PERMANENT CITIZENS ADVISORY COMMITTEE TO THE MTA
MINUTES OF SEPTEMBER 8, 2016
A meeting of the Permanent Citizens Advisory Committee (PCAC) to the MTA was convened at 12:00 noon on September 8, 2016 in the 20th floor, Conference Room 4 at 2 Broadway, New York City.
The following members were present:
Andrew Albert
William K. Guild
Mark Epstein
Marisol Halpern
Orrin Getz
Sharon King Hoge
Randy Glucksman
Trudy Mason
Stuart Goldstein
Scott Nicholls
Ira Greenberg
Wilhelm Ronda
The following members were on the phone:
Christopher Greif
The following members were absent:
Francena Amparo
Mike Godino
Gerard Bringmann
Rhonda Herman
Michael A. Cairl
Maureen Michael
Sheila Carpenter
Raymond Pagano
Richard Cataggio
Bryan Peranzo
Francis T. Corcoran
Edith Prentiss
Owen Costello
Larry Rubinstein
Burton M. Strauss, Jr.
In addition, the following persons were present:
William Henderson -Executive Director
Ellyn Shannon -Associate Director
Angela Bellisio -Planning Manager
Bradley Brashears -Transportation Planner
Karyl Cafiero -Research Associate
Robert Foran -MTA
Aimee Vargas -MTA
Alan Treffeson -NYC Independent Budget Office
Richard Schulman -Concerned citizen
Approval of Agenda and Minutes
The agenda for the September 8, 2016 meeting was approved. The minutes of the June 2, 2016 meeting were approved.
Chairs’ Reports
Randolph Glucksman presented the PCAC Chair’s report. A copy of the written report is attached to these minutes.
Council Chair’s reports were previously distributed to the members.
Mark Epstein asked for any comments or questions on the LIRRCC Chair’s report and there were none. Mr. Glucksman likewise asked for comments or questions on the MNRCC report and heard none. Andrew Albert asked for comments or questions on the NYCTRC Chair’s report and noted that that a decision has been made to proceed with the reconstruction of the L line’s Canarsie Tubes over an 18 month time period. He also noted that the NYCTRC members had taken their annual field trip in August to inspect the M line’s Bushwick viaduct and bridge over LIRR tracks at Fresh Pond,
Mr. Albert also noted that first test cars of the R179 series have arrived.
Chris Greif said that he had seen a D train with cars that looked different than the rolling stock normally on the line and asked whether this could have been the new cars. Mr. Albert said that the R179 cars would not have been in revenue service on the D line.
Old Business
Bill Henderson presented the results of the survey of members concerning meeting times. Since the last meeting, the preferences of more members had been gathered, but the strong consensus remains to keep the quarterly PCAC meetings at their current times.
New Business
Ellyn Shannon presented the work that PCAC staff has done on the public engagement issue and said that the direction that staff is pursuing work in three areas. These areas include a set of meetings with high level opinion leaders to discuss the state of the MTA and the constraints and opportunities that it faces, an emphasis on public education which may use forums and social media to increase understanding of the funding and governance of the MTA and the issues that its operating agencies face, and a set of public workshops that allow interested stakeholders can engage in discussions about options for funding and operations and possible paths forward for the MTA
Mr. Albert asked who would operate this process and Ms. Shannon said that the MTA would do it, possibly following the model that was developed during Lee Sander’s tenure as MTA Executive Director. Mr. Albert said that the Board had a discussion at a recent meeting that noted the public understands the need for periodic fare increases, but riders want to believe that they are getting something in exchange for increased fares.
Stuart Goldstein asked whether this process would replace fare hearings. Ms. Shannon said that the steps she presented would lead up to the official fare hearing process. Marisol Halpern asked whether there is hope of getting the MTA to support this plan, as it seems to be a battle just to conduct the fare hearings. Ms. Shannon replied that the L line meetings were successful in educating riders on the issues and reaching consensus on repairing the Canarsie tunnels and that this can motivate the MTA to follow a process focused on increasing public understanding.
Mr. Greif asked what PCAC members can do to move toward this model and suggested that members could help to raise the profile of the PCAC and its councils.
Ms. Shannon responded that advocating that the MTA revise its public engagement process would be subject to the group’s decision. Mr. Albert said that one issue with public hearings that is offputting is that there is no response to stakeholders’ statements from those on the other side of the dais. Randy Glucksman commented that we recognize that those representing the MTA at hearings cannot respond to all statements, but having the ability to make a response is a valuable tool.
