Metropolitan Transportation Authority
July Financial Plan 2015 – 2018
Presentation to the Board
July 28, 2014
The February Plan projected small cash balances in 2014 to 2016
and a $255 million deficit in 2017
($ in millions)
$100
64
$50
4
9
$0
($50)
($100)
($150)
($200)
Note: Cash balances are carried forward to reduce next year’s deficit
($250)
(255)
($300)
2014
2015
2016
2017
1
The February Plan was based on five key,
inter-related elements
•
•
•
•
•
Three years of “net zero” labor settlements for all MTA unions
Annually recurring cost savings ($1.1 billion in 2014 increasing to $1.5 billion by 2017)
Projected fare/toll increases of 4% in 2015 and 2017
No further legislative erosion of PMT revenue
$370 million of annual PAYGO capital beginning in 2015 as a “down payment” on the
2015 – 2019 Capital Program
As we stated at that time, failure to achieve the first two elements, or any significant
decrease in the PMT or any other taxes/subsidies, will require an increase in fares/tolls or
a decrease in funds committed to PAYGO capital
While we are on track to achieve the annually recurring savings targets, based on recent
labor settlements and agreements, 3 “net zero” labor settlements are unachievable
2
What else has changed since the February Plan?
•
Favorable re-estimates and other changes
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―
―
―
―
―
―
―
―
•
Lower health and welfare /OPEB current payment estimates
Lower debt service
Favorable energy re-estimates in 2015 – 2017
Lower pension re-estimates
Higher passenger/toll revenues and other revenue
Higher paratransit savings
Higher real estate receipts in 2014, nearly offset by lower projections in 2015 – 2017
Delayed impact of East Side Access on operating expenses
Reduced 2013 spending that increased carryover balance
Unfavorable re-estimates and other changes
―
―
―
―
―
Lower PMT receipts
Higher overtime re-estimates
Higher safety investments
Additional operational and maintenance needs
Additional service investments and customer enhancements
•
Re-estimates and other changes are $635 million net favorable through 2017
•
However, actual and assumed labor settlements with TWU Local 100 and other unions and
potential settlements with CRR unions will increase labor costs by a minimum of $1.28 billion
through 2017
•
Bottom line is $645 million net unfavorable through 2017
•
Reallocation of existing resources is required to offset higher labor costs to avoid raising
fares/tolls more than projected and to minimize hit on PAYGO capital
3
Assuming Transit Unions follow the TWU Local 100 pattern
and Commuter Unions follow the LIRR Union Coalition pattern,
incremental labor costs during the Plan Period increase $478 million in 2014
and an average of $260 million a year
($ in millions)
$100
$478
$293
$256
$255
$237
208
207
192
48
48
2016
2017
$0
($100)
($200)
245
348
45
48
($300)
($400)
130
($500)
Through 2014
2015
Cost of TWU Pattern for all MTA
2018
Incremental cost of LIRR pattern for CRRs
4
Reallocating resources to fund the higher labor costs
avoids the need to raise fares/tolls above current projections,
but requires long-term trade-offs
($ in millions)
$100
$478
$293
$0
84
($100)
172
109
($200)
20
$256
$255
29
21
118
127
29
27
80
80
$237
6
127
24
80
80
($300)
306
Capital funding capacity is reduced by $1.5 billion
($400)
($500)
Through 2014
2015
2016
2017
2018
Favorable Operating Re-estimates
OPEB Reserves (2014) and Contributions
Supplemental Pension Contribution (offset by loss of ROI Savings)
PAYGO contribution
5
Highlights of the July Plan
•
Funds TWU Local 100 and LIRR Union Coalition pattern settlements from:
—
—
—
—
•
•
Favorable re-estimates
OPEB reserves and eliminating contributions through 2017
Eliminating supplemental LIRR pension contributions
Reducing PAYGO
Maintains projected fare/toll revenue increases in 2015 and 2017 of 4%
(2% annual increase)
Provides PAYGO capital contributions for the 2015 – 2019 Capital Program at a
reduced level of approximately $290 million beginning in 2015
― $2.3 billion of PAYGO over expected eight-year expenditure period, or
― $5.4 billion in funding capacity if PAYGO funds are used for debt service
• Invests $363 million in safety improvements over the Plan Period
• Invests $125 million in new operational and maintenance needs over the Plan Period
• Adds $20 million in additional annual service and service quality investments
— In addition to $5 million in annual service guideline adjustments
• Continues annually recurring cost savings ($1.3 billion in 2015, increasing to over
