Public Hearing - March 02, 2015

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       1      JOINT HEARING BEFORE THE NEW YORK STATE
              SENATE STANDING COMMITTEE ON TRANSPORTATION
       2      AND
              SENATE STANDING COMMITTEE ON INFRASTRUCTURE AND
       3      CAPITAL INVESTMENT
              -----------------------------------------------------
       4
                                 PUBLIC HEARING:
       5
                  METROPOLITAN TRANSPORTATION AUTHORITY (MTA)
       6                       BUDGET AND FINANCES

       7       TO EXAMINE THE CHANGES NECESSARY TO PREVENT ANNUAL
                OPERATING DEFICITS, STOP THE CONTINUING CYCLE OF
       8      INCREASED FARES AND DECREASED SERVICES, AND DISCUSS
                      FUNDING OPTIONS FOR THE CAPITAL PLAN
       9
              -----------------------------------------------------
      10

      11                       Legislative Office Building
                               Hearing Room A
      12                       181 State Street
                               Albany, New York  12247
      13
                               March 2, 2015
      14                       10:30 a.m. to -1:30 p.m.

      15
              PRESIDING:
      16
                 Senator Joseph E. Robach, Chairman
      17         NYS Senate Standing Committee on Transportation

      18         Senator Carl L. Marcellino
                 Chairman, NYS Standing Committee on Infrastructure
      19         and Capital Investment;
                 Vice Chairman, NYS Senate Standing Committee
      20         on Transportation

      21

      22      PRESENT:

      23         Senator John J. Bonacic

      24         Senator Thomas Croci

      25         Senator Martin Malavé Dilan








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              PRESENT (continued):
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                 Senator Simcha Felder
       3
                 Senator Martin J. Golden
       4
                 Senator Brad Hoylman
       5
                 Senator Jack Martins
       6
                 Senator Terrence P. Murphy
       7
                 Senator Bill Perkins
       8
                 Senator Daniel L. Squadron
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       1
              SPEAKERS:                               PAGE  QUESTIONS
       2
              Thomas F. Prendergast                     10      24
       3      Chairman and Chief Executive Officer
              Robert Foran
       4      Chief Financial Officer
              Craig Stewart
       5      Senior Director for Capital Programs
              Metropolitan Transportation Authority
       6
              Carman Bianco                             10      24
       7      President
              MTA - New York City Transit
       8
              Darryl Irick                              10      24
       9      President
              MTA - Bus Company
      10
              Joseph Giulietti                          10      24
      11      President
              Metro-North Railroad
      12
              James Ferrara                             10      24
      13      President
              MTA - Bridges and Tunnels
      14
              William Henderson                        109     122
      15      Executive Director
              Ellyn Shannon
      16      Associate Director
              Permanent Citizens Advisory Committee
      17           to Metropolitan Transportation
                   Authority
      18
              LaTonya Crisp-Sauray                     138     151
      19      Recording Secretary
              Transport Workers Union, Local 100
      20
              Dr. James Melius                         138     151
      21      Administrator
              New York State Laborers
      22
              George Trickio                           138     151
      23      Business Manager
              New York State Laborers, Local 1298
      24

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              SPEAKERS (continued):                   PAGE  QUESTIONS
       2
              Nadine Lemmon                            154     174
       3      NY and Federal Policy Coordinator
              Tri-State Transportation Campaign
       4
              Alex Matthiessen                         154     174
       5      Campaign Director
              Move NY                                  177     177
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       1             SENATOR MARCELLINO:  I'm just going to give

       2      the members about two minutes more because travel is

       3      somewhat delayed.

       4             We will be on hold for two more minutes, and

       5      then we'll start.

       6                  [Pause in the proceeding.]

       7             SENATOR MARCELLINO:  Thank you.

       8             This is a hearing of the Senate

       9      Infrastructure and Capital Investment, and the

      10      Transportation, Committee.

      11             I'm Chair of the Infrastructure Committee.

      12             Senator Robach is Chair of the Transportation

      13      Committee.  I am his Vice Chair.

      14             The purposes of this hearing is to examine

      15      changes, any changes, that may be necessary to

      16      prevent annual operating deficits in the MTA and

      17      stop the continuing cycle of increased fares and

      18      decreased services.

      19             The MTA provides public transportation in and

      20      around the New York City area, stretching into

      21      seven counties in New York State and two counties in

      22      Connecticut.

      23             The system includes the Long Island Railroad,

      24      the Metro-North Railroad, Staten Island Railway, the

      25      Long Island Bus, MTA Bus, New York City Transit, and







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       1      the bridges and tunnels into New York City.

       2             The MTA has an operating budget of about

       3      14.4 billion.

       4             In deference to "Mr. Spock" passing away, I'm

       5      going to say, 14.467.92, approximately.

       6             We won't do that.

       7             But, with over 69,000 employees for 2015,

       8      with a predicted operating-budget deficit of

       9      322 million in 2018.

      10             Chairman Prendergast, if you would correct me

      11      if I'm wrong, when you -- in your comments, if I've

      12      made any errors in the numbers.

      13             The proposed 32.1 billion capital program for

      14      2015 to 2019 has a projected funding gap of

      15      15.2 billion, almost half of the total costs.

      16             This hearing is to get some answers as to

      17      what steps will be needed to take to have a fiscally

      18      strong and in-the-black MTA.

      19             One of the things that our Conference in

      20      the -- I'm sure the Senate as a whole, but,

      21      specifically, I'll speak for the Republican

      22      Conference in the Senate, is we are about to get rid

      23      of the MTA payroll tax.

      24             We've done away with a good portion of it.

      25      We want to do away with the rest of it.







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       1             So we're going to ask for a plan that you may

       2      come up with that would help us to accomplish that

       3      task and keep, and I stress, keep the MTA on solid

       4      fiscal footing.

       5             As fees and fares are increased, it is

       6      imperative that the funds support improvements to

       7      the transportation network where the fares and fees

       8      are raised.

       9             Fare increases on the Long Island Railroad,

      10      for example, should not, and I stress the word "not"

      11      support the rest of the MTA system.

      12             Where possible they should support

      13      themselves, if this is possible.

      14             If it's not, we'd love to know why, and an

      15      explanation, and maybe we can work something out.

      16             This hearing is being broadcast on the

      17      NewYorkSenate.gov website, and will be archived on

      18      the Transportation Committee page.

      19             I am joined this morning by, to my left,

      20      Senator Martins; to the far right, Senator Dilan,

      21      past chairman of the Transportation Committee; next

      22      to him, Senator Bonacic, Senator Croci, and

      23      Senator Golden.

      24             I'm going to step back a second, instead of

      25      leading the questions, because Senator Bonacic has a







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       1      press conference that he's going to have to deal

       2      with this morning.

       3             It was on, John.

       4             SENATOR BONACIC:  Yes.

       5             SENATOR MARCELLINO:  They're all on.  You

       6      don't have to push it.

       7             SENATOR BONACIC:  Excellent.  Thank you,

       8      Mr. Chairman.

       9             SENATOR MARCELLINO:  Let him ask questions

      10      before opening, gentlemen, because he's got to move.

      11             Okay?

      12             Thank you.

      13             SENATOR BONACIC:  First of all, good morning.

      14             Quite an impressive table of representatives.

      15             Thank you for the job that you do.

      16             SENATOR MARCELLINO:  Debbie, can he be heard?

      17             SENATOR BONACIC:  It's not an easy job.

      18             SENATOR MARCELLINO:  Sean [ph.], can you push

      19      that button?

      20             Just push it once.

      21             That's it.

      22             SENATOR BONACIC:  I'm going to be quick.

      23             I represent, predominantly, Orange County.

      24             I think, quite frankly, they get the least

      25      back, in terms of services, for the money that they







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       1      generate.

       2             I'm going to ask you -- I'm going to give you

       3      some numbers and then ask you the question.

       4             If my numbers are wrong, I'd like you to tell

       5      me.

       6             I show that the current MTA capital plan for

       7      the Long Island Railroad is 3.1 billion, for

       8      Metro-North it's 2.6 billion.

       9             The ridership is pretty much equal.  Close.

      10      There's parity there.

      11             The revenue generated from Metro-North is

      12      about 717 million.

      13             That from Long Island ridership is 702.

      14             These are the numbers that I pulled from your

      15      report.

      16             So, I would ask you to give consideration to

      17      some parity of investment in Orange County so we can

      18      have more service.

      19             And what am I talking about?

      20             I'm talking about, number one, to establish a

      21      rail yard in Orange County, where we could have more

      22      trains and a rail yard that would allow for more

      23      service and passing sightings.

      24             Roughly, about 100 million apiece, I'd ask

      25      you to give consideration to that.







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       1             And I thank you for being here.

       2             Thank you, Mr. Chairman.

       3             SENATOR MARCELLINO:  Thank you, Senator.

       4             I'd ask -- for normal procedure, we've got

       5      opening statements.

       6             I would ask that people who are testifying,

       7      you don't necessarily have to read every word to

       8      your presentation.  We have copies.

       9             The faster we go through that, the quicker we

      10      can get to questions, and then we can move on to

      11      resolving the problem.

      12             We've been joined by Senator Murphy, to my

      13      left.

      14             SENATOR MURPHY:  Good morning.

      15             SENATOR MARCELLINO:  Mr. Prendergast.

      16             THOMAS F. PRENDERGAST:  Good morning,

      17      Chairmen Marcellino and Robach, and other members of

      18      the committees.

      19             Thank you for holding this hearing and asking

      20      me to testify.

      21             I'm joined by all the MTA's agency

      22      presidents, with the exception of Pat Nowakowski who

      23      was unable to attend due to personal issues at home.

      24             Carmen Bianco is seated to my right,

      25      president of New York City Transit;







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       1             Darryl Irick is seated to my left, president

       2      of MTA Bus;

       3             Joe Giulietti is seated, too, to my left,

       4      president of Metro-North Railroad;

       5             And, Jim Ferrera, president of Bridges and

       6      Tunnels, to the city, to my right;

       7             Our chief financial officer is Bob Foran, at

       8      the far end of the table to my right;

       9             And, Craig Stewart is the senior director of

      10      Capital Programs, at the end of the table to my

      11      left.

      12             In the broadest terms, Senators, and all of

      13      us, you and we, are here today because the MTA is

      14      essential, not only to the 8.7 million customers we

      15      serve every day, but also to New York's daily life

      16      and the statewide economy and growth, so investing

      17      in this operation and its capital needs is

      18      essential.

      19             Governor Cuomo recently released the proposed

      20      2015-16 executive budget, and we're pleased that we

      21      once again see increased State aid.

      22             Total funding for the MTA increased by almost

      23      141 million over the State's 2014-15 enacted budget.

      24             This increase includes an almost $37 million

      25      boost to our operating budget, and more than







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       1      104 million being transferred to the

       2      MTA capital program.

       3             It also provides more than 1 billion in new

       4      funding for the 2015-19 capital program.