Bill Henderson said that it would be useful for members to provide staff with any ideas they have on public engagements.
Orrin Getz said that the MTA could improve public engagement by maintaining staffed tables at the hearings. Sharon King Hoge added that this would also be a good way for the MTA to do outreach.
Mr. Getz noted that one important issue facing the LIRR is the availability of rolling stock to service the East End of Long Island. He said that the LIRR President had assured the MTA Board that there was sufficient equipment to operate service, but the experience during the past summer contradicted this. Mr. Getz said that there was even a train cancelled on a holiday weekend due to lack of equipment and that he believes that there is a severe shortage of cars. Mr. Getz said that he strongly believes that the East End should have the same level of service as other parts of the MTA system. Richard Schulman noted that demand is not large with current schedules and that when he rides to Greenport, the passenger load is often him and another person. Mark Epstein commented that he would like to speak with Mr. Getz about this issue and that he does not believe that East End service is the first place that service needs to be added. Mr. Getz responded that stated that there should be a better accounting of what equipment is available for service in diesel territory.
Mr. Getz noted that he attended a recent NYMTC meeting and that one issue that needs to be discussed is options for moving commuters between New Jersey and Manhattan. He noted that there are plans being developed to build a new bus terminal in Manhattan, but questioned where the terminal’s passengers will go once they arrive in Manhattan, with connecting services such as the E train jammed during rush hour. The New Jersey Association of Rail Passengers has been asking the Port Authority for more detail about what they are planning and advocates the extension of 7 line to Secaucus. Mr. Albert said that the Secaucus Rail Terminal could be used to provide connections if the 7 line were extended.
Mr. Greif said that on Tuesday, he saw a huge line of buses leaving the Lincoln Tunnel and that this presents safety concerns, as the facilities crossing the Hudson River are overloaded. Yvonne Morrow commented that the Port Authority Bus Terminal and many sites proposed for its replacement are located in Community Board 4 and that the Community Board is advocating that a bus terminal be built in New Jersey. She said that the Port Authority wants to demolish housing on the Far West Side to build a new terminal. Ms. King Hoge stated that she has long suggested that there be a northern bus terminal where riders could transfer to subways to complete their journey. Mr. Albert replied that there is a bus terminal at 178th Street, but it is underutilized. Mr. Getz said that this issue also affects MTA commuters, as Rockland County is also west of the Hudson. Ira Greenberg said that he needed to take a look at the passenger flows before deciding which option is preferable. Mr. Getz said that a group of advocates to which he belongs will be meeting with New Jersey Transit interim Executive Director Dennis Martin.
Ms. Hoge stated that memorial service for Robert Kiley is September 30 at the University Club and she will send information to Mr. Henderson to forward to members.
Introduction of MTA Chief Financial Officer Robert Foran to Discuss the Proposed 2017 MTA Budget and the Financial Prospects Facing the MTA and its Agencies
Mr. Foran said that his presentation is based on the July Financial Plan, which contains the first projected 2017 MTA budget as well as the first projection of financial conditions for 2020. In November they will be releasing proposed a final proposed budget, and this will include the impact of expected fare increases, which are of course subject to MTA Board approval.
Mr. Foran summarized the state of the MTA’s finances, noting that in February they expected to have a $121 million cash balance for 2016, small cash balances in 2017 and 2018 and a $257 million deficit in 2019. The February Financial Plan also envisioned increasing the amount of annual recurring savings from $1.6 Billion in 2016 to $1.8 billion in 2019. As well as funding for continuing operations the plan also includes service, maintenance, information technology, and enterprise asset management program investments.
The MTA Board generally takes the amount budgeted for a general reserve that remains unused at year end and applies it to reducing long term liabilities. This year, half of this amount was directed toward the LIRR plan for additional pensions, which three years ago was funded to 25 percent of liabilities, but is now funded around 55 percent of liabilities. This reduces the MTA’s expenses in the long run, as less funding is required to make up for earnings not realized on the plan’s funding shortfall. There are other major unfunded liabilities that the MTA must confront, as its retiree health care liability is between $14 and 15 billion.
