Is the MTA correctly performing its bus network redesigns?

[N6 Limited]

2 hours ago, RailRunRob said:

Gotcha I see so about $7Bn ear marked for Buses. Was this funding approved it seems like it's pending? There capital cost's definitely out-of-control I agree but also seems like a lot of their budget goes to Payroll,Pensions and health as well more then non labor looking at this chart. looking to see if I can find something more updated.

They'd have more breathing room if they didn't have debt service and interest to worry about. Why don't these govt agencies ever try to wipe out the debt to free up their resources?

[LTA1992]

1 hour ago, N6 Limited said:

They'd have more breathing room if they didn't have debt service and interest to worry about. Why don't these govt agencies ever try to wipe out the debt to free up their resources?

Considering that the Federal Government likes to take loan after loan from the Federal Reserve (itself able to create money from thin air), it shouldn't be a surprise this is the pattern.

More importantly, we live in a country that doesn't care.

Edited January 4, 2020 by LTA1992

[RailRunRob]

6 hours ago, N6 Limited said:

They'd have more breathing room if they didn't have debt service and interest to worry about. Why don't these govt agencies ever try to wipe out the debt to free up their resources?

Good point. Considering how important these transit systems are to the Economics all over the country you'd think there be sometype of lower interest or even forgiveness.

Edited January 4, 2020 by RailRunRob

[bobtehpanda]

On 1/3/2020 at 1:16 PM, RailRunRob said:

Isn’t  the MTA in the process of restructuring the entire organization?

Shuffling the deck chairs on the Titanic is not going to do a lot, particularly when nothing about organization culture seems like it's going to change, and some of the power is being removed from people who can effect cultural change like Byford.

They're giving more power to MTACC, which is the organization that delivered overpriced projects, and is consistently bungling East Side Access, something that was supposed to cost $4B and open in 2007 and is now going to cost $12B and open in 2023, or something like that. Assuming the latest figures are accurate.

[RailRunRob]

18 hours ago, bobtehpanda said:

Shuffling the deck chairs on the Titanic is not going to do a lot, particularly when nothing about organization culture seems like it's going to change, and some of the power is being removed from people who can effect cultural change like Byford.

They're giving more power to MTACC, which is the organization that delivered overpriced projects, and is consistently bungling East Side Access, something that was supposed to cost $4B and open in 2007 and is now going to cost $12B and open in 2023, or something like that. Assuming the latest figures are accurate.

I agree ☝️I guess the question is how do we debark the Titanic itself?  Whenever diving into who's in charge and making the call's ultimately can never seem to get a direct answer but it seems all roads lead to Albany are we too focused on the Byford's and Di Basio's when our public officials in Albany are the ones need to get in the game?

[BrooklynBus]

Sign my petition to stop the MTA from eliminating bus stops based on a distance formula. 

https://www.change.org/p/mta-oppose-the-mta-s-plan-to-eliminate-bus-stops?recruiter=9207357&utm_source=share_petition&utm_medium=copylink&utm_campaign=share_petition&utm_term=share_petition&use_react=false

[Deucey]

On 1/4/2020 at 12:20 PM, N6 Limited said:

Why don't these govt agencies ever try to wipe out the debt to free up their resources?

A finance person can correct me, but if  issues bonds for this debt - vs taking bank loans - they’re for a fixed term by contract and would have an early payoff or redemption penalty. Meaning it could cost more than the interest offered to pay them off or redeem/refinance.

[Via Garibaldi 8]

On 1/4/2020 at 12:20 PM, N6 Limited said:

They'd have more breathing room if they didn't have debt service and interest to worry about. Why don't these govt agencies ever try to wipe out the debt to free up their resources?

 

40 minutes ago, Deucey said:

A finance person can correct me, but if  issues bonds for this debt - vs taking bank loans - they’re for a fixed term by contract and would have an early payoff or redemption penalty. Meaning it could cost more than the interest offered to pay them off or redeem/refinance.

The 's funding situation is rather complicated. They would still likely have to borrow because their funding sources are so volatile to begin with.  Only a portion of their funding comes from fares. The rest they get from real estate, the State, the City, tolls and so on. A downturn in the economy can impact any of those funding sources. 

Real estate can tank in a bad economy, as you are less likely to have new businesses looking for commercial spaces, and commercial rents decline as a result.  Even with a strong economy, for years now, they have struggled with the real estate that they have to try to maximize the rent that they can collect on their spaces, if anything, as some properties sit vacant. Some spaces include areas in the subway where they try to reinvent those spaces to make them more attractive to potential businesses. Additionally, in a bad economy, people tend to take less discretionary trips to go out to eat or to shop, which means fewer fares for the  (less revenue).

A downturn can also mean less funding from the City and State, as they have to slash their funding budgets, which then would force the  to borrow to make up for their fiscal deficits. That's the main reason why they're in bad shape to begin with. 

The more they have to borrow, the more of a risk they are if they have to keep borrowing and aren't paying back much. It impacts their credit rating, and thus they have to pay more to borrow due to the higher risk of them potentially being unable to pay back what they borrow.