       5             In addition, the MTA's 2015 budget and

       6      financial plan, approved by our board in January,

       7      presents a fully transparent view of our current and

       8      4-year financial outlook.

       9             This strongly reaffirms our organization-wide

      10      commitment to cost-cutting, and it shows that we've

      11      already cut more than $1 billion out of our annual

      12      operating budget.

      13             Here are just two examples.

      14             We've consolidated all of our headquarters

      15      into 2 Broadway in Lower Manhattan, and through this

      16      move we not only reduced operating costs, but we

      17      will monetize the former headquarters at 341, 345,

      18      347 Madison Avenue and generate hundreds of millions

      19      of dollars for our capital program.

      20             We also issued 479 million of refunding

      21      bonds, and completed associated restructurings of

      22      existing escrows, for a total savings of over

      23      110 million.

      24             But when it comes to running more efficiently

      25      we're not finished.







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       1             New savings initiatives are being identified

       2      in the areas of prompt-payment discounts,

       3      workers' comp, energy-management consolidations,

       4      purchasing, inventory, and employee benefits.

       5             These initiatives will raise our total annual

       6      savings target to 1.6 billion a year by 2018.

       7             This is an effort we started after the

       8      financial crisis in 2009 and we continue to maintain

       9      it.

      10             It's the most aggressive cost-cutting in the

      11      MTA's history, and we're realizing savings through

      12      improved operations in three critical and important

      13      ways:

      14             First of all, without these savings, we could

      15      not have reduced our projected fare and toll

      16      increases from about 7.5 percent every other year,

      17      to 4 percent every other year; or, roughly,

      18      2 percent a year.

      19             Secondly, these savings have allowed us to

      20      add 157 million back into service and quality

      21      enhancements since 2002; services that were cut, and

      22      services restored, and additional quality

      23      enhancements made for our customers.

      24             They have helped us to put $290 million a

      25      year into a pay-as-you-go capital account that will







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       1      generate up to 5.4 billion for the 2015-19 program,

       2      which, for the MTA, is the most important topic

       3      today.

       4             The capital program, as you know, is a series

       5      of 5-year investments, beginning in 1982, that allow

       6      us to renew, enhance, and expand our

       7      5,000-square-mile network.

       8             And over the past 30 years, we have invested

       9      some 150 billion through that program in the vital

      10      infrastructure that keeps New York moving, and we

      11      could not have done that without the State

      12      Legislature and their support.

      13             Yet, these investments have revitalized and

      14      maintained our transit system, and they have

      15      revitalized our region, enabling improvements that

      16      have brought customers back to our system in droves,

      17      while creating jobs in the thousands.

      18             Today's ridership is at all-time-high levels.

      19             Before October 2013, we had never recorded

      20      6 million subway riders in a day.  But we exceeded

      21      that number on 29 days in the last four months of

      22      last year and set an all-time high for monthly

      23      subway ridership last October.

      24             Metro-North's ridership has almost doubled

      25      since its founding in 1983, to 83 million last year,







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       1      and the Long Island Railroad's ridership of more

       2      than 83 million, make them the two most heavily

       3      traveled commuter railroads in the country.

       4             Until recently, most of the ridership growth

       5      was from reverse commutes traveled between suburban

       6      destinations and during off-peak hours, evenings,

       7      and weekends.

       8             But, today, we're seeing that ridership

       9      growth in all of these areas; and more importantly,

      10      during peak hours.

      11             We're seeing more and more customers who need

      12      to wait two, three, and even four trains before they

      13      can board during rush hours.

      14             Our network is stretched almost to its

      15      capacity.

      16             Trains are more crowded than ever and

      17      commutes are more difficult.  A minor delay on one

      18      train at rush hour can have a massive ripple effect,

      19      leading to overcrowding on the platform, doors being

      20      held open at every station, and spiraling delays for

      21      every train that follows.

      22             If that happened on a regular basis, the

      23      impact would be severe for millions of riders, their

      24      employers, and the region's economy.

      25             These ridership trends show no signs of







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       1      abating in the foreseeable future, and with the

       2      future in mind, we convened a panel of experts to

       3      inform the development of our current capital

       4      program, especially with respect to two important

       5      areas: climate change and changing demographics.

       6             This transportation-reinvention commission

       7      stated some very simple truths in their report:

       8             More than 2 million additional people are

       9      expected to live in the MTA region by 2040, putting

      10      increasing pressure on a system that's already

      11      largely at capacity;

      12             Demographic shifts are driving new and

      13      evolving customer expectations, service needs, and

      14      accessibility requirements, and the current system

      15      is simply not fully equipped to meet these changing

      16      needs.

      17             With these challenges in mind, the MTA board

      18      this fall approved the proposed 2015-19 capital

      19      program that will allow us to build capacity, meet

      20      growing needs and those expectations, and, most

      21      importantly, renew our system to keep it safe and

      22      reliable, because capacity is by no means our only

      23      challenge.

      24             Maintaining a system as large and as old as

      25      ours is unavoidably expensive.







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       1             If we want the system to continue operating

       2      safely and reliably, we must continue to invest

       3      heavily in what we call "a state of good repair."

       4             Senators, I ask you to keep this fact in

       5      mind.

       6             Safety and reliability projects, including

       7      track replacement, structural repairs, signal-system

       8      improvements, and replacement fleets, comprise fully

       9      two-thirds of the annexed capital program.

      10             These expenditures are not for anything

      11      fancy.  They are simply essential, and the reason

      12      why is simple: safe and reliable service is our

      13      number-one job every day.

      14             Here are a few examples of the kinds of

      15      maintenance and good-repair spending we must not

      16      postpone:

      17             196 million to complete the installation of

      18      positive train control.

      19             The best and safest commuter-railroad system

      20      in -- of around in -- at both Metro-North and

      21      Long Island Railroad, for a total cost of just under

      22      a billion dollars.

      23             We'll also begin modern new signal system on

      24      the E, F, M, and R lines in Queens, and the B, F,

      25      M lines in Manhattan.







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       1             This system, which is fully in place on the

       2      L Line, and under construction on the 7, allows us

       3      to run more trains, move more people, ease crowding,

       4      and provide better, safer service.  It will allow us

       5      to replace signals from the 1930s that could

       6      jeopardize safety and reliability if they remain in

       7      our system much longer.

       8             And remember, the foundation of our subway

       9      system was built more than 110 years ago, making

      10      modern signals the best and only way we can

      11      significantly add capacity.

      12             We'll replace 86 miles of subway track, and

      13      we'll continue to invest 1,000 signal components,

      14      most of our components you'll never see: electrical

      15      substations, pumps, and tunnel lighting.

      16             These projects may not be glamorous, but

      17      together with normal replacement of our trains and

      18      buses, they are key to moving our people safely and

      19      reliably.

      20             The 2015-19 program will allow us to expand

      21      our systems to better accommodate current ridership

      22      levels, and prepare for the even more growth that

      23      we're already seeing in the system.

      24             And in a region with new understanding of

      25      natural hazards, the system expansion will protect







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       1      us from making our transit system and network ever

       2      more redundant.

       3             We will finish phase one of the Second Avenue

       4      subway to build capacity and ease congestion on the

       5      most crowded line in the country, the

       6      Lexington Avenue Line.

       7             And, through the 2015-19 program, we will

       8      begin construction on the second phase of the

       9      Second Avenue subway, from the Upper East Side into

      10      East Harlem.

      11             We will continue to advance the East Side

      12      access project, easing the commute of some

      13      160,000 Long Island Railroad customers every day.

      14             We will complete the Long Island Railroad

      15      double-track project, which will improve service and

      16      reliability by adding a second track to the

      17      railroad's Ronkonkoma branch, or, main line.

      18             And, we will begin development of Penn

      19      Access, a project that will add four new Metro-North

      20      stations in the Bronx, and open a new Metro

      21      [unintelligible] point directly into Penn Station.

      22             Through this project we will provide critical

      23      system resiliency to the over 270,000 Metro-North

      24      riders.  And for the first time ever, customers in

      25      Co-Op City, Morris Park, Parkchester, and







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       1      Hunts Point will have a one-seat rail ride directly

       2      to the heart of Manhattan.

       3             Dramatically improving our transit network is

       4      hardly the benefit of a fully funded 2015-19

       5      program.

       6             The MTA's capital program and the jobs it

       7      creates are an integral part of our region's economy

       8      and economic growth.

       9             Just last month, the Urban Land Institute of

      10      New York and the Permanent Citizens Advisory

      11      Committee to the MTA published a report, examining

      12      the intrinsic connection between a healthy transit

      13      system and a healthy, vibrant economy.

      14             According to this report, since 1982, the MTA

      15      capital program has transformed the region's public

      16      economic -- transportation system into a truly

      17      economic -- crucial economic asset, helping New York

      18      achieve global economic preeminence that few could

      19      have imagined in the economic crises of the '70s.

      20             Investments in the MTA have generated

      21      economic benefits for communities across

      22      New York State, with major vendors opening plants to

      23      both fulfill the transportation needs locally and

      24      across North America.

      25             Indeed, the capital-program investments







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       1      create hundreds of thousands of jobs throughout

       2      New York State and nationally, and a new study by

       3      KPMG proves it.

       4             We commissioned KPMG to look at how many jobs

       5      will be created by the 2015-19 capital program, and

       6      the results also published last month are

       7      staggering.

       8             KPMG found that, in the tradition of the

       9      MTA's previous capital program, a fully funded

      10      2015-19 program will create more than

      11      400,000 New York State jobs and generate nearly

      12      52 billion in economic output.  These jobs, the

      13      study found, will be created in every corner of

      14      New York State.

      15             In 2013, our board approved a nearly

      16      $2 billion contract with Kawasaki to build new

      17      rail -- commuter rail trains.  This order alone is

      18      expected to generate 1500 jobs at the Kawasaki plant

      19      in Yonkers and to suppliers upstate.

      20             The plant makes railcars and parts for the

      21      transit systems around the world, in Boston,

      22      Virginia, Maryland, and Taipei, while creating

      23      high-tech-paying jobs.

      24             But you can bet it wouldn't be in Yonkers,

      25      New York, without the MTA.







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       1             We've already also purchased more than 2,000

       2      of the 3,000 railcars built at Bombardier's

       3      100,000-square-foot facility in Plattsburgh,

       4      including a new rail fleet for MTA commuter

       5      railroads in 2007.

       6             In October we submitted the 2015-19 capital

       7      program to the capital-program review board so we

       8      could begin a dialogue.

       9             One concern shared by all parties is the

      10      funding.

      11             We have identified sources for half of the

      12      money needed to fund the program.

      13             All three levels government must understand

      14      the importance of the system, the necessity of

      15      capital investment in infrastructure, and, if

      16      necessary, new sources of that support.

      17             All of us have a stake in ensuring that

      18      New York's economic engine continues at full

      19      strength.

