New building congress report urges adoption of dedicated user fees to pay for mass transit, roads, and other vital city infrastructure

Report Recommends Uniform Toll Policy, Residential Parking Permits, and
Vehicle Miles Fee to Lessen Growing Debt Burden

New York’s increasing reliance on borrowing to fund its capital projects is unsustainable over the long-run, and government officials must institute new, dedicated revenue sources to maintain, grow and strengthen the City’s vast transportation and infrastructure networks, according to a recently released New York Building Congress report.

In How to Save New York City’s Infrastructure: Dedicate Revenues, the Building Congress found that an impressive $18 billion was invested in 2011 by the City of New York, the Metropolitan Transportation Authority (MTA), the Port Authority of New York & New Jersey and other government agencies to fund the upkeep and expansion of the City’s mass transit network, water and sewer system, public schools, parks and other critical public works.

However, the public sector has relied increasingly on debt financing for its capital funding.  The debt burden for the City of New York currently stands at $100 billion and could grow to $109 billion by 2017.  Servicing this debt absorbs about $5 billion annually of the City’s general revenues, and should rise to $7 billion by 2015.

Similarly, the MTA devoted approximately 16 percent of all 2011 revenues to meet its debt service obligations and could increase to 22 percent by 2018.

As a larger share of the existing funding pie goes to pay debt service, new sources will be needed for future infrastructure maintenance and upgrades.  In its report, the Building Congress recommends that State and City officials carefully examine and work to adopt these or other revenue-enhancement measures.

UNIFORM TOLL POLICY
In 2007, the Mayor and City Council approved a plan to charge drivers for access to Manhattan’s core business districts and dedicate revenues to regional mass transit infrastructure. The plan, however, was shelved by the State Legislature in 2008.

The Building Congress report supports a revised plan that would charge vehicles a more uniform fee for crossing bridges and tunnels within the five boroughs, or for entering Manhattan below 59th Street.  The plan could initially lower the cost of many crossings across the City while generating more than a billion dollars of new revenue annually, money which could go directly to vital transportation infrastructure.

PARKING PERMITS
The Building Congress also proposes a Residential Parking Permit program which would charge car owners a fee in return for preferred access to a parking spot in their neighborhoods. The report notes that the City possesses up to 4.4 million unmetered on-street parking spaces from which it now derives zero revenue.

Of America’s 10 most populous cities, New York is the only one without a residential parking permit program.  Such programs can help reduce congestion, improve residential quality of life, and generate new revenues, which could be dedicated to the $2 billion annual cost of maintaining and modernizing the City’s transportation network.

VMT FEE
The Building Congress report recommends consideration of a Vehicle Miles Traveled fee for New York State as a partial replacement for the gas tax.  The VMT more accurately measures each vehicle’s actual use of public roads and can generate more stable revenue than the gas tax, particularly as cars are become more fuel efficient.

Today New York State pays for roads and bridges through a Dedicated Highway and Bridge Trust Fund, underwritten by a variety of fuel taxes.  But the Fund is increasingly used to service existing debt and requires a substantial subsidy to meet its other obligations. The Fund is no longer able to support significant new transportation infrastructure investment.

PAY-AS-YOU-THROW
The report also looks to the City’s sanitation department, whose budget has quadrupled in the last twenty years, as another possible revenue source.  A Pay-As-You Throw system, which requires residents to pay based on how much household waste they generate, has proven effective in other cities, and could raise substantial revenue while reducing sanitation costs by creating incentives for residents to recycle more and waste less.   

ADDITIONAL RECOMMENDATIONS
The Building Congress also advocates greater use of public-private partnerships (PPP) to permit innovative design, delivery, financing and maintenance arrangements between government and the private sector. PPPs have the potential to reduce design and construction costs, shave time off of projects, and permit creative financing options that can lessen the long-term cost of maintaining an asset after its completion. 

In addition, the Building Congress report found that public entities like the New York City Water Finance Authority, created specifically to receive dedicated user fees and devote them exclusively to the operations and capital programs of the water and sewer system, have been effective.  The Building Congress urges replication of this model to manage future dedicated revenue sources so they are used for their intended purpose.

Building Congress President Richard T. Anderson said, “Without new, dedicated revenue sources, government will simply not be able to maintain its current level of support for critical capital projects, much less make the additional investments necessary to harden New York City’s transportation network and infrastructure in the wake of Superstorm Sandy and climate change.”

 “The Building Congress has offered a number of options to support continued investment in New York City’s essential infrastructure,” concluded Mr. Anderson.  “The City’s elected and civic leaders, starting with the Mayor Bill de Blasio, should seriously consider these and other viable revenue generating alternatives. There is no more pressing policy issue for New York City.”

What you can do:

Contact Mayor Bill de Blasio and New York Council Speaker Melissa Mark Viverito to urge the Administration and Council to protect the City’s capital program from mounting debt service costs through creation of new revenue sources dedicated exclusively to the maintenance and upkeep of the City’s infrastructure.

Contact Governor Andrew Cuomo and State Legislature leadership, Senators Dean Skelos and Jeffrey Klein and Assembly Member Sheldon Silver, to reiterate that State-funded infrastructure must have new dedicated revenue sources, particularly the MTA and New York City schools.

Click here for sample letters that you can send to the Mayor and Governor.

For a copy of the report, How to Save New York City’s Infrastructure: Dedicate Revenues, click here.