They are always analyzing projections because they have to have a balanced budget by law.

Edited January 10, 2020 by Via Garibaldi 8

[bobtehpanda]

Government debt is of a different beast than personal debt.

In general, it's more permissible to have government debt, because it allows one to get the funding for projects upfront and pay it off later. Actually paying as you go would be rather slow for projects in the billions of dollars, and on top of that the projects are so large that inflation causes their cost to increase over time by substantial amounts if you drag it out too long.

The main issue, IMO, is that the traditional 33/33/33 split between city, state, and MTA for Capital Plans went out the window over successive mayoral and gubernatorial administrations in and after the '90s, so now more of this debt is on the MTA's ledger so the city and state can claim they're balancing their books.

[N6 Limited]

20 hours ago, bobtehpanda said:

Government debt is of a different beast than personal debt.

In general, it's more permissible to have government debt, because it allows one to get the funding for projects upfront and pay it off later. Actually paying as you go would be rather slow for projects in the billions of dollars, and on top of that the projects are so large that inflation causes their cost to increase over time by substantial amounts if you drag it out too long.

The main issue, IMO, is that the traditional 33/33/33 split between city, state, and MTA for Capital Plans went out the window over successive mayoral and gubernatorial administrations in and after the '90s, so now more of this debt is on the MTA's ledger so the city and state can claim they're balancing their books.

That's interesting. They all get tons of money, it should be easy to do the 33/33/33 split.

Other than that, I was thinking along the lines of an example like, A transit agency has 5 million in debt, instead of trying to get 5 million in grants or whatever to get rid of it, they continue to let it take a (sometimes) increasing amount of their budget where they have to do service cuts, etc. (Though it is understandable (if not moot) if there is a pre-payment penalty).

[Deucey]

2 hours ago, N6 Limited said:

Other than that, I was thinking along the lines of an example like, A transit agency has 5 million in debt, instead of trying to get 5 million in grants or whatever to get rid of it, they continue to let it take a (sometimes) increasing amount of their budget where they have to do service cuts, etc. (Though it is understandable (if not moot) if there is a pre-payment penalty).

That $5 million in debt is likely fixed-term bonds (5,10,20,30 years) and can’t be paid off early without penalties or bond rating being lowered (ie AAA+ to AAA) - meaning higher interest on refinancing them or new  bond issues.

Commercial and government debt doesn’t work like credit cards.

[bobtehpanda]

4 hours ago, N6 Limited said:

Other than that, I was thinking along the lines of an example like, A transit agency has 5 million in debt, instead of trying to get 5 million in grants or whatever to get rid of it, they continue to let it take a (sometimes) increasing amount of their budget where they have to do service cuts, etc. (Though it is understandable (if not moot) if there is a pre-payment penalty).

There's no such thing as grants for debt relief.

Every dollar of debt the agency is taking out is because that's a dollar they didn't get as a grant from city/state/fed. The MTA is actively taking out debt to run things, they don't really have anything to pay it off with even if they could.

[N6 Limited]

3 hours ago, Deucey said:

That $5 million in debt is likely fixed-term bonds (5,10,20,30 years) and can’t be paid off early without penalties or bond rating being lowered (ie AAA+ to AAA) - meaning higher interest on refinancing them or new  bond issues.

Commercial and government debt doesn’t work like credit cards.

 

1 hour ago, bobtehpanda said:

There's no such thing as grants for debt relief.

Every dollar of debt the agency is taking out is because that's a dollar they didn't get as a grant from city/state/fed. The MTA is actively taking out debt to run things, they don't really have anything to pay it off with even if they could.

 Seems like a slippery slope.

[Deucey]

10 hours ago, N6 Limited said:

 

 Seems like a slippery slope.

That's the problem with conservatives' "starve the beast" tax policy and liberals' "Don't piss off the suburbs" tax policy. Both end up screwing everyone over because nothing gets done - or it's done with sin taxes like tolls.

On a student of politics note, I do wonder how much better off infrastructure funding would be if we had a VAT/GST system like the EU and Canada instead of this multi-layered income, assessment and sales taxation scheme we currently complain about but do nothing to fix - especially since it'd make it much harder for big business to avoid net taxation (or that part where Amazon can say they paid 0% in tax in a given year).

[bobtehpanda]

10 hours ago, N6 Limited said:

Seems like a slippery slope.

This is how all corporations and governments are funded.

Of course, someone in the end has to pay all of that interest, and the riders do, and it's all so that the State and City can claim they're being fiscally responsible when really they're shoving debts onto others' books to run a surplus. See: the MTA funding those upstate ski resorts

[Deucey]

2 minutes ago, bobtehpanda said:

This is how all corporations and governments are funded.

Of course, someone in the end has to pay all of that interest, and the riders do, and it's all so that the State and City can claim they're being fiscally responsible when really they're shoving debts onto others' books to run a surplus. See: the MTA funding those upstate ski resorts

IIRC, it was this type of fiscal management that led to all the accounting scandals in the early 00's - after Arthur Andersen collapsed.

Also similar: the Madoff scheme. But we let governments get away with it since the old common law axiom "The King can do no wrong" still applies.