      20             We must keep a critically important fact in

      21      mind:  If we are to build the MTA's network of

      22      trains, buses, bridges, and millions of other assets

      23      today, it would cost nearly $1 trillion.

      24             $1 trillion.

      25             It takes 11-1/2 days to get 1 million







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       1      seconds.

       2             It takes 32 years to get a billion seconds.

       3             It takes 32,000 years to get a trillion

       4      seconds.

       5             A trillion dollars is a large asset.

       6             That means our previous $24 billion capital

       7      program represented a reinvestment back into our

       8      system of less than 1/2 percent of the system's

       9      total value.

      10             We can talk about the strengths and

      11      challenges of upstate and downstate, Senators, but

      12      I think the state of New York has one economy, and

      13      the MTA's 12-county regional transportation system

      14      is essential to that economy.

      15             It makes a huge pool of employees available

      16      to New York businesses.

      17             It allows our region to comfortably

      18      accommodate millions more people.

      19             It makes it possible for people to live

      20      wherever they want within our region regardless of

      21      where they work.

      22             It allows employees to bring home paychecks

      23      that support local schools and government services

      24      and consumer spending, creating jobs wherever they

      25      live.







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       1             It enables and supports job development

       2      across our entire region, giving employers a system

       3      that employees can count on in creating 400,000 jobs

       4      into vendor companies that deliver the capital

       5      improvements.

       6             Every major world city today -- London,

       7      Paris, Hong Kong, and others -- is investing in

       8      transit to improve the quality of life for their

       9      residents, to maintain their status as a global

      10      financial and business center, and to make them even

      11      more competitive in the world economy.

      12             New York must do the same because the past is

      13      not prologued.  We must continue to invest.

      14             Chairmen Marcellino and Robach, we appreciate

      15      the support you've given the MTA in the past, and

      16      your continuing support, and look forward to working

      17      with you to continue the MTA's improved efficiency,

      18      safety, reliability, and growth.

      19             Thank you for your time today, and now we're

      20      happy to answer any questions you might have for us.

      21             SENATOR MARCELLINO:  Thank you,

      22      Chairman Prendergast.

      23             Let me just clarify what we will be doing for

      24      the rest of the hearing.

      25             We will, in the interests of time and moving







                                                                   25
       1      the process along, because we have a number of

       2      people here --

       3             And Senator Brad Hoylman has joined us, and

       4      Senator Bill Perkins has joined us as well.

       5             -- we're going to allow two questions per

       6      Senator, to start.

       7             We'll move on to the next Senator after

       8      two questions, and then we'll get another round if

       9      we have to, in going around.

      10             This way, we can move things along and keep

      11      things going.

      12             I just have one to start, and that's about

      13      safety.

      14             I talk to a lot of people, Syosset, where

      15      I live; Huntington, which I also represent; two

      16      major areas for Long Island Railroad stations, big

      17      commuter systems, big commuter use.

      18             People are scared, to a certain extent.

      19             They have been reading in the papers recently

      20      about serious accidents that have occurred on the

      21      railroads.

      22             [Unintelligible] with the curve and going a

      23      little too quick.  [Unintelligible], we don't know

      24      for sure.  There might be a question about whether

      25      the operator was fully awake and alert at the time.







                                                                   26
       1             We have a recent one, where the lady was

       2      caught on the track, the train hit her.

       3             Tragic accident.  Fire, flame, third rail

       4      entering and penetrating the cars.

       5             400 -- I believe something like 400 feet of

       6      third rail was taken up at that time.

       7             I had never heard of that before.

       8             We've had a couple of incidents of crossing

       9      accidents.  Again, beyond that, not as serious, but

      10      more.

      11             Gentlemen, what are we doing to alleviate the

      12      concerns of the riding public?

      13             I have never heard the kind of concern before

      14      that I'm hearing now from my constituents about the

      15      safety of the Long Island Railroad and the MTA

      16      system.

      17             What are we doing to alleviate their

      18      concerns, and to make sure these kinds of accidents,

      19      broken rails, don't occur?

      20             THOMAS F. PRENDERGAST:  Safety is our highest

      21      priority; safety and reliability of the system.

      22      Those are the underpinnings of the capital program.

      23             Metro-North had a series of problems starting

      24      over two years ago.

      25             They had the derailment at Bridgeport.  They







                                                                   27
       1      had another one near Spuyten Duyvil.  And then they

       2      had the derailment at Spuyten Duyvil.

       3             The derailment at Spuyten Duyvil was an

       4      overspeed condition, that's clear.  And it's also

       5      pretty clear, although we need to do more, the

       6      locomotive engineer had a condition: sleep apnea.

       7             We've got a pilot program underway at

       8      Metro-North, that we're going to share the results

       9      with across all the agencies, not just Long Island

      10      Railroad, but New York City Transit as well, in

      11      terms of the importance of us being able to identify

      12      employees who have conditions like that, because so

      13      much, in terms of the operation of our bus and rail

      14      system, is dependent upon a person who is fully

      15      cognizant, fully awake, and fully capable of

      16      carrying out their duties.

      17             In the area of Bridgeport where we had a

      18      derailment, it was very clear that we had a series

      19      of maintenance activities that weren't being

      20      performed properly.

      21             We brought in -- in addition to the NTSB

      22      coming in and investigating that incident, we

      23      brought in outside experts from the Association of

      24      American Railroads to review the track programs and

      25      the maintenance programs.  And we've got efforts







                                                                   28
       1      underway to deal with all of those.

       2             We've actually shared that information across

       3      all three agencies.

       4             You will see in the capital program for

       5      2015-19, very large commitments of money for the

       6      maintenance and upkeep of the track infrastructure

       7      on the railroads.  Probably one of the largest asset

       8      categories.  Over a billion dollars in New York City

       9      Transit, Long Island Railroad, and I think a little

      10      over half a billion dollars at Metro-North.

      11             In terms of grade-crossing safety, the two

      12      largest railroads in the country are Metro-North and

      13      Long Island Railroad.

      14             Long Island has just under 300 grade

      15      crossings.  Metro-North has about 150, I believe.

      16      And they are one of the highest hazard-exposure

      17      categories we have.

      18             We have instituted, along with New York State

      19      DOT, some of the highest levels of protection at

      20      those grade crossings, in the forms of flashing

      21      lights and gates and sound alarms.

      22             And where possible, we've also expended money

      23      to eliminate those grade crossings: one at

      24      Herricks Road on Long Island Railroad, and

      25      New Hyde Park Road.







                                                                   29
       1             And those are very costly, but where you have

       2      a very high frequency of high-speed train movement

       3      and traffic movement, those are the type of

       4      expenditures you need to make.

       5             We're going to launch an outreach effort to

       6      try to raise the level of awareness of all the

       7      people who traverse over grade crossings, in the

       8      form of motorists, to make sure they're aware of the

       9      hazards associated with driving upon and over a

      10      grade crossing.

      11             It will be an ongoing effort.

      12             We understand the importance of making sure

      13      that our actual safety numbers are not only right,

      14      but the perception of the public is the safety that

      15      we're providing on all of the systems we operate as

      16      high.

      17             And so I take those comments very seriously

      18      because, if people start to doubt the safety of the

      19      system, we've already started to lose ground.

      20             And we need to do whatever we can to, as

      21      I said, address the actual issue of safety, but also

      22      the perceptual issues of safety.

      23             SENATOR MARCELLINO:  The gates that drop

      24      down, I see the crossings.  In Syosset, there's one

      25      by Robbins Lane.  There's another one in several







                                                                   30
       1      different places throughout the system.

       2             To my mind, it's just too easy to go between

       3      and around them.

       4             Is there a possibility of perhaps making

       5      those gates longer, physically, so that there is --

       6      you just can't go a quick turn and out?  Because

       7      right now you can.

       8             Making it more difficult to go around them?

       9             Because you, literally, almost have to go on

      10      the track.

      11             We don't want them to do that, obviously, but

      12      to discourage that kind of crossing capability?

      13             THOMAS F. PRENDERGAST:  There are standards

      14      that we follow that are standards developed on a

      15      national level, so that when people approach grade

      16      crossings, what they see in one state is similar to

      17      what they see in another state.

      18             And we need to remain within those standards.

      19             Where there are locations where there is a

      20      high frequency of people driving around gates,

      21      normally, the decision is made to put in what they

      22      call "four-quad gates."

      23             And, so, instead of just a gate on the

      24      leading edge of the lane approaching, you would also

      25      have them on the opposite lane to make sure people







                                                                   31
       1      couldn't drive around the gate.

       2             They're also used when you want to go into

       3      a -- when somebody's asking for a grade crossing

       4      without having the locomotive engineering sound the

       5      train horn, but you have to go through an elaborate

       6      process.

       7             And so, generally, those are the types of

       8      approaches that are used for people at locations

       9      where people are driving around gates.

      10             And in addition to that, we can use the local

      11      police jurisdiction or the MTA police to be able to

      12      have a higher level of enforcement to make sure

      13      people don't do that.

      14             SENATOR MARCELLINO:  Thank you, Tom.

      15             It's not an easy topic, I understand.

      16             THOMAS F. PRENDERGAST:  No.

      17             SENATOR MARCELLINO:  This is difficult.

      18      People are going to make efforts to do that.

      19             We've been joined by Senator Dan Squadron,

      20      and by Chairman of the Transportation Committee,

      21      Senator Robach.

      22             In deference to Senator Robach, who I know

      23      has another --

      24             SENATOR ROBACH:  I'm good.

      25             SENATOR MARCELLINO:  You're good?  Okay.







                                                                   32
       1             I'd like to move to Senator Golden.

       2             SENATOR GOLDEN:  Thank you, Mr. Chairman.

       3             Thank you, MTA, for being here today, and all

       4      the different heads of the different agencies.

       5             The -- since we're limited in questions that

       6      we're going to ask, I'm not going to get into the

       7      $15 billion budget that's -- capital budget at this

       8      point, but we will, obviously, if the meeting

       9      continues.

      10             But I'm going to be very local in my approach

      11      here, and I'm going to start with buses, and then

      12      I'm going to back up to the second question which

      13      will be on trains.

      14             But on the buses, the X27 headways or

      15      disaster, you guys are going to do a study.  We --

      16      I don't know if you did that study.

      17             I know you said you did reinvestment into

      18      services.

      19             And I'd look to know where we are with the

      20      27, the X28 on the weekends, and the -- the X37 --

      21      not the X37 --

      22             THOMAS F. PRENDERGAST:  B37.

      23             SENATOR GOLDEN:  -- the B37, getting into

      24      Court Street, because of the senior population that

      25      we have in our community.







                                                                   33
       1             And, we still have no elevator at

       2      86th Street for the seniors to be able to access

       3      the train system.

       4             So that's the basic question on the buses.

       5             And, how does Vision Zero play into this?

       6             THOMAS F. PRENDERGAST:  Well, B37, I believe

       7      the transit authority committed to continue looking

       8      at the issue of the extension into downtown

       9      Brooklyn.

      10             I don't know the status of the further

      11      studies on the X27 or 28.