Mr. Foran said that since the February Financial Plan, there have been a number of changes in assumptions and conditions. For one, the MTA Capital Program has been approved, which allows major investments to proceed. The largest impact on health and welfare costs is in Workers Compensation, which has increased greatly. Also, the MTA pension liabilities have increased by an estimated $100 million per year due to revised mortality estimates released by the NYC Employees Retirement System, which covers NYC Transit employees. In addition, this year’s farebox revenue is lower than projected by $182 million, but since the February plan there has been an $843 million positive net charge in assumptions.
The July financial plan has increased savings targets, which will rise to $2 billion annually by 2020. In addition, continued low interest rates have enabled $566 additional spending on capital investments, and the $200 million of pay-as-you go capital spending has been accelerated. There are also increased customer experience expenditures the July plan. These changes eliminate the projected 2019 deficit, but there is still a substantial deficit of $371 million projected for 2020.
Mr. Epstein stated that he would like to review the details of increased spending on the customer experience, as he did not see anything targeted to the LIRR.
Mr. Foran noted that the July Plan also includes platform service adjustments, which increase MTA service to respond to increased demand. These do not require Board approval but will cost about $21 million. The recurring savings referenced earlier include actions such as extracting $113 million from the procurement process, reducing the growth of paratransit by $93 million, and reducing prescription drug costs for retirees by substituting other coverage for Medicare Part D and receiving a subsidy in exchange.
Ms. Shannon said that the staff has experienced issues suggesting that information technology changes may be causing problems that lead to inefficiencies in MTA departments and asked if MTA Audit has looked at the situation. Mr. Foran responded that the changes that have been made in information technology have been in terms of consolidation and not in reduction of resources available to employees. The aim is to invest in smart information technology by doing things such as working toward standardization. Standardization allows the MTA to reduce headcount previously devoted to supporting systems with only a few users. The goal is to get to 150 systems applications in the organization. MTA Audit is looking at the process, as anytime there is consolidation, Audit participates in establishing staffing levels.
Mr. Goldstein said that the MTA Business Services Center (BSC) was mentioned in the presentation and that it is not clear that BSC is realizing its originally projected savings goals. Mr. Foran stated that dollar savings are coming in areas other than reducing headcount. For example, there is inefficiency reduced throughout agencies by implementing shared services, and the agencies of the MTA could not do consolidated procurement without the BSC. He acknowledged that the original plan was to save through headcount reduction, but the BSC was not initially implemented well. With the implementation of PeopleSoft 9.2, the original vision is now working. The MTA is in the process of reducing the 26 payrolls that the organization once administered and the BSC is accomplishing efficiencies through this process. Mr. Foran said that we should not focus on the $30 million in payroll reduction that was once stated as a goal for BSC, as in reality payroll reduction savings were never projected as more than the low tens of millions. He noted that another efficiency that is being realized is faster payment of invoices to receive vendor discounts.
Trudy Mason asked why the MTA had 26 payrolls. Mr. Foran replied that the payrolls were established mainly because of collective bargaining. When different bargaining units had various provisions in their contracts, the provisions were administered through different payrolls.
Mr. Foran turned to the financial challenges facing the MTA. He said that keeping the budget in balance depends on continued fare and toll increases at about 2 percent per year. There is also provision for salaries and benefits to rise, and there is roughly a 2 percent increase in salaries built in to the plan. A major threat is the so-called Cadillac tax on health benefits, which was to kick in in 2018 but now has a 2020 effective date. The estimated annual cost of this provision to MTA in 2022 is $180 million.
Even positive changes have potential financial implications. For example the move to open road tolling is a threat to the plan. While the system is working on the Henry Hudson Bridge with no commercial traffic, financially it is only breaking even in terms of revenue lost and income from penalties. It is uncertain what will happen when the system moves to more heavily used crossings with more commercial vehicles, which have greater incentive to evade tolls. In these cases, there may be a risk of loss. Mr. Foran said that the MTA is also seeing $10 million in revenue lost from Uber and similar services.
Ms. Hoge asked whether congestion pricing or a similar arrangement could provide a source of revenue. Mr. Foran said that those revenue sources need to be explored, but it is the Legislative’s job to make decisions on whether to move forward with them.
Mr. Foran also said that the cost of servicing the MTA’s debt is a concern. At present, the financial plan assumes interest rates higher than they are currently, but a change in financial conditions could challenge the plan’s assumptions.
Adjournment
The meeting was adjourned at 2:10 pm
Respectfully submitted,
William Henderson
Executive Director