Capital | February 27, 2012
By Dana Rubenstein
M.T.A. chairman Joe Lhota, a lifelong conservative Republican, thinks the way the government funds the mass transit system that sustains New York's economy is fundamentally inadequate.
He has taken to saying as much in public, most recently at an infrastructure forum at Baruch College.
“It is only sustainable if our economy keeps growing or grows anywhere between 5 and 10 percent a year,” said Lhota, a burly, bearded Giuliani-era deputy mayor who has been running the authority since Nov. 14. “We can’t always rely on that.”
It might seem obvious to suggest, as Lhota has shown a tendency to do during his first three months in office, that the financing structure of the M.T.A. is awful.
The authority, which operates buses, subways, trains and bridges, relies heavily on revenue streams that are sensitive to economic decline and vulnerable to the regular, short-sighted predations of Albany. Its finances were left so precarious by the recent recession that in 2009, the M.T.A. drafted its 1980s savior, Dick Ravitch, back into service to come up with a stabilization plan. His commission’s report called for tolls on the East River and Harlem River bridges, but those proposals died in Albany, something Lhota attributed on Thursday to it having been thrust upon the legislature without sufficient public discussion beforehand.
Ravitch also called for the creation of a “payroll mobility tax,” which did make it through Albany, but has since been under attack by suburban Republicans for whom a loud fight with faceless urban transportation bureacrats is all upside.
The M.T.A., a state authority, remains a big-government villain of choice for State Senate Republicans from Port Jefferson to Poughkeepsie. The Republicans who run the House of Representatives don’t like the M.T.A. much, either. Right now, the House is trying to redirect substantial amounts of gas-tax revenues away from mass transit and toward highways.
While it has plenty of attackers, the authority has few public defenders.
Governor Andrew Cuomo, who, though widely admired for his ability to bring Albany to heel, has expended no political capital to defend expenditures on mass transit. In fact, Cuomo's apparent disinterest in transportation issues prompted Lhota's well-respected transportation-specialist predecessor, Jay Walder, to bolt shortly after he came to office. And the governor has since earned the displeasure of mass-transit advocates for excluding public transportation from the Tappan Zee Bridge-replacement project, and for horse-trading a payroll mobility tax cut for Republican support of a nominal tax hike on the very wealthy.
So to sum up, Lhota was installed by a governor who doesn't much care about transit to straighten out the finances and public image of an authority that is a political pinata, all while keeping the trains running on time.
Perhaps surprisingly, under these circumstances, Joe Lhota's first 100 days have been fairly calm. And perhaps more surprisingly, transit people seem to like the job he's doing.
For one thing, Lhota implemented Fastrack, a program that shuts down entire subway lines for a series of evenings to increase repair efficiency, and which has so far been well-received.
Advocates also say they like the way Lhota has been willing to argue the case for public investment in transportation.
When, during Lhota’s Senate confirmation hearings, Suffolk County Republican Lee Zeldin said it would be better for the M.T.A. to receive no taxpayer money, Lhota responded, “There is no way that the M.T.A. can operate without taxpayer money. It was never envisioned to be run without taxpayer dollars. There is not a transportation or commuter rail or transit system in the country that doesn’t work without some other infusion of cash.”
Lhota has also loudly resisted the House of Representative’s efforts to cut the gas tax (though that’s not a particularly controversial stance to take in New York City, since the House is Republican, the city is Democratic, and the bill is unlikely to get the Senate’s or president’s approval anyway).
“So far, I think in terms of his public presentation of himself, I think he has come through with a lot of credibility,” said Noah Budnick, deputy director of Transportation Alternatives, an advocacy group.
Lhota says he’s also been trying to make headway in Albany, to which he’s traveled seven times to discuss transit issues with the executive and legislative branch, and where he lobbied alongside Transport Workers Union head John Samuelsen on Feb. 13.
“That never happened with Walder,” said Jim Gannon, a spokesman for the T.W.U. who praises Lhota, even though the union is locked in contentious contract negotiations with the M.T.A. that may well influence the authority’s ability to carry out its capital plan. Gannon points out that before implementing Fastrack, Lhota even consulted with the union beforehand about workers’ concerns.
“I think he’s definitely more politic, if you know what I mean,” said Gannon. “Whereas Walder was very confrontational. You know, he just didn’t show the union much respect.”
If Walder were taking part in the negotiations, Gannon said, “There would be demonstrations and threats and saber-rattling all over the place.”