      12             Do you know, Darryl?

      13             DARRYL IRICK:  No.

      14             Currently, right now, you know, as a matter

      15      of course, operations planning will -- as always, is

      16      looking at all of our routes, particularly on the

      17      express side.

      18             As you may be aware, the X17 comes into

      19      Brooklyn from Staten Island to -- as a supplemental

      20      replacement service.

      21             So we continuously look at that.

      22             We have no updates in terms of, you know,

      23      what we're going to do different in that particular

      24      part of Brooklyn at this point.

      25             SENATOR GOLDEN:  Well, it's the furthest







                                                                   34
       1      point in Brooklyn, so you've got to look at it.

       2             And we have to -- I know you guys were

       3      underway in a study, and I wanted to know what

       4      happened to that study as to the headways, and the

       5      reinvestments into the buses, and the Vision Zero.

       6             How's Vision Zero playing into this?

       7             DARRYL IRICK:  I'll take it.

       8             So we work very closely, we align ourselves

       9      very closely, with Vision Zero.

      10             Vision Zero is sort symbiotic with our safety

      11      culture at Buses.

      12             So, currently, right now, on a number of

      13      initiatives, we're working with the City, in terms

      14      of crosswalks, in terms of speed -- bus speeds, and

      15      a number of issues, inclusive of technology,

      16      inclusive of making our bus operators more aware of

      17      pedestrian behavior and conditions on the road.

      18             So we're very closely aligned with

      19      Vision Zero.

      20             SENATOR GOLDEN:  Locking up bus drivers, do

      21      you think that's a little step too far?

      22             THOMAS F. PRENDERGAST:  A decision was made,

      23      and a resolution was passed by the city council, in

      24      support of Vision Zero, that they were going to

      25      place a higher priority on incidents involving a







                                                                   35
       1      motor vehicle striking someone in the crosswalk.

       2             And in the course of that discussion, a

       3      decision was made that they would arrest, with the

       4      exception, I think, people who were driving City

       5      vehicles.

       6             So, so far, since the implementation of that

       7      program, there have been a number of bus drivers

       8      that have been arrested.

       9             What I can assure you is that,

      10      John Samuelsen, the president of the Transport

      11      Workers Union, myself, and Polly Trottenberg, the

      12      commissioner of the DOT, are committed to the goals

      13      of Vision Zero, which is trying to reduce --

      14      significantly reduce or eliminate those collisions

      15      that strike people in crosswalks.  And that's where

      16      the focus needs to be.

      17             We do have a dialogue, and in terms of, to

      18      what extent it makes sense to arrest bus operators.

      19      But I want to get it to the level where we're

      20      focused on the issue at hand, which is trying to

      21      reduce.

      22             In some cases, we may need to change the

      23      location of the turning of the bus, right or left,

      24      to a different location where there's less

      25      likelihood of striking somebody.







                                                                   36
       1             Or change the location of the crosswalk to a

       2      mid-block crossing.

       3             I --

       4             SENATOR GOLDEN:  Which makes all the sense in

       5      the world.

       6             THOMAS F. PRENDERGAST:  I drove a bus for

       7      30 days, only 30 days.

       8             Darryl drove a lot longer than that.

       9             But I can tell you, a left turn or a right

      10      turn, where the radius of the turn is 25 feet behind

      11      you, is problematic, because you need to be able

      12      to -- you need to be able to keep track of what's

      13      going on in front of you at the same time with the

      14      sweep of the bus.

      15             And if somebody runs to catch up to --

      16      they're not really running to catch up to the bus.

      17      They're running across the intersection, and they

      18      run into the action of the bus turning.

      19             It's an extremely difficult situation for the

      20      bus operator to see.

      21             SENATOR GOLDEN:  You're not the only one.

      22             DOT, sanitation, all these people being

      23      arrested, I think it's absurd.  I think that's up to

      24      the -- we have to do something about that.  And,

      25      hopefully, in the near future we do address that







                                                                   37
       1      situation.

       2             It's up to the police department to make

       3      reports.

       4             It's up to the police department to make

       5      arrests if the person is faulted, and drugs,

       6      alcohol.

       7             But to make decisions at the scene, and to

       8      make arrests of City workers, or, anybody, as a

       9      matter of fact, I think is -- if the guy acted

      10      inappropriately and he was reckless, the answer is,

      11      yes.  But the -- they have to prove recklessness.

      12             I mean, that's the summons.  It's not an

      13      arrestable situation.  They give them a summons.

      14      They don't arrest them at the scene.

      15             Last question:  The trains.

      16             I have, obviously, the same situation of the

      17      train; the headways to the R train.

      18             We are at the further point out by the

      19      Verrazano Bridge in the southeast and southwest

      20      parts of Brooklyn.

      21             We have no opportunities, except for the

      22      express buses and those trains, to get us into

      23      Manhattan and keep the clientele and the people

      24      working, and the constituency working, in the city

      25      of New York.







                                                                   38
       1             We have terrible headways when it comes to

       2      our R train.

       3             We need an additional double R, or something,

       4      to help us with this R train.

       5             And, we need that handicapped-accessible

       6      train on the R train to get the people in and out of

       7      Manhattan.  And that's just one line.

       8             I have the N, the D, the F...you name it,

       9      I've got them all.

      10             So I need -- that's my biggest headache, is

      11      the R train.

      12             THOMAS F. PRENDERGAST:  One of the things

      13      I noted in my testimony is the million more people

      14      we're going to see in the city by 2035.

      15             We're already starting to see it along the

      16      Fourth Avenue in Brooklyn, from downtown Brooklyn,

      17      all the way out to Bay Ridge, and locations in and

      18      around stations where buildings are being taken down

      19      and replaced, a 2-unit building is being replaced

      20      with a 6- or a 12-unit building.

      21             So we're seeing ridership grow in advance of

      22      that million that we're going to see by 2035.

      23             And, so -- and the R train, once we rebuilt

      24      the Montague Street 2, people have come back, you

      25      know, in droves, as is happening in other places in







                                                                   39
       1      the system.

       2             So the issue of going -- doing constant

       3      ridership checks and trying to balance the delivery

       4      of service with the demand created by customers is

       5      one that's ongoing.  And that's one of the areas

       6      we're looking at, Senator.

       7             SENATOR GOLDEN:  Thank you very much.

       8             SENATOR MARCELLINO:  Senator Martins.

       9             SENATOR MARTINS:  Thank you.

      10             My question is with respect to the capital

      11      plan, and the $32 billion reflected therein.

      12             I know there's a portion there that deals

      13      with bridges and tunnels.

      14             But just the scope of the plan itself, is the

      15      a plan, that all $32 billion be borrowed?

      16             THOMAS F. PRENDERGAST:  No.  And I'll let Bob

      17      go through the details of it, but -- and we'll break

      18      it down into details.

      19             And, you're right, Senator, the -- 3 billion

      20      is for bridges and tunnels, and their capital needs.

      21      And in some ways, that is self-funded out their own

      22      revenue that they collect.

      23             And the remainder of the money is spread

      24      across the remainder of the agencies.  Order of

      25      magnitude:  $22 billion for state of good repair.







                                                                   40
       1      About 4, 4 1/2 million for what we call "enhanced."

       2      And the remainder for expansion.

       3             Bob, if you go would go through the...

       4             ROBERT FORAN:  Thank you.

       5             The current financial plan on the table has

       6      about $6.2 billion that comes from federal funds.

       7             Then it does have MTA bonds for the commuter

       8      and transit program, of about 3.9 billion.

       9             It also includes 2.3 billion for bridges and

      10      tunnels that are there, but it still has a

      11      significant amount of pay-as-you-go capital;

      12      together, about 1.6, 1.7.

      13             Asset sales and leases, the disposition of

      14      our headquarters buildings, and also excess real

      15      estate, generates about 600 million.

      16             City of New York capital funds, we have about

      17      $650 million in the budget.

      18             Federal new-start funds, we're estimating

      19      could be north of 500 million.

      20             Private-developer contributions of about

      21      200 million.

      22             And then other MTA sources, about

      23      760 million.

      24             So the total amount of bonding, out of the

      25      $32 billion that we're talking about, is around







                                                                   41
       1      $7 billion.

       2             SENATOR MARTINS:  7 billion?

       3             ROBERT FORAN:  Yes.

       4             SENATOR MARTINS:  With respect to the types

       5      of projects that are included in this capital plan,

       6      a lot of it is for what is, apparently, maintenance.

       7      Day-to-day operations maintenance.  You used the

       8      term "state of good repair."

       9             What portion of the MTA's significant annual

      10      budget goes towards these items already?

      11             And why is it necessary to borrow and bond

      12      for these?

      13             Wouldn't that be better covered under your

      14      annual operating budget?

      15             THOMAS F. PRENDERGAST:  There are specific

      16      definitions for what is called "out-of-face

      17      replacement" of an asset, and it would be

      18      capitalized, versus the maintenance and repair of an

      19      asset to keep it useful during its useful life.

      20             Useful life of a current is now 40 years?

      21             UNKNOWN SPEAKER:  [No video pan.]

      22             Yes.

      23             THOMAS F. PRENDERGAST:  It used to be 35, but

      24      we have been able to stretch it to 40 years because

      25      of stainless-steel car bodies and wise decisions in







                                                                   42
       1      terms of the manufacturer.

       2             As that product reaches the end of its useful

       3      life, the car-body structure is starting to fail,

       4      the major assemblies and components are failing.

       5      And if you were to do it on a maintenance level, you

       6      were to do it actually replacing component by

       7      component, it would cost you more.

       8             So according to accounting principles, what

       9      you do is, you basically replace that asset with one

      10      that's new and you start that useful life over

      11      again.

      12             And the idea is, asset-by-asset category --

      13      cars, signals, track, line equipment, line

      14      structures -- you try to squeeze the useful life out

      15      of the asset.

      16             A curved track, probably 20 years or less,

      17      depending on the radius of the curve.

      18             Tangent track, probably 30 years.

      19             Track in and around what we call "special

      20      work" with switches, et cetera, even less than that.

      21             And so you actually have to replace the

      22      asset.

      23             The asset has got so much wear on it you can

      24      no longer do maintenance on it.

      25             Side-rail wear, the wear of the rail itself,







                                                                   43
       1      the wear of the rail flange itself, it gets to a

       2      point where you have to replace it.

       3             And so, historically, from an accounting

       4      standpoint, even the Class 1 railroads capitalize

       5      those replacement costs, rather than put them in the

       6      operating budget, in terms of maintenance.

       7             And that's what we do.

       8             SENATOR MARTINS:  No, I appreciate that, but,

       9      are you borrowing for that for the useful period?

      10             For example, are we paying for a switch that

      11      may have a useful life of, I guess you just said,

      12      about 10 years, or 20 years, or so; right?

