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Meeting Minutes Sept. 3, 2015

PERMANENT CITIZENS ADVISORY COMMITTEE TO THE MTA
MINUTES OF SEPTEMBER 3, 2015

A meeting of the Permanent Citizens Advisory Committee (PCAC) to the MTA was convened at 12:00 noon on September 3, 2015 in the 20th floor Board Room, at 2 Broadway, New York City.

The following members were present:
Andrew Albert
Christopher Greif
Sheila Carpenter
William K. Guild
Randy Glucksman
Trudy Mason
Mike Godino
Scott Nicholls
Ira Greenberg
Michael Sinansky
Burton Strauss, Jr.

The following members were on the phone:
Francena Amparo
Stuart Goldstein
Francis Corcoran L
arry Rubinstein
Neal Zuckerman

The following members were absent:
Gerard Bringmann
Sharon King Hoge
Richard Cataggio
Matthew Kessler
Owen Costello
Maureen Michael
Mark Epstein
Raymond Pagano
Marisol Halpern
Bryan Peranzo
Rhonda Herman
Edith Prentiss

In addition, the following persons were present:
William Henderson – Executive Director
Ellyn Shannon – Associate Director
Angela Bellisio – Transportation Planner
Bradley Brashears – Transportation Planner
Karyl Cafiero – Research Associate
Marsha Desormeaux – MTA Inspector General Office
Steven Cohen – MTA Inspector General Office
Stephen Berrang – MTA
Dustin Jones – Disabled In Action

In addition, the following persons were present:
Anthony Drummond – Brooklyn Borough President’s Office
Leida Snow – LS Consultant
Lou Sepersky – MetroEast, Inc.
George Haiklas – IRUM
Alan Flacks – NY County Democratic Committee
Michal Higgins, Jr. – Riders Alliance
Aliya Rasool – DOT
Yvonne Morrow – Concerned citizen

Approval of Agenda and Minutes

The agenda for the September 3, 2015 meeting was approved. The minutes of the June 4, 2015 meeting were approved.

Chairs’ Reports

The PCAC, LIRRCC, MNRCC and NYCTRC Chairs’ Reports are attached to these minutes.

Randolph Glucksman presented the PCAC Chair’s Report as well as the MNRCC Chair’s Report. Mr. Albert asked, in reference to the MNRCC’s efforts to secure alternative service to compensate for the discontinuation of train 1601, whether the MTA had considered adjusting other schedules later to accommodate passengers no longer able to ride train 1601. Mr. Glucksman said that an East of Hudson train could be adjusted to connect with Tappan Zee Express service over the Hudson, but that this option would not provide service to two of the three Metro-North Pascack Valley Line stations.

Ira Greenberg presented the LIRRCC Chair’s Report.

Andrew Albert presented the NYCTRC Chair’s Report. Trudy Mason noted that Mr. Albert had mentioned the Council’s Second Avenue Subway tour and said that the work is coming along on the project. She said that the MTA will have to devote additional resources to ensure that the project is finished on time and that there are plans to do so.

Mr. Albert further noted that the M86 bus has been converted to a Select Bus Service route and is generally working well and that the 34th Street – Hudson Yards station will open on September 13, increasing the number of subway stations to 469. Ms. Mason asked if the Council could be invited to the station’s opening. It was observed that there is a train simulator in the Second Avenue Subway community center and Chris Greif said that he had established a new record on the simulator when he had tried it.

Guest – Steve Berrang, MTA Director, Capital Program Management – to update the PCAC on the status of the MTA Capital Program

Mr. Berrang distributed two letters, one from the New York State executive budget office to MTA Chairman Prendergast and another from the MTA Chairman to New York State and New York City officials. The letters outlined the status of funding for the Capital Program and potential funding options involving the City.

Chris Greif asked whether the Capital Program could do more to increase the accessibility of subway stations.

Mr. Berrang responded that the MTA is committed to finishing the full list of 100 key stations in the next Capital Program. In addition, the Capital Program has made several stations that are not designated key stations accessible, and there may be potential to make other non-key stations accessible within the Capital Program.

Mike Godino asked whether the MTA is committed to meeting ADA commitments for 2020 and beyond. Mr. Berrang replied that the MTA will meet its commitments under the key station plan. Beyond 2019, he is unable to say what will be done, since the current proposed Capital Plan ends in 2019.

Mike Sinansky said that he thought Chairman Prendergast’s letters to the City were great. He also asked whether the City is willing to assume its responsibility to fund the NYC Transit system. Mr. Berrang said that the MTA is having fruitful dialogue with City stakeholders, but he is not able to discuss the specifics of those conversations.

Mr. Sinansky asked what the City wants in terms of representation on the MTA Board. Mr. Berrang said that he does not know.

