Thomas Prendergast. "I look forward to continuing the dialogue with you, members of the state legislature and key stakeholders."
Just how to plug the gap may not emerge at least until after next month's state elections, capital markets observers acknowledge. The MTA is pitching the city, state and federal government and corporate leaders for additional funds.
"MTA officials now have to go back and retool," said Anthony Figliola, vice president of Uniondale, N.Y., consulting firm Empire Government Strategies.
Elected officials don't want to raise taxes in an election year they don't want to raise taxes, so the burden may fall on commuters through fares, he said.
The MTA has already been implementing biennial fare and toll increases as part of a deal for state aid in 2009.
"I might preface by saying the MTA is infamous for keeping two sets of books," said Figliola. "I suggest we have a hard look at the books. There might be some items in the capital budget that may not be paid for right away."
MTA spokesman Adam Lisberg took exception to Figliola's comments.
"The MTA is a fiscally responsible and thoroughly transparent public authority, and irresponsible claims that the MTA ever maintained 'two sets of books' have been thoroughly debunked by an appellate court," spokesman Adam Lisberg said in a statement. "The MTA has carved more than $1 billion in savings from its annual operating budget, and we look forward to a dialogue with responsible parties about how to fund the vital capital projects necessary to keep New York's economic engine running."
The authority may also have to borrow more. MTA is one the largest municipal issuers with about $34 billion in debt, and its latest plan includes $3.9 billion in new bonding capacity.
Among other measures, the 2015 to 2019 plan calls for installing so-called positive train control and communications-based train control safety measures on commuter lines and subways. It also adds $5.5 billion for the next phase of the Second Avenue Subway from 96th Street to 125th Street, for East Side Access for Long Island Rail Road trains and to begin the Penn Access project to bring Metro-North New Haven Line service into Penn Station and add four stations in the Bronx.
The plan incorporates $16.9 billion in available funding from federal, state, local and private sources, and from MTA and Triborough Bridge and Tunnel Authority bond proceeds.
"Their priorities are correct. The signal system continuing the state of good repair, opening up Metro-North to Penn Station - all of these are very important to the economy of this city and this region," Richard Ravitch, who chaired the MTA from 1979 to 1983 and was a driving force behind the MTA's original capital plan, said in a recent Bond Buyer video.
"They cannot finance this without decisions to be made by the political leadership in Albany, and so far they have been absolutely silent on how they would propose to finance at least the $15 billion, or perhaps bigger, gap," said Ravitch. "I'm waiting with baited breath to hear what the politicians are prepared to do."
According to MTA spokesman Kevin Ortiz, capital plans are never fully enacted until the following spring as part of state budget negotiations. "This is a purely pro-forma move and was not unexpected," Ortiz said of McDonald's letter.
The MTA's own board approved the plan a week earlier by a 12-1 vote. Allen Cappelli dissented, saying his Staten Island borough was largely ignored.
After that meeting, Prendergast called the plan the beginning of a dialogue.
"When the chairman of the MTA presents the capital plan and calls it the start of a dialogue, that doesn't generate too much confidence," said William Henderson, executive director of the Permanent Citizens Advisory Committee to the MTA.
Henderson added that federal funding could pose as a large variable. "There are a lot of moving parts to this," he said.