      13             THOMAS F. PRENDERGAST:  Depending upon the

      14      switch.

      15             SENATOR MARTINS:  Are we paying that over a

      16      longer period of time?  Or are there controls that

      17      make sure that we're not bonding for something well

      18      beyond its useful life?

      19             ROBERT FORAN:  In fact, we are bonding

      20      significantly less than the economic useful life of

      21      most of our assets.

      22             I would give as an example, what we're doing

      23      for East Side access, or what we might be doing for

      24      Second Avenue, or some of these other projects,

      25      those are projects that, frankly, are







                                                                   44
       1      7500-year-lived assets, but we've been borrowing at

       2      a 30-year bonding, which has an average life of

       3      about 20 years.

       4             So we are borrowing with an average life of

       5      20 years, which effectively says that's how we're

       6      paying it off; and, yet, we're doing that for some

       7      7-year assets, we're doing it for some 10-year

       8      assets, we're doing it for 20-year, 30-year,

       9      50-year, 75-, 100-year assets.

      10             So I think we're very prudent right now in

      11      how we are bonding.  We are not bonding at a level

      12      that is really inappropriate and mismatching asset

      13      and liabilities.

      14             SENATOR MARTINS:  And just to clarify:  Out

      15      of the 32 billion, 3 billion are for bridges and

      16      tunnels, leaving about 28 or 29 billion dollars

      17      specifically for MTA-related state of good repair,

      18      purchasing of new equipment, cars, as well as

      19      expansion of the Second Avenue subway and East Side

      20      access.

      21             And out of all of that, the MTA will be

      22      paying for approximately 21 out of the

      23      28 billion dollars on a pay-as-you-go basis, through

      24      capital, reserves, or whatnot, or sale of assets,

      25      and bonding for only $7 billion.







                                                                   45
       1             Is that what I heard?

       2             ROBERT FORAN:  Including federal monies,

       3      including city money.

       4             SENATOR MARTINS:  Sure.

       5             ROBERT FORAN:  Yeah.

       6             SENATOR MARTINS:  Okay, thank you.

       7             THOMAS F. PRENDERGAST:  And one of the points

       8      we want to make is, is that the Legislature been

       9      great to the MTA since 1992.

      10             In order to get this gap funded, we need

      11      support from four parties, because people quickly

      12      say, What about Albany?  What about the Governor?

      13      What about the Legislature?

      14             We need support from the federal government.

      15             We need support from the city government,

      16      state.

      17             And, also, direct and indirect benefiters of

      18      the system, like the real-estate industry.

      19             The funding of the Number 7 Line through

      20      real-estate taxes, to be approved over a period of

      21      time, is another way you can fund expansions.

      22             SENATOR MARTINS:  No, I appreciate it.

      23             I do have more questions.  I'll be back on

      24      the second turnaround.

      25             SENATOR MARCELLINO:  On the second round.







                                                                   46
       1             Senator Croci, please.

       2             SENATOR CROCI:  Thank you, Mr. Chairman.

       3             Chairman, thank you for being here today.

       4             Just a quick -- couple of quick questions

       5      with regard to service on Long Island Railroad.

       6             I look forward to meeting with

       7      President Nowakowski when he has the opportunity.

       8             I agree with you, safety has to be paramount,

       9      and I appreciate your words to that regard.

      10             In that vein, two projects I know LIRR is

      11      working on; one in Ronkonkoma, with the expansion of

      12      the rail yard.  And I some see familiar faces here

      13      in the community who have been doing a lot of work

      14      in that regard.

      15             I think what the community is really looking

      16      for there is a commitment to some of the safety

      17      improvements that they would like to see, some of

      18      the quality-of-life improvements that they would

      19      like to see, as this project goes forward.

      20             It's, I think, a small investment,

      21      particularly with, as you said, a $1 trillion asset,

      22      to make sure that, with this improved service, with

      23      this expanded capability, that we're not losing the

      24      quality and character of the community, and to

      25      ensure that pedestrians have the ability to travel







                                                                   47
       1      safely by foot and other means around the

       2      improvements.

       3             So I'd like to just get your quick thoughts

       4      on that, as well as, I saw you mentioned natural

       5      hazards.

       6             I looked to the system as critical

       7      infrastructure, and I look at it in an all-hazard

       8      approach to our security.  So that includes both

       9      natural hazards, as well as terrorist threats, and

      10      that kind of security.

      11             So, with the natural-hazard area, I think

      12      that the eastern end of my district, on the

      13      William Floyd Parkway, there is only one crossing

      14      from the Shirley Mastic Beach area at grade.

      15             In the case of a "Superstorm Sandy" and a

      16      mass evacuation, that would be a very big problem.

      17             I'd like to hear your thoughts on that one as

      18      well, sir.

      19             THOMAS F. PRENDERGAST:  As you know, I was

      20      president of the railroad for a little bit under

      21      six years in the '90s, '94 through 2000.

      22             And whenever we do work, I mean, we're a part

      23      of the community.

      24             The railroad may have been there first.

      25             It doesn't make sense arguing who was there







                                                                   48
       1      first.

       2             We are part of the community; an integral

       3      part of the community.

       4             When we did construction projects, when we

       5      raised all the platforms and created the new diesel

       6      yards, you know, we learned from some of those.

       7             Some of those went very well, some of those

       8      didn't go very well.  High-mast lighting, and things

       9      of that nature.

      10             The ability for the yard to be located in a

      11      place to have minimum impact, the ability for it to

      12      be part of the community.

      13             And, so, those are lessons learned that we

      14      have carried forward through just about everything

      15      we do at the Long Island Railroad.

      16             And I know that people that are here today

      17      could give you examples of that.

      18             In terms of the importance of addressing,

      19      I like to define "safety" as freedom from accidental

      20      injury or hazard, and, "security freedom" from

      21      deliberate injury.

      22             The approaches to each one of those, while

      23      they're both important, the approaches to each one

      24      of those are different, because what you have to do,

      25      where you have to spend your money, and what you







                                                                   49
       1      need to protect against are different.

       2             And we do have commitments to what we do in

       3      the area of security, because we consider ourselves

       4      to be a high-level target.  And we go through the

       5      entire system and do a-threat level assessment from

       6      a standpoint, is what's the likelihood of someone

       7      choosing that to be a target?  And then we address

       8      its hazards.

       9             And that's the approach we take.

      10             So it's a commitment we have always had, it's

      11      a commitment we will maintain, and we'll carry it

      12      forward.

      13             SENATOR CROCI:  Thank you.

      14             And with those specific projects mentioned,

      15      both the Ronkonkoma expansion of the yard and the

      16      double track, as well as Shirley, the crossing,

      17      if -- I look forward to my conversations with

      18      President Nowakowski about it, and, hopefully, we

      19      can get some commitment, so that we can relay that

      20      to the community that, you know, the partnership

      21      continues.

      22             THOMAS F. PRENDERGAST:  I mean, I'm trying to

      23      visualize Mastic Shirley [sic], and I think I can,

      24      but I haven't been out there in a while, but, as the

      25      traffic on the railroad increases and goes further







                                                                   50
       1      east, as the highway traffic increases, from a

       2      vehicular standpoint, we do, at times, have to come

       3      back and add additional protection at crossings and

       4      treat it more as a true highway crossing, rather

       5      than as a local residential street.

       6             So, certainly, as the railroad continues to

       7      grow further east and population increases, the

       8      issue of what we need to do in terms of

       9      grade-crossing safety is something we will address.

      10             SENATOR CROCI:  And there are additional

      11      venues at which an additional crossing would be

      12      possible.

      13             That's something that the team may want to

      14      consider:  Instead of that one crossing and one

      15      narrow choke point, in the event of an evacuation,

      16      perhaps an additional crossing.

      17             But that's -- I leave it to the team to come

      18      back to us with your suggestions.

      19             THOMAS F. PRENDERGAST:  Okay.

      20             Thank you.

      21             SENATOR CROCI:  Thank you very much.

      22             SENATOR MARCELLINO:  Thank you.

      23             Senator Murphy.

      24             SENATOR PERKINS:  Thank you.

      25             SENATOR MURPHY:  Thank you.







                                                                   51
       1             SENATOR PERKINS:  Did you say Perkins?

       2             SENATOR MARCELLINO:  No, I said Murphy.

       3             SENATOR PERKINS:  Oh, Murphy.

       4             SENATOR MARCELLINO:  They're so close to each

       5      other.

       6                  [Laughter.]

       7             SENATOR MURPHY:  Thank you, Mr. Chairman.

       8             SENATOR MARCELLINO:  In case somebody hadn't

       9      noticed, I'm going from one side to the other.  I'm

      10      just looking and going down in sequence.

      11             That's all.

      12             SENATOR MURPHY:  You know, unfortunately,

      13      like the Chairman said, it's a sensitive topic.

      14             We've had the worst tragedy in history on the

      15      Harlem Line that, literally, runs right through the

      16      heart of my district.

      17             And, you know, security has been brought up

      18      here.

      19             I know you just said in the hearings today,

      20      you've identified 150 crossings, roughly, up on the

      21      Metro-North, Joe.

      22             Are we doing anything to identify those

      23      crossings as a primary, secondary, and tertiary

      24      possibility of fixing these crossings at all?

      25             THOMAS F. PRENDERGAST:  I believe that the







                                                                   52
       1      federal government actually rates the crossings in

       2      terms of hazard severity, and then puts a value with

       3      it.

       4             And we take note of that, and we make sure

       5      that we're meeting more than just the minimum

       6      standard required at those crossings.

       7             Do you want to take it further, Joe, in terms

       8      of what we may be doing in the future?

       9             JOSEPH GIULIETTI:  The only thing I would say

      10      is, that you've heard the chairman already talk

      11      about what we're going to do with

      12      Operation Lifesaver, which will be awareness, which

      13      has to be the number-one priority in terms of making

      14      people aware of what a crossing is and what they

      15      should be doing at it, because it seems that our

      16      biggest problem is, that a flashing red light, which

      17      is a stop signal, and for people not to go through.

      18             Those are the types of things we have to look

      19      at.  And, also, taking a full evaluation of that

      20      crossing.

      21             You know, you've heard already other systems

      22      that are in place, like four-quadrant gate.

      23             We're looking at all of that as we're going

      24      through it right now.

      25             SENATOR MURPHY:  All right, if you need any







                                                                   53
       1      assistance from me, please chirp up.

       2             Secondly, you've indicated that, this year,

       3      in four months, you've had 6 million riders in one

       4      day.  Correct?

       5             THOMAS F. PRENDERGAST:  On the subway system,

       6      yes.

       7             SENATOR MURPHY:  Yeah, that's pretty

       8      incredible.

       9             And you expect, in 2031, an additional

      10      1 million riders, possibly.

      11             THOMAS F. PRENDERGAST:  In my testimony,

      12      I talked about a million more residents in

      13      New York City by 2035, and an additional million in

      14      the region by 2035, so some fraction thereof would

      15      use our network, so the number would grow.