Ms. Mason discussed the NYCTRC’s tour of the Second Avenue Subway and that she had gone to the site the day before with Congresswoman Maloney. She said that on these tours there were questions about what the City will be doing to support the line’s construction and whether there are specific plans to have the City financially support Phase 2 of the project.

Mr. Berrang replied that there is no need for additional funding for Phase 1 of the project. For Phase 2, $1.5 billion in funding is included in the proposed 2015-2019 Capital Program to continue work on the line. Ms. Mason asked the source of that funding. Mr. Berrang said that the MTA will be seeking to reach a Full Funding Grant Agreement with federal government and will look to other stakeholders to supply remaining funds that are necessary.

Randolph Glucksman said that the Governor was quoted in the New York Times as saying that “you” must invest in the system when discussing LIRR delays but that it is not clear to whom he was referring.

Mr. Glucksman thanked Mr. Berrang for updating the Committee.

Old Business

Mike Sinansky commented that in the MNRCC Chair’s Report, the deadline for installing Positive Train Control was discussed. He asked whether the MNRCC has further information on efforts to extend the deadline.

William Henderson added that the extension of the deadline will probably be considered this fall in concert with the renewal of the federal transportation bill.

New Business

No New Business was discussed.

Introduction of Charles Brecher, Consulting Co-Director of Research, and Jamison Dague, Research Associate, Citizens Budget Commission, to Discuss Proposals for an Equitable and effective funding system for the MTA.

Dr. Brecher gave an introduction into the work and history of the Citizens Budget Commission (CBC). Mr. Henderson commented that the CBC has become one of the foremost voices in the public debate over the funding of the MTA and has provided valuable analysis.

Dr. Brecher said that he would start with an explanation of the CBC’s 25-50-25 plan, how the MTA would fit into the plan, and how it would work with the Capital Program. He explained that the 25-50-25 plan is an exercise in setting up principles for funding the MTA. He noted that the MTA was established to depoliticize the process of providing transportation services and that operating according to agreed-upon principles would further this objective.

While the objective of organizing the MTA was to take politics out of the process, in practice this has not happened. For example, the process of setting fares has not worked out well and has been subject to political considerations. Dr. Brecher said that while some rider advocacy groups believe that raising fares should be the last resort for generating additional revenue, the principles underlying the 25-50-25 plan do not place this restriction on fares. In this plan when costs increase, the funding to meet them must also rise, and the increases in contributions from stakeholder groups grow proportionately, following agreed-upon funding ratios.

The foundation of the 25-50-25 formula is that the beneficiaries of public transit pay for its costs. Accordingly, motorists pay 25 percent of costs, transit riders pay 50 percent of costs, and general taxpayers, representing all those benefitted by transit’s contribution to the area’s economy and quality of life, pay 25 percent of costs.

Dr. Brecher said that the exact percentages that each stakeholder group should contribute are subject to debate and the political process can result in changes in the relative levels of support, but there should be some fixed basis for the allocation of burdens in funding the system over the long term. These percentages supply the formula for allocating funding responsibilities.

While the current debate is on the division of funding responsibility between the State and City, the CBC looks at the debate over funding differently. Under its point of view, it is less important whether funding comes from the City or the State, as both of these governmental units function as vehicles for collecting taxes from a broad-based set of stakeholders that benefit from transit’s impact on the area’s economy and quality of life.

Mr. Albert asked whether the general taxpayer group includes taxpayers statewide, in addition those in the MTA region. Dr. Brecher replied that the source of funding from general taxpayers is somewhat confused, as taxes in general are collected statewide and allocated through the State’s budget process. In fact, however, relatively little of the State’s allocation of funding for the MTA draws on general revenues. Most of the allocation is derived from taxes that are applied within the MTA region.

Dr. Brecher said that the current breakdown of MTA revenues is about 48 percent from fares and operating revenues, 40 percent from dedicated taxes and subsidies, and 14 percent from motor vehicle cross subsidies, including the Bridges and Tunnels surplus, which add to over 100 percent because of rounding. Also, accounting for subsidies is difficult because most of the discussion uses a cash basis, but a more accurate accounting would use Generally Accepted Accounting Principles (GAAP), which would recognize future commitments and liabilities.

Neal Zuckerman said that the main differences between the current system and one based on GAAP are in the treatment of depreciation expenses and Other Post Employment Benefit (OPEB) liabilities, such as retiree health care obligations.

Dr. Brecher said that the MTA accounts for interest expense on its borrowing, but the depreciation on current assets is greater than interest expenses, so the MTA’s capital costs are actually greater than reported. He said that the CBC believes that OPEB expenses should be accounted for as the obligation is incurred.

The MTA says it is paying in $350 million annually for OPEB expenses, but it faces an annual liability of $2.8 billion for depreciation and OPEB. This leads to less funds being available for the payoff of debt and contributions to the OPEB trust. Dr. Brecher said that CBC does not believe that MTA taxes should be reduced, but that resources should be devoted to correcting the underfunding of the MTA’s capital and OPEB expenses and that vehicle cross subsidies should be contributing more toward the MTA’s costs.