Mass-transit advocates are also hopeful that Lhota will turn out to be more of an asset than they originally expected.
Gene Russianoff, staff attorney for the Straphangers Campaign, is hopeful that Lhota will be more accessible than his predecessor Walder, and said that so far he's impressed with Lhota's outreach.
“With the exception of the Senator Bill Perkins flap, I watched him testify two or three times, and he’s very responsive to legislators," Russianoff said. "He’s very direct. There’s really no B.S.”
There is nothing accidental about Lhota's charm offensive. The chairman says very plainly that he believes establishing good relationships with stakeholders is the first step toward acquiring more support, financial and otherwise, for the beleaguered authority.
“It’s important to have open lines of communication, so we can begin to change the image of the M.T.A.,” Lhota said in a recent interview.
He’d like in particular to get state legislators, many of whom, he says, “believe we are grossly inefficient,” to understand that half of the surplus on the M.T.A.- controlled bridges goes to the Long Island Railroad and Metro North.
“I need to get that across,” said Lhota. “People do not know that. I can’t tell you the number of legislators who don’t know that. They think any surplus goes to the subways. And that’s not true.”
More broadly, his message has been simply that the authority is in an extremely precarious position right now, and that its financial needs must be taken seriously.
“I keep saying over and over again how precarious our financial situation is, said Lhota. “We’re going to have to find different sources of revenue in order to find the capital necessary to sustain a state of good repair.”
That sounds obvious, and yet there's been no one with any significant political power who's been willing to push for those secure sources of revenue, as illustrated by the outcome of the recent rescue plan devised by Ravitch, which was promptly discarded by Albany.
“If you look at the last fiscal crisis that the M.T.A. went through in 2009 and 2010, then-lieutenant governor Ravitch ... came up with one of the recommendations that was implemented by the legislature, was Payroll Mobility tax,” said Lhota, during the Thursday forum. “Eighteen months later, you see the Payroll Mobility Tax being reduced. So there are mixed signals going on here.”
One idea Lhota floated at the public forum on Thursday was the notion of tax-increment financing for the M.T.A., a mechanism by which the authority would get a piece of whatever real estate tax revenue is sparked by major infrastructure investments. New York City is using a similar sort of funding mechanism to pay for the 7-train extension to the far west side.
“We’re building the Second Avenue Subway today with state dollars, with federal dollars, but there’s no way that any of the economic demand that can come from the Second Avenue Subway will go back to pay off the M.T.A. for its investment,” said Lhota. “Tax-increment financing has been talked about in the state for 30 years,” said Lhota, in a follow-up interview. “It’s a financing and funding arsenal that would be helpful in New York State.”
But allowing the M.T.A. to use that mechanism will probably require Albany approval.
Which gets to Lhota's central challenge.
His ability to succeed in bringing the transit system through its current crisis intact—maintaining current levels of service, continuing with longer-term capital projects necessary to accommodate ridership in the future, and leaving it on a sustainable financial footing—depends on many difficult things. Some of those things are within his power to do something about: enlightened prioritization of the authority's maintenance and capital projects, for example, and negotiations with the transit union on pensions and benefits.
But other, simply, are much bigger than the M.T.A. chair.
“If ridership doesn’t continue as it is, if federal financing doesn’t continue at the same level,” said Andrew Albert, chairman of the New York City Transit Riders Council and an M.T.A. boardmember. “Lots of different things have to come together for everything to be fine, which is very worrisome for riders.”
New York's transit system, and in large part, its economy, will rise and fall depending not only on whether the system is run efficiently, but whether it is given enough resources in the first place to maintain itself and grow, and not perpetually be in a perpetual state of emergency.
“It’s very tenuous and very perilous,” said Charles Moerdler, an M.T.A. board member. “That’s not an exaggeration, I mean seriously. The budget is balanced very delicately, because it is dependent very, very heavily on state and city grants in money."
And that it turn means Lhota will need what his predecessor didn't get, which is backing from the powerful and popular governor.
At the very least, Lhota has access, as illustrated by the time he spent on the second floor of the Capitol during each of his seven trips to Albany as M.T.A. chair.
When I asked Lhota what his tenure would be judged on, he said, "I think it will rest on bolstering and enhancing the image of the M.T.A., both with the riders, our customers, as well as elected officials, union leadership, board members and the media. I think that is instrumental to putting the M.T.A. back on good financial footing. We’ve got to enhance the image of the M.T.A."
In that regard, at least, he seems to be off to a decent start.