      16             But the growth in the New York City subway is

      17      even above that.

      18             So, we had never before recorded 6 million

      19      people a day until October 24, 2013, and we had

      20      29 days in 2014.

      21             The growth we had thought was primarily due

      22      to metro card and value pricing, people riding in

      23      the middle of the day, weekends, and nights.

      24             Now we're seeing increased ridership during

      25      rush hour, and that's why it's taking people three,







                                                                   54
       1      four trains to get on before they can get to their

       2      destination.

       3             It used to be the first or second train they

       4      could get on.

       5             SENATOR MURPHY:  So it would be an awful lot

       6      of riders?

       7             THOMAS F. PRENDERGAST:  Absolutely.

       8             SENATOR MURPHY:  So, does there come a point

       9      at any time during this that you guys actually make

      10      a profit --

      11             THOMAS F. PRENDERGAST:  No.

      12             SENATOR MURPHY:  -- as a small -- so you will

      13      never make a profit?

      14             THOMAS F. PRENDERGAST:  I've been in this

      15      business my whole career.

      16             I graduated the University of Illinois in

      17      1974.

      18             And, no, we've never been in --

      19             SENATOR MURPHY:  So if you had 10 million

      20      riders, you would still not make a profit?

      21             THOMAS F. PRENDERGAST:  Well, at some point

      22      maybe you would, but you'd have loading standards

      23      far in excess of what -- every one of our services

      24      is subsidized.

      25             The lowest subsidized ride in the MTA network







                                                                   55
       1      is New York City subway.

       2             We call "fare-box recovery ratio," for every

       3      dollar it costs to operate, how much comes out of

       4      fare box?

       5             It's 70 percent for New York City Transit

       6      Subway;

       7             It's about 40 percent for New York City Bus;

       8             It's about 60 percent for Metro-North;

       9             And about 50 percent for Long Island

      10      Railroad.

      11             So, no, they're all heavily subsidized to

      12      enable people to be able to afford riding public

      13      transportation, and, the tremendous -- I mean, the

      14      most sustainable system in the country in terms of

      15      measured carbon footprint.

      16             People think of the Pacific Northwest and how

      17      green it is, or whatever.

      18             The lowest carbon footprint per capita is

      19      right here in New York City, because more people use

      20      public transit.

      21             SENATOR MURPHY:  Public transportation.

      22             So, no matter how many riders, it would never

      23      kind of facilitate and sustain itself?

      24             THOMAS F. PRENDERGAST:  If you raised the

      25      fare to the cost of what the fare would be, yes.







                                                                   56
       1             But, no, generally not.

       2             SENATOR MURPHY:  All right, I just -- I'm

       3      done.

       4             Thank you.

       5             SENATOR MARCELLINO:  Senator Dilan.

       6             SENATOR DILAN:  Yes, good morning.

       7             Your November financial plan proposes to

       8      realize a $500 million savings up to the year 2018.

       9             Where will these cuts come from?

      10             Will it be from service cuts, or will you

      11      have to let employees go?

      12             ROBERT FORAN:  The -- we are not anticipating

      13      any service cuts.

      14             I think it's been very clear by the board,

      15      that it was so painful when we did the service cuts

      16      in 2010, that no one wants to address those again.

      17             So what we're trying to do is figure out how

      18      to reduce our costs in areas that, frankly, in the

      19      past, were considered uncontrollable costs.  And

      20      with that I mean, things like pensions and

      21      health care that were growing at a very, very rapid

      22      rate.

      23             We are trying to reduce our unfunded

      24      liabilities on some of our pension plans when we

      25      receive a one-shot windfall from things like







                                                                   57
       1      real-estate revenues.

       2             We do not want to put ourselves back in a

       3      situation where we were building a budget based upon

       4      real estate one-time transactional revenues that

       5      came in.

       6             You all recall that's really how we got in

       7      trouble back in 2009, when we had seen real-estate

       8      revenues go from a billion seven, down to less than

       9      $400 million in two years.

      10             And that was the reason that we were

      11      presented with and we accepted the PMT.

      12             So what we're trying to do is figure out, how

      13      do we take one-shot revenues and apply them to

      14      reduce ongoing costs?

      15             We're doing that in health care.  We're doing

      16      that in our pensions.

      17             We've also gone through and reduced

      18      administrative headcount.

      19             If you recall, we did a 15 percent reduction

      20      of administrative headcount throughout the agencies.

      21      We did a 20 percent reduction at headquarters.

      22             We went four years without any cost-of-living

      23      raises at headquarters, and that saved us about

      24      $60 million.

      25             Between the two of them, about $160 million.







                                                                   58
       1             We're trying to be more efficient in terms of

       2      our procurement.

       3             We're looking at our energy management.

       4             We're looking at our workers' compensation.

       5             We're consolidating.

       6             We have just consolidated our information

       7      technology from all of the agencies, now, two

       8      headquarters.

       9             We're consolidating treasury.

      10             We're consolidating certain procurement

      11      functions.

      12             You are well aware that we have our business

      13      service center where we've reduced our costs.

      14             So, that's what we're trying to do.

      15             Also, in para-transit, we feel that we have a

      16      commitment in para-transit to meet, you know, the

      17      requirements of the law to provide for those of our

      18      customers who need it, but we're trying to reduce

      19      unit costs by being smarter.  And we have done a

      20      significant job of reducing unit cost.

      21             So, that's the way that we plan on hitting

      22      this $1.6 billion annually-recurring savings target

      23      by 2018, not through service reductions.

      24             SENATOR DILAN:  Okay --

      25             THOMAS F. PRENDERGAST:  For the past







                                                                   59
       1      two years, I'll just add on, we showed the budget to

       2      the board in November.  We vote on it in December.

       3      And then at the mid-year mark, in July, we take a

       4      look at how well we're performing against budget.

       5             And for, I think, each of the last

       6      three years, we've had some money that we've been

       7      able to put into either new services or restoration

       8      of services that were cut.

       9             SENATOR DILAN:  Okay, thank you.

      10             With regard to your capital budget, you

      11      proposed a $32 billion-plus budget, and, apparently,

      12      there's a $15 billion gap there.

      13             What do you expect the ultimate number to be

      14      once a final plan is put together?

      15             And also in your testimony, you did provide

      16      some economic information in terms of the number of

      17      jobs that it creates in the entire system.

      18             Could you also perhaps, maybe later on, give

      19      us more specifics in terms of, regionally, how many

      20      jobs it creates statewide; and, especially, outside

      21      of the MTA network area?

      22             THOMAS F. PRENDERGAST:  Yes.

      23             I think we started with the last program,

      24      Senator, where we showed where the money that flowed

      25      into the program flowed back into the state in other







                                                                   60
       1      parts, and much of it outside the service area

       2      itself.

       3             I mean, the North Country, in terms of

       4      Bombardier and bus making -- bus manufacturing

       5      facilities, get a significant portion of that money.

       6             But we can share that information with you.

       7             SENATOR DILAN:  Okay, thank you.

       8             I'll have questions in the second round.

       9             SENATOR MARCELLINO:  Thank you.

      10             Senator Perkins.

      11             SENATOR PERKINS:  Thank you very much.

      12             Good morning.

      13             So, I have a few questions that -- first

      14      I want to -- you know, you've -- we've closed down

      15      some stations, so to speak, where we -- I don't want

      16      to say closed them down, but we took out the --

      17             THOMAS F. PRENDERGAST:  Token-booth clerks.

      18             SENATOR PERKINS:  The, what?

      19             THOMAS F. PRENDERGAST:  Token-booth clerks.

      20      Station agents.

      21             SENATOR PERKINS:  -- token-booth clerks,

      22      yeah.

      23             And -- so now they're abandoned, and they are

      24      hazardous to people, because there are folks who

      25      hang out in them, and who, I guess, do things that







                                                                   61
       1      are illegal.  And they -- they're there during the

       2      rush hour when folks are going to work, and they're

       3      there in the evening when folks are coming home from

       4      work.

       5             And, so, I don't know how that impacts the

       6      capital budget, by turning -- by taking out the

       7      token-booth clerks, or whatever impacts it has on

       8      the capital budget.

       9             Can you explain why that is happening, and

      10      how that has improved the situation?

      11             THOMAS F. PRENDERGAST:  I'll start, and then

      12      I'll let Carmen take it further.

      13             Back in 2009, when we found ourselves in the

      14      situation we were, where we had some serious

      15      financial problems, one of the areas we looked at

      16      was the issue of closing token booths where the

      17      selling of fare media was exceptionally low.

      18             The original reason a token-booth clerk was

      19      created back in the turn of the nineteenth to the

      20      twentieth century was to be able to sell tokens for

      21      people to gain entrance to the system.

      22             And then there were money-handling

      23      situations, with respect to, they needed to be

      24      secure and stay inside that booth.

      25             So, we closed those booths because of the







                                                                   62
       1      fact that there were other means for people to buy

       2      the fare media.

       3             What we're trying to do, Senator, is move to

       4      a day where we actually are utilizing employees in

       5      ways that are rewarding for them, in terms of having

       6      more value, in their mind, in terms of what they can

       7      do; but, also, provide a more needed service for us

       8      in the form of a customer-service agent that would

       9      be able to be out and about the station.

      10             We do not want customer-service agents or

      11      token-booth clerks to provide security.  That's the

      12      responsibility of the transit bureau or the

      13      New York City Police Department.

      14             But, certainly, I think we all could

      15      understand and agree that a visible presence of

      16      someone on the platform, observing and seeing

      17      something going on and reporting on it, is of value

      18      to the system.

      19             And that's the direction we'd like to move.

      20             Carmen, do you want to add more to that?

      21             CARMEN BIANCO:  The only other thing I would

      22      add to that, Senator, is that, back in the time

      23      frame of 2010, we did, in fact, remove a number of

      24      those vacant booths so that they would not become a

      25      security issue.







                                                                   63
       1             The booths that we have, that we have at

       2      least one full-time booth in every single station,

       3      there may be others out there that will open on

       4      special occasions, but, those booths are monitored.

       5             The employees that work in those booths have

       6      the ability to stay in -- 100 percent in touch with

       7      our control center, so they have immediate -- if

       8      there's an immediate need for assistance, they

       9      can -- they could respond, or have NYPD respond.

      10             SENATOR PERKINS:  You know, that's really

      11      kind of ridiculous because, generally, what's

      12      happening is, that one person is either on the

      13      downtown side in the booth or the uptown side, so

      14      they're seeing from across the tracks, if anything

      15      at all, what's going on.

      16             So that side where that person is not, is,

      17      for all intents and purposes, a very serious danger

      18      zone for your customers.

      19             You know, we love your workers.  We want them

      20      to be safe and secure and well-paid, et al., but our

      21      wives and our children and our neighbors deserve to

      22      be better treated than that.

