Congestion pricing has already been tapped as a potential solution to far more problems than it can realistically solve. But now that something resembling an actual plan is taking shape in the form of the next state budget, we’re getting a slightly clearer picture of where exactly the money will go. There are still lots of questions, but as the debates continue, I want to quickly note a very important distinction that seems to be getting lost in the weeds.
Warning: the next paragraph is very boring, but I promise it’s important! OK, deep breath:
The MTA has two budgets: the annual operating budget and the five-year Capital Program. The operating budget, which includes labor, health care, pensions, and debt service, is approved by the MTA board and must be balanced every year. The Capital Program, which funds major projects, upgrades and so on, must be approved by the Capital Program Review Board, a state legislature body, as well as jumping through a host of other bureaucratic hoops.
Eyes glazing over halfway through that? I don’t blame you. Just remember: two budgets. One focused on short-term costs, the other long-term.
When the MTA talks about its pending deficit, they’re talking about the operating budget, the short-term stuff. A billion dollar deficit by 2022? Operating budget. Necessary fare and toll hikes every other year for the foreseeable future? Operating budget. Debt service? Operating budget.
Congestion pricing is supposed to pay for stuff. But what stuff? As Cuomo has lately presented it, either take congestion pricing or get a 30 percent fare and toll hike. It’s a politically expedient message and makes it sound like the money will go towards the operating budget, because fare hikes pay for operating budget expenses. But that’s not what his proposed budget says.
In the latest amendments to the state budget, Cuomo’s office inserted a number of provisions that assure congestion pricing revenues will go towards a “capital lockbox.” One such amendment states, “The metropolitan transportation authority is prohibited from using or transferring monies in the congestion tolling capital lockbox fund to make payments for any non-capital cost.” My reading of this is that the “capital lockbox” will only be available for the five-year capital program, but it’s possible the term “capital” here will have a broader definition.
Either way, it seems pretty clear congestion pricing revenue, as it is currently written, will not be used to pay for the same things fare and toll hikes pay for. Congestion pricing revenue, as the budget is written now, won’t be available to run more buses or trains, to curb the authority’s runaway debt service, or fund long-term commitments to employee benefits, the short-term costs that are resulting in the authority projecting massive deficits in the future. Instead, it will be used for long-term costs like expanding the system and buying new trains. In other words, the money is currently earmarked to pay for different things than Cuomo says it is.
It’s not that congestion pricing ought to go towards one or the other. On the one hand, there’s some logic to putting it in a capital lockbox. Adding another revenue stream to keep feeding the beast of labor, pension, and debt service costs doesn’t obviously solve anything except kicking the fiscal can down the road. On the other hand, it’s merely feeding a different beast: exorbitant capital costs. If the concern is that congestion pricing revenue will be thrown down the MTA spending rathole, both budgets provide ample opportunity for the money to be wasted.
In the meantime, the MTA won’t be able to use the immediate monetary windfall to provide service improvements, which it will need to do should congestion pricing pass, particularly in outer borough neighborhoods. And without that money being available for the operating budget, the MTA may once again resort to threatening service cuts, much less service improvements.
However, if the goal is to reduce the state’s obligation to toss money down that rat hole, suddenly this congestion pricing plan makes much more sense. The state’s contribution to the MTA’s operating budget (short-term stuff) comes mostly through dedicated taxes where the state acts as little more than a pass-through vehicle. However, its contribution to the Capital Program is much more complicated. And, because of those complications, the state currently owes the MTA about $8 billion to the current capital program (which ends this year). It will surely owe much more in the next one. This is the problem congestion pricing, as it is currently written, appears to solve.