The New York Times
May 1, 2000
Approval Expected for Transit Agency's Spending Plan
By RICHARD PEREZ-PENA
ALBANY, April 30,2000 Despite continued, fierce opposition from finance experts and
transit advocates, officials here say the Legislature will approve the Metropolitan
Transportation Authority's $17 billion capital plan, perhaps as early as this week.
Analysts say that even with changes made in the last few weeks, the plan still
rests on a vast pile of debt that will force fare increases and will hobble the
authority's ability to make capital improvements in the future. It would require the
largest sale of municipal bonds in history, $22 billion over five years.
"Our criticism of the old plan is our criticism of the new plan," said
Frank J. Mauro, director of the Fiscal Policy Institute, a nonprofit group here that
studies state and local finances. "They haven't changed much. It's still a
nightmare."
The plan, covering this year through 2004, envisions the first major expansion of
the transit and commuter rail system in generations. It would begin construction of a Long
Island Rail Road connection to Grand Central Terminal, and conduct the
engineering work to prepare for building a full-length Second Avenue subway
line and a subway connection to La Guardia Airport.
"But if the financing isn't real, the plan's not real," said Gene
Russianoff, staff lawyer with the Straphangers Campaign, a transit advocacy group.
"This plan puts those projects farther away, not nearer. It's a phony
plan."
In recent weeks, Mr. Russianoff and others have started complaining that the plan
will short-change city residents. They note that most of the money to be spent on
the Long Island project is in the first years of the plan, while the money for the
Second Avenue and La Guardia projects lags several years behind. When the time comes
to put shovels in the dirt for the city projects, they predict, the money will
be gone.
E. Virgil Conway, the M.T.A. chairman, dismissed such predictions. "That
would be highly irresponsible," he said. "A system is a system and you
hope that people understand the interrelation of the parts." Overall, he said,
"I think our plan is well conceived."
Legislators and aides in both the Assembly and the Senate say the decision has
been made to approve the plan. "I would say that we are 80 percent there on the
details," Senator Dean G. Skelos, a Nassau County Republican who has taken the
lead role on the plan in his house, said last week. "It should be done very
soon."
For the plan to go forward, the Legislature must pass a bill permitting the
authority to refinance its existing debts through the sale of $12 billion in bonds.
The entire plan must be approved by a review board that includes representatives of
the Senate and Assembly leaders, who blocked an earlier version of the plan but have
signaled that the latest one will pass muster.
In addition, Gov. George E. Pataki and the Legislature have promised $1.6 billion
from a November bond issue for M.T.A. capital projects.
Mr. Pataki has forced a profound change in the way the authority pays for its
upkeep and improvements, by largely withdrawing the state from the role it once
played as the major source of money. New York City has also cut back sharply.
For the new capital plan, those changes have forced the the authority to rely
mostly on borrowed money, to be repaid through riders' fares over the next 30 years.
The authority would sell $10 billion in new bonds, a burden that critics say the
agency's budget cannot support without huge fare increases.
Mr. Conway said that there was similar criticism when the last capital plan was
proposed five years ago. "They were pounding the table and screaming to stop
this," he said. "And what happened? We had the first fare reductions in
the history of the entire system," a reference to the volume fare discounts
introduced in recent years.
That plan worked and so will the new one, he said.
But the last plan involved $3.5 billion in new debt, not the $10 billion
envisioned under the new one.
And in fact, the 1995 plan has left the authority facing deficits in the hundreds
of millions of dollars each year. That is because the amount of money the authority
has had to take out of its fare revenues to pay off debts has climbed from $500
million in 1995 to $1 billion this year. And it will reach $1.6 billion a year with
all the debt envisioned in the new plan.
In addition to fears about the $10 billion in new debt, there has been sharp
criticism of the bond refinancing. That deal would lower annual payments on the debt
somewhat in the early years, but it would increase the cost of repayment by $5.4
billion over the 30-year life of the bonds. Finance experts in government and in the
private sector call that bad policy, but many add that they see no other way
to get the authority through the next several years.