New York State Public Transit Funding

Two buses operate near the Sunset Park bus depot in Brooklyn. These buses are made by New Flyer corporation. Christopher MacKechnie

New York State Public Transportation Funding

The New York State government provides more public transit funding than any other state government, about $3 billion annually. This fact is not surprising as New York state transit systems carry about 33% of all transit riders in the country. Of course the vast majority of these riders are in the New York City metropolitan area.

Funding Programs

Like California state transit funding, New York state transit funding comes from a variety of programs.

First, there is the State Transit Operations Assistance (STOA) fund, first inaugurated in 1975 and funded with general funding. This funding, also known as section 18-b funding, requires a 100% local match to receive and accounts for about $224 million of the total of $3 billion.

Second, the Mass Transit Operating Assistance (MTOA) fund was started in 1981 and is divided into two sections: downstate, which is the New York City metropolitan area, and upstate, which is everything else. The downstate part of the fund is funded by a petroleum business tax (PBT) which is levied on any company that produces, refines, or imports petroleum for use in the state of New York, a New York MTA Corporate Tax Surcharge, a .25% sales tax in the New York City region, and the Long Lines tax. The upstate part of the fund is only funded by part of the PBT. Note that in New York petroleum is not only used to make gasoline but is also used extensively in electricity generation and home heating.

 

Third, in 1993 the Mass Transportation Trust Fund was started, which is funded with PBT revenues from the State Dedicated Transportation Trust Fund. The State Dedicated Transportation Trust Fund is split as follows: 63% of highways and bridges, 34% for New York MTA, and 3% for all other transit providers in the state.

Two other smaller funds also exist: the State Dedicated Fund (SDF), which provides money for capital needs of transit providers other than the New York MTA, and the Omnibus fund, which provides 50% of the non federal matching fund requirement for federal programs for transit providers other than the MTA. The SDF fund provides about $21 million per year and the Omnibus provides about $18.5 million per year. Apart from these two funds New York does not provide dedicated capital funding, which means that the New York MTA has to pay for vehicle purchases and maintenance itself.

Transit funds are distributed to eligible state providers via a formula that as of September 2015 pays them $ .405 per passenger and $ .69 per vehicle mile.

Funding Outlook

Because the vast majority of New York state transit funding does not come from sales taxes the funding outlook for the state's transit systems is pretty stable. With the exception of the New York MTA, no New York state transit system was forced to reduce service as a result of the recession that occurred in the late 2000s. However, the state government had raided some of the funding dedicated to public transit in a budget balancing effort. In addition, the enormous cost of rehabilitating New York's one hundred year old subway lines has sent the MTA deeply into debt to the tune of $25.5 billion.

Payments on that debt are around $2 billion a year. The failure to implement a bailout plan that would have inaugurated congestion charges in Manhattan, increased tolls on some bridges, and higher car registration fees caused the MTA to increase fares and reduce service, including the cancellation of my beloved V subway line.

Since this article originally appeared in March 2011, the funding outlook has improved.  The adopted 2015-2016 New York state budget provides $4.974 billion in STOA funding, $64 million more than in the 2014-2015 budget.  The New York MTA receives $4.49 billion of this total.  Despite this increase, the state still has not addressed the enormous capital need for transit rehabilitation in the New York region.

The future will only be worse if something is not done. While many would like the state government to resume funding the MTA's capital projects, it is very unlikely that this will happen given the current economy.

  Now that the MTA has received its full allocation of New Starts Program funding for the Second Avenue Subway and the Long island Railroad East Side Access project, there is little federal funding for the state in the pipeline besides the $300 million the MTA will receive in FY16 for power improvements on the Canarsie (L) subway line.  Given the current Republican attitude towards funding of any kind it has been lucky that federal public transit funding has remained constant.  The most likely scenario continues to be that the MTA will have to solve its funding problems itself, possibly with the congestion charge that failed previously.

The New York MTA's story is a cautionary reminder of what happens after your shiny new rapid transit line opens: it must be maintained, and after a period of time completely overhauled. Chicago is in a similar predicament with Washington following closely behind.  It is nice to see in FY16 that a significant amount of New Starts money is dedicated to investing in "core capacity", which in reality means rehabilitation of existing legacy rail lines.

Return to the Basics of Transit Funding .