Mr. Dague stated that the funding picture for the MTA Capital Program has changed from the original proposal. There is now a $15.5 billion funding gap without accounting for additional MTA borrowing and a State commitment of $7.2 billion with no definite source. If one accepts these figures and assumes that the MTA borrows to fill the gap, debt service would be almost $1 billion per year for this additional amount but, because of the lag between contracting and completing work, funds for debt service would not be needed until 2025.

Going back to MTA cash accounting system, the CBC looked at what would be required to implement the 25-50-25 plan. Mr. Albert asked if the analysis included periodic fare increases. Mr. Dague responded that the analysis uses a 2019 base, so fare increases in 2017 and 2019 are factored in. He said that to get to a funding split of 25-50-25, a 3 percent fare increase would be required, which would raise average fares from $1.91 to $1.97, but the real change would be that annual vehicle cross subsidies would have to rise $1.8 billion.

The CBC has examined four categories of cross subsidies, including tolls, vehicle registrations and licenses, the gasoline tax, and Vehicle Miles Traveled (VMT) fees. The CBC also looked at charges for UBER and similar services more recently.

To generate an additional $1.8 billion, tolls would have to increase 109 percent, assuming no changes in traffic. The Move NY campaign indicated that their proposal would generate $1 billion in additional revenue, but this is only 55 percent of the total need.

Looking at vehicle registration fees, a 169 percent increase in fees would put New York on a par with Vermont but would only raise $68 million per year. The CBC also examined increasing supplemental fees and found that doubling those fees only raises $171 million annually, less than 10 percent of the MTA’s need. In general vehicle fees do not raise a large amount of money

Looking at a gas tax increase, if New York State raised its motor fuel tax to the same level as Connecticut, it could generate an additional $164 million for the MTA.
Increasing the gas tax to $.50 per gallon and increasing the MTA’s share of new revenues to 61 percent from 31 percent would raise $493 million per year for the MTA, but would be a significant change. Nationally, gas tax increases are popular, but our neighboring states are not raising gas taxes, which could be an issue.

Another source of revenue is a Vehicle Miles Travelled, or VMT, user fee. This charge could be a simple flat rate, or could vary by time of day, location, or other factors. One advantage to this source is that it is flexible and adapts to increases in fuel efficiency. A VMT fee for all of the MTA region would raise $1.8 billion at 2.4 cents per mile for cars and 6.5 cents per mile for trucks. Mr. Glucksman asked how this fee would be administered. Mr. Dague said it could be calculated through a GPS system or a periodic reporting of mileage.

A final option would be a range of transportation services fees, such as additional changes on UBER and similar services as well as black cars. These transportation providers erode MTA revenue from taxi surcharges, but the overall impact is not great, especially when it is considered net of additional sales taxes.

There are three options that have been discussed, including expanding the taxi surcharge to UBER and similar services and to traditional black cars. This would raise an additional $55 million, including revenue generated by the growth of UBER and similar services. If the expanded surcharge were adjusted so that it represented a percentage of fares similar to the existing taxi surcharge, it would double collections to $117 million. Finally, if the transportation sales tax were reformed and dedicated solely to the MTA, even a lower rate could generate $225 million per year.

Mr. Sinansky noted that the numbers presented are predicated on the 25-50-25 split of funding sources and asked how much analysis has been done on the 25-50-25 plan and how detailed this analysis has been.

Dr. Brecher stated that the 25-50-25 breakdown is based on the estimated value of the benefits derived from public transportation.

Mr. Sinansky suggested that there are other sources of revenue that could be tapped, such as a surcharge on AIRBnB rentals.

Dr. Brecher stated that they based their presentation on a belief that there is a range of potential sources that could generate the funding needed for the MTA.

George Haikalis said that there is a huge fixed cost to running the Transit system and asked whether costs to riders shouldn’t be allocated in terms of marginal cost with low or free fares in off peak times.

Mr. Dague stated that they did not look at distribution of fares, but the aggregate fare revenue.

Mr. Greif stated that there is a need to be sure about the numbers.

Dr. Brecher stated that he believes that there is a consensus on the amount needed to run the system, at least in short run.

Lou Sepersky wanted to know if there is a defined level of funding for Transit and how to ensure that funding is not pulled away to benefit the general fund.

Dr. Brecher stated that there is no good way to guarantee that fees that are imposed will go to support transportation. Any legislation passed can be changed by a subsequent legislature, but bond covenants could be an enforceable way of ensuring that there is a maintenance of effort to fund the MTA.

Adjournment

The meeting was adjourned at 2:10 pm
Respectfully submitted,

William Henderson
Executive Director