      23             To have those places abandoned so that the

      24      vagrants can sell rides with their metro cards, or

      25      bag, or intimidate, I don't think that's a safe,







                                                                   64
       1      right way to run the system, especially in my

       2      neighborhood, and other neighborhoods as well.

       3             So, I think we have to rethink that.

       4             I use the system as much, if not more, than

       5      most of your customers.  And I think that, when you

       6      subject our neighbors, especially the females, to

       7      that kind of environment, you're not serving your

       8      purpose.

       9             It's a very bad decision that was made.

      10             There's no security there.

      11             And those who prey know that, and they take

      12      advantage of that, and it intimidates folks.

      13             It makes people feel as if they're not

      14      respected.

      15             We have nobody down here, they say.  Why is

      16      that?

      17             Has your wife -- do your wives go to these

      18      stations?

      19             Would you want your wife to have to go

      20      through that kind of a situation?  Your daughters?

      21      Your children?

      22             I don't think so.

      23             How much are we saving?

      24             Did you quantify the amount that we're saving

      25      [unintelligible] --







                                                                   65
       1             THOMAS F. PRENDERGAST:  We'll get you the

       2      numbers.

       3             SENATOR PERKINS:  -- by doing that?

       4             THOMAS F. PRENDERGAST:  The focus -- the

       5      crime in the subway is at its lowest level ever,

       6      from the transit bureau.

       7             SENATOR PERKINS:  I'm not asking you about

       8      the crime in the system.

       9             I'm telling you about very specific areas

      10      where you have taken --

      11             THOMAS F. PRENDERGAST:  If we had infinite

      12      resources, we could deploy resources that way.  But

      13      we don't, I'm sorry.

      14             SENATOR PERKINS:  So how much are you saving?

      15      is what I'm asking.

      16             THOMAS F. PRENDERGAST:  I'll get you the

      17      number.  I don't know the number off the top of my

      18      head.

      19             But in order to deal with the problems we had

      20      in 2009, in order to deal with the fiscal problems

      21      we had, we had to make decisions [unintelligible] --

      22             SENATOR PERKINS:  Are you telling me that

      23      those stations are safe?

      24             THOMAS F. PRENDERGAST:  Yes, they're safe.

      25             SENATOR PERKINS:  They're not safe.







                                                                   66
       1             How can you have addicts in the station, with

       2      no security, no police, during rush hour and

       3      throughout the day, and consider that people -- how

       4      do you say that's safe?

       5             What is your definition of "safe"?

       6             THOMAS F. PRENDERGAST:  Well, I guess we

       7      probably should have started there, because I can

       8      find similar conditions on the street, I can find

       9      similar conditions --

      10             SENATOR PERKINS:  You don't patrol the

      11      street.  That's not your job.

      12             I'm talking about your job, which is in the

      13      subway system.

      14             THOMAS F. PRENDERGAST:  Responsibility for

      15      safety and -- responsibility for security in the

      16      New York City subway is the transit bureau and

      17      New York City Police Department's responsibility.

      18             SENATOR PERKINS:  But I'm telling you there's

      19      no safety in those places.

      20             Now, what are you going to do to fix that?

      21             THOMAS F. PRENDERGAST:  We focus our efforts

      22      through the use of the transit bureau and the

      23      New York City Police Department.

      24             SENATOR PERKINS:  You're not going to do

      25      anything, is what you're telling me?







                                                                   67
       1             THOMAS F. PRENDERGAST:  I'm not going to put

       2      employees in harm's way to perform police work.

       3             SENATOR PERKINS:  What about my constituents

       4      in harm's way?

       5             What about our children in harm's way?

       6             What about our families in harm's way?

       7             UNKNOWN SPEAKER:  [No video pan.]

       8             Senator, there's --

       9             SENATOR PERKINS:  Your employees get paid to

      10      run the system and protect the system.

      11             How come there are no employees in those

      12      stations protecting those customers?

      13             Why should people feel they have to go to

      14      work, do whatever they do with the system, under

      15      those kind of conditions?

      16             SENATOR MARCELLINO:  Senator, I couldn't

      17      agree with you more, that leaving the system --

      18      leaving the thing unprotected or without staff could

      19      create, and probably does create, a serious problem.

      20             I think you have made your point.

      21             SENATOR PERKINS:  The most important aspect

      22      of that problem is the emotional, psychological

      23      [unintelligible] --

      24             SENATOR MARCELLINO:  I hear you.

      25             SENATOR PERKINS:  -- that people have about







                                                                   68
       1      the system.

       2             SENATOR MARCELLINO:  I hear you.

       3             That's a subject that we will bring up

       4      further, because what you're talking about I think

       5      relates, as Chairman Prendergast points out, with

       6      the New York City Police Department as well, and

       7      that's an issue that we're going to have to take

       8      issue with, because I agree with you, there is a

       9      safety concern there.

      10             I don't know that a token-booth operator

      11      assigned to an individual station, sitting in a

      12      booth, is going to provide the kind of safety you're

      13      looking for.

      14             SENATOR PERKINS:  They have a phone.

      15             If things go on, they report it to the

      16      police.

      17             Now it's totally abandoned.

      18             I don't want to go any further.  I think

      19      I made my point.

      20             SENATOR MARCELLINO:  Yes, I believe you did.

      21             SENATOR PERKINS:  And we need to revisit that

      22      decision.  It's a bad decision.

      23             And if we have to prove it, in terms of

      24      bringing people to your office, and help you

      25      understand what their concerns are, we'll do that.







                                                                   69
       1             But I don't think you want your wife going

       2      down there.  I don't think you want your children

       3      going down there.

       4             SENATOR MARCELLINO:  Do you have another

       5      question, Bill?

       6             SENATOR PERKINS:  Yeah, I do.

       7             You know, when the system goes down, like,

       8      you're not going to have any service, how do we get

       9      to know that that's happening?

      10             CARMEN BIANCO:  You know, Senator, there are

      11      a number of ways that we do that.

      12             One is, that we -- within our control center,

      13      we have direct access to the media outlets.  We have

      14      direct access to Transcom, which is a regional

      15      system that puts out messages via the radio.

      16             We also, internally, will immediately post

      17      that on our website.  If our customers are signed up

      18      for text messages, they will get text messages that

      19      there's a situation, and what lines are not running.

      20             So what we try to do is to be immediate, to

      21      be very accurate, to get this information out

      22      through as many outlets as we possibly can.

      23             To make station announcements on the

      24      platforms so that we can, you know, really direct

      25      messages on the platform, so that we can help our







                                                                   70
       1      customers understand what the problem is, and how

       2      they could best get around that situation.

       3             SENATOR PERKINS:  Well, my experience is,

       4      that some of that is being done very often.  Folks

       5      are bewildered about what's going on.

       6             Have you ever -- have you noticed that at

       7      all?

       8             Have you been informed about that type of

       9      bewilderment, that type of concern, that your

      10      customers have?

      11             CARMEN BIANCO:  No, Senator.

      12             All I would add to your comment is that, our

      13      transit system is very large.

      14             As our chairman's mentioned, we've had days

      15      now where we experience 6 million customers.

      16             We operate just under 8,000 trains a day on a

      17      24-hour, 365-day basis.

      18             So when you have that kind of complexity --

      19      and we have strategic teams all over the entire

      20      system, so that as a problem's encountered, we're

      21      able to immediately address it.

      22             Whether that problem's a customer that's

      23      sick, whether that problem is an equipment problem,

      24      whether it's a police issue...whatever it is, we

      25      spend an awful lot of time trying to understand how







                                                                   71
       1      to deal with issues like that, and in terms of what

       2      is the mitigation level that we need to put in place

       3      immediately to fix that problem.

       4             So, this is not something we look for an

       5      incident to occur.

       6             We -- we -- you know, again, very old system,

       7      lots of activity all day long, but we try to stay

       8      every bit ahead of these situations so we can

       9      immediately get into action as the problem arises.

      10             SENATOR PERKINS:  So, two other quick

      11      concerns.

      12             One is rodents, and rats all over the system

      13      still.

      14             Does this capital money translate into any

      15      rodent-abatement-type programs?

      16             UNKNOWN SPEAKER:  [No video pan.]

      17             Not capital program.

      18             That would be covered off in the operating

      19      budget.

      20             Do you want to talk about the program?

      21             CARMEN BIANCO:  That is covered off under the

      22      operating program.

      23             And in our normal operations, we bait all the

      24      time on the system.

      25             We do our level best to remove rubbish on the







                                                                   72
       1      platforms, rubbish that is generated in the station.

       2             As a matter of fact, we will remove

       3      approximately 40 tons of refuse each and every day,

       4      and we do that in the middle of the night when most

       5      of our customers are not on the system.

       6             We have trains and/or trucks that go to each

       7      station.

       8             But as that material is gathered during the

       9      day, it's put in a secure room.  That room is built

      10      so that rodents can't penetrate it, to the extent we

      11      can.

      12             And, so, that's one program that we have.

      13             And we do bait on an ongoing regular basis

      14      throughout the system.

      15             We are also, as you're aware, involved in

      16      another situation.

      17             I'm trying to think of the name of the

      18      organization, but, it was that project, or the

      19      research, to actually take and sterilize the female

      20      rat population so that they could no longer produce.

      21      And that is still ongoing.

      22             SENATOR PERKINS:  Thank you very much.

      23             The sterilization must not be working,

      24      because they seem to be exploding.

      25             I appreciate the opportunity you've given me







                                                                   73
       1      to say something, but I want to make sure that you

       2      understand that we have a rodent problem, a very

       3      serious rodent problem, that is more visible to me

       4      than ever before.

       5             SENATOR MARCELLINO:  Thank you.

       6             Chairman Prendergast, you mentioned before,

       7      reports that are coming, that -- studies that are

       8      being done on various issues.

       9             Would it be possible for us to get copies of

      10      these reports as they come to you --

      11             THOMAS F. PRENDERGAST:  Sure.

      12             SENATOR MARCELLINO:  -- for the Committee, so

      13      we can make a file?

      14             THOMAS F. PRENDERGAST:  Absolutely.

      15             We'll make them available to you, sir.

      16             SENATOR MARCELLINO:  I appreciate that.

      17             Senator Hoylman.

      18             SENATOR HOYLMAN:  Thank you, Mr. Chair, for

      19      organizing this.

      20             And thank you to the MTA for being here

      21      today.

      22             You know, I echo some of Senator Perkins'

      23      concerns, which I think go to the issue of returning

      24      the state to its legacy of support for the MTA,

      25      which is -- one of our transportation-advocate







                                                                   74
       1      organizations is going to be saying later, and

       2      really not putting as much pressure on fares and

       3      tolls.  And I know that's what you're trying to

       4      accomplish, and I know you've got a $15 billion gap

       5      to close.

       6             In that respect, I'm concerned that we are

       7      not exploring all of the revenue options that we

       8      could be in order to close that gap.