$1.5 billion in 2017)
• Eliminates the projected deficit in year 2017 and reduces the 2018 deficit to $262M
6
Proposed Areas of MTA Safety Investments
(not funded from the capital program)
MTA will be making safety investments based on: new mandates; recommendations by
governmental bodies; compliance with existing laws, policies and procedures; and, new MTA
initiatives such as those supporting the “Vision Zero” initiative. Investments will be taking place in
the following areas:
•
Customer/Employee Safety ($40 million per year) - Promote and adhere to a culture of safety
with customers and employees via improved work practices and investments in technology
and equipment, including the use of audio/visual cameras on commuter rail rolling stock
•
Track ($17 million per year) - More frequent track inspections and repairs
•
Signals ($8 million per year) - Upgrades and repairs to signals and signal systems
•
Training ($6 million per year) - Enhancement of employee training
•
Positive Train Control ($6 million per year) - Positive Train Control on LIRR and MNR
•
IT/Communications ($3 million per year) - Enhance safety systems and communications with
customers and employees
•
Right-of-Way ($4 million per year) - More aggressive inspection and maintenance on the
right-of-way
7
Highlights of Agency-Proposed
2014 Service and Service Quality Investments
•
New York City Transit ($13.5 million net annualized) – To improve response times and reduce
service delays, permanently establish four Combined Action Teams (CAT) in Manhattan for
MOW issues and establish 4-person rapid-response signal teams along the Lexington Avenue
corridor; expand J line weekend service; additional bus connections to SI Ferry; additional Bus
service to Gateway II Mall; new Select Bus Service (SBS)
•
Long Island Rail Road ($3.4 million net annualized) – Restore bi-hourly weekend service on the
West Hempstead branch; extend hourly weekend service between Babylon and Patchogue to
year-round; extend seasonal weekend service to Montauk by ten weeks; restore one weekend
round-trip on the Oyster Bay branch; increase capacity on Ronkonkoma, Port Washington,
Hempstead, Huntington and Babylon lines; improve signage at Penn Station and outlying
stations
•
Metro-North Railroad ($1.0 million net annualized) - Add a new midday train from Hoboken to
Middletown; one year pilot program to reduce daily parking fee from $2.75 to $1.25 f per 16
hours and annual permit from $235 to $20 at all MNR West of Hudson stations
•
Staten Island Railway ($2.0 million net annualized) - Install arrival clocks at 17 stations; and
additional connections with SI Ferry
8
Achieving annually recurring savings targets is key to
reducing pressure on future fares/tolls and PAYGO capital
($ in millions)
$1,800
$1,600
$1,400
$1,200
$1,000
2014 July Plan
2013 July Plan
$800
2012 July Plan
2011 July Plan
$600
$400
$200
$0
2010
2011
2012
2013
2014
2015
2016
2017
2018
9
More targeted savings have been identified
since the November Plan
($ in millions)
$300
$250
66
76
$200
55
53
$150
65
51
$100
49
137
$50
$0
27
46
4
18
26
2014
2015
2016
$1,107
$1,261
$1,435
Implemented Savings
Other Identified Savings
114
106
2017
$1,526
2018
$1,521
Unidentified Savings
Savings Targets
10
2014 February Plan vs. Proposed July Plan
($ in millions)
$200
162
146
$150
$100
113
64
$50
10
4
9
$0
N/A
($50)
February Plan
Proposed July Plan
($100)
($150)
($200)
($250)
Note: Cash balances are carried forward to
reduce next year’s deficit
(255)
($300)
2014
2015
2016
2017
(262)
2018
11
What is our strategy going forward?
•
Continue to pursue efficiencies/consolidations to maximize annually recurring cost
savings; we must remain focused on existing cost control to avoid “backsliding”
•
While funding higher labor cost caused us to temporarily divert some of our
resources away from our strategy to address long-term costs and liabilities, we
remain committed to this objective
– Although the July Plan suspends OPEB contributions through 2017, contributions are
resumed in 2018, albeit at a much lower level
– Should finances improve, we intend to increase funding to the extent practicable
•
Use non-recurring revenues, favorable budget variances and unused general
reserve funds to reduce long-term unfunded liabilities—OPEBs, LIRR Additional
Pension Plan or as PAYGO
– Simply put, this strategy converts favorable “one- shots” into recurring savings
•
Reinvest debt service savings in PAYGO capital
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