       9             And, I'm also concerned that, in terms of our

      10      state's, you know, one-shot budget surplus that we

      11      have this year, that you're not getting enough of

      12      it.

      13             And I think -- I think the MTA's reporting

      14      that you're getting 37 million, is that correct, out

      15      of the -- out of the $104 million surplus in

      16      operating revenue toward capital projects?

      17             THOMAS F. PRENDERGAST:  There's money we're

      18      getting in the operating budget, and there's money

      19      we may be getting out of the 5 billion.

      20             Bob?

      21             ROBERT FORAN:  Yes, with the 104 that you

      22      referred to, that's actually going to capital.

      23             It's 37 more in total than we were expecting

      24      to get.

      25             So, effectively, that 37 will be additive.







                                                                   75
       1      We will get an additional capital program.

       2             The rest will just be replacement monies for

       3      what would otherwise have been operating.

       4             However, in the Governor's budget -- proposed

       5      budget, he has $750 million for our core program,

       6      and then there's $250 million for Penn Access.

       7             So, there's a billion dollars in that

       8      proposal.

       9             And of the billion dollars, there's also,

      10      250 of that, the Penn Access, is money from the

      11      strategic fund, which is, I believe, using some of

      12      the one-shot monies.  And then there's 150 for

      13      certain transit-oriented development projects.

      14             SENATOR HOYLMAN:  So in terms of the

      15      bank-settlement funds, I've been reading here that

      16      there's about $850 million of those funds

      17      unallocated.

      18             Any chance or any suggestion that the MTA

      19      will try to acquire some of those funds?

      20             THOMAS F. PRENDERGAST:  I'm sure we'll be

      21      part of the dialogue.

      22             I mean, the first thing we wanted to do when

      23      we presented the capital program is make sure people

      24      understood the 32 billion: 32 billion, with

      25      3 billion for bridges and tunnels, and the remainder







                                                                   76
       1      for the other agencies.

       2             I think it's essential that we have a

       3      discussion with respect to the size of that program,

       4      and then you define what the gap is.

       5             That's the board's recommendation, strong

       6      recommendation.

       7             That's what we feel we need to not only

       8      address state of good repair, but enhance, in terms

       9      of the level and quality of service, and provide for

      10      expansion to meet those 2 million more people that

      11      are going to be in the region by 2035.

      12             So, we have always thought, from the time we

      13      submitted the plan, it was essential that we had a

      14      dialogue about the size of the ask, because some

      15      people may say you're faced -- the Legislature is

      16      faced with issues that are beyond us, in terms of a

      17      lot of needs and confined resources.

      18             So if someone -- we need to have a dialogue

      19      in terms of the size of that ask.

      20             And once that's defined, then we start to

      21      decide, what are the different funding alternatives

      22      we need to have from the federal, state, local

      23      governments, and the people that benefit directly

      24      and indirectly from the system, to identify the

      25      means to resolve that gap?







                                                                   77
       1             So we would be part of that dialogue, in

       2      answer to your question.

       3             SENATOR HOYLMAN:  So, an issue's come to

       4      light about the surcharge placed on taxi rides.

       5      I think it's 50 cents per ride that is dedicated to

       6      the MTA.

       7             And, in recent months, and years, we've seen

       8      a drop in taxi ridership, mostly due to car-sharing

       9      services, like Uber and Lift, and others.

      10             These car-share services don't have that

      11      dedicated surcharge.

      12             Has that impacted your bottom line?

      13             ROBERT FORAN:  I think we're still

      14      anticipating receiving about $90 million on the

      15      50-cent surcharge.

      16             The only time we're getting money from Uber

      17      or Lift is if the Uber or Lift driver happens to be

      18      a medallion driver.  In that case, they have the

      19      mechanism to collect.

      20             Again, it will be up to our legislative

      21      leaders to determine what, you know, could be

      22      applied to liberty-car services, black-car services,

      23      to non-medallion Uber or Lift or sharing services.

      24             Certainly, there's an argument that could be

      25      made for equity, but we would leave it to, you know,







                                                                   78
       1      those who legislate to come up with the appropriate,

       2      fair approach.

       3             But as of right now, we're still planning on

       4      about $90 million, I think, coming in.

       5             SENATOR HOYLMAN:  So you're not advocating a

       6      position on that?

       7             ROBERT FORAN:  We'll leave that for the

       8      discussion.

       9             SENATOR HOYLMAN:  Now, if I could just zero

      10      in on a more local issue, I represent the west and

      11      east side of Manhattan, Grand Central Station, and

      12      the neighborhood around Penn Station.

      13             I have a small business owner in

      14      Grand Central Station, a wine retailer, who's been

      15      there for about, I think, over 15 years, called

      16      "Grand Harvest Wines."

      17             Are you familiar with it?

      18             ROBERT FORAN:  Yes.

      19             SENATOR HOYLMAN:  And the gentleman -- it's a

      20      family-owned business, very successful.  I think

      21      something like 400 transactions a day.  Really has

      22      established itself as a high-end retailer and a

      23      go-to place for commuters, but also locals alike.

      24             They are in a Kafkaesque situation with the

      25      MTA, in terms of their bidding to renew their lease.







                                                                   79
       1             As I understand it, they won two RFPs, but

       2      then were told, after the second, that a new RFP was

       3      going to be issued, which they subsequently lost to

       4      another bidder who hadn't bid on the first two; in

       5      that, they were willing to pay something like

       6      40 percent more than their current lease.

       7             And I just want to raise that to your

       8      attention because, you know, we think of

       9      Grand Central as, certainly, the crossroads for the

      10      city, and the world, but there are a lot of small

      11      businesses there that the local community relies on.

      12             And I would urge you to look at this matter

      13      closely, and consider; consider the service that

      14      this business has brought, the success, and the

      15      family-owned nature and independence of it, when you

      16      move forward with this RFP.

      17             SENATOR MARCELLINO:  Senator Squadron.

      18             SENATOR SQUADRON:  Thank you very much.

      19             And thank you all.

      20             Thank you, to both Chairs, for this, and

      21      we're represented by the entire MTA region

      22      [unintelligible] centers, which I think says a lot.

      23             Thank you.

      24             And I actually was becoming a little bit

      25      confused, just listening to some of the most recent







                                                                   80
       1      answers.

       2             I just want to be clear here.

       3             I'm a subway rider myself.

       4             Certainly, my district is massively dependent

       5      on it.

       6             But, really, my city, and my region, is

       7      massively dependent on it, as the Chair said.

       8             And it seems to me that we have a $15 billion

       9      funding gap, and we've got a lot going on in this

      10      legislative session, and a lot that's important.

      11             But, I feel like I might be the most nervous

      12      person in this room about the $15 billion funding

      13      gap.

      14             I just want to make sure that my

      15      understanding of this policy concern and yours are

      16      aligned.

      17             That's a big problem; right?

      18             THOMAS F. PRENDERGAST:  Absolutely.

      19             I've been 40 years in the business.

      20             Absolutely, sir.  And I say that

      21      respectfully.

      22             SENATOR SQUADRON:  Oh, good, so we share it.

      23             What are the consequences if we don't fund

      24      it?

      25             THOMAS F. PRENDERGAST:  Well, first, I'll







                                                                   81
       1      start with external parties.

       2             I'll start with the reinvention commission,

       3      the Urban Land Institute; people who have looked at

       4      the worth and value of the MTA network to the

       5      economy.

       6             This is the second-largest economy in the

       7      world, second only to Tokyo.

       8             It has been an historic part of New York's

       9      growth from World War II.

      10             We're seeing record ridership levels.

      11             You have things here that no other system in

      12      the world has.

      13             Nobody has 468 stations.

      14             You know, 71 percent of the city's population

      15      lives within one-half mile of a subway station.

      16             I think it's 61 percent of the Long Island

      17      Railroad customer lives within two miles of a

      18      station.

      19             51 percent of a Metro-North customer lives

      20      within two miles of a station.

      21             SENATOR SQUADRON:  And with due respect, and

      22      out of respect for time I have, the importance of

      23      the system is clear.

      24             What are the consequences if we don't find

      25      it?







                                                                   82
       1             Because, you know, I've got to tell you, I'm

       2      in Albany.  Sometimes my wife gets home late for the

       3      babysitter, on that F Train, and that's a

       4      consequence.

       5             And that's a much smaller consequence in my

       6      life and many of my constituents' lives.

       7             Tell me the consequences if we don't fund

       8      this thing, for riders.

       9             THOMAS F. PRENDERGAST:  If you start at the

      10      32 billion, take off 3 billion for bridges and

      11      tunnels, you're down to 29 billion, as we start to

      12      lose dollars off that.

      13             If the consensus of the region and the

      14      decision-makers at large say, "We can't afford

      15      $29 billion," it will first come out of expansion.

      16      Second Avenue subway, the next phase, would be the

      17      first.

      18             It will then -- it's arguable as to what

      19      extent it would affect East Side access because, if

      20      you stall that project, you may have to refund

      21      money.

      22             Then you go into what we call "enhanced."

      23             So things like countdown clocks, things like

      24      features and elements of the system that maybe the

      25      millennials depend on and consider to be







                                                                   83
       1      entitlements would have to be sacrificed.

       2             SENATOR SQUADRON:  So let me ask you this --

       3             THOMAS F. PRENDERGAST:  Before we have to

       4      protect a state of good repair.

       5             SENATOR SQUADRON:  -- I get a lot of angry

       6      calls about the countdown clocks on the lettered

       7      lines, because they're not there.

       8             THOMAS F. PRENDERGAST:  They're not there.

       9             SENATOR SQUADRON:  We're not going to get

      10      them if we don't fund this thing?

      11             SENATOR MARCELLINO:  At some point you have

      12      to get an alignment between the money we have to

      13      fund the program and the projects that get funded

      14      with that level.

      15             And so, in a hierarchal fashion, the thing

      16      we're going protect is state of good repair.

      17             It may not be that interesting to somebody if

      18      they don't see a substation or they don't see cables

      19      going to a third rail, but if we don't maintain

      20      that, and that's a safety and reliability issue,

      21      then we could have a safety and reliability problem

      22      so.

      23             And, so, we have to protect that core of

      24      $22 billion.

      25             SENATOR SQUADRON:  Let me ask you about that,







                                                                   84
       1      because I was just on a B Train that, from

       2      34th Street to West 4th Street, got beaten by two

       3      F trains, shockingly.  The express was not just

       4      slow.  It was like slow and [unintelligible].

       5             It seemed that the cars on the B were older,

       6      the ones on the F were newer.

       7             I was proud with the MTA to create the

       8      full-line reviews a few years ago, that have been

       9      very effective.  In fact, the first one was on the

      10      F Line.

      11             One of the things it recommended was, that

      12      there should be sort of an alignment of cars, and

      13      actually newer cars for the F Line.

      14             I notice we're not seeing that with the same

      15      consistency we used to.

      16             I also notice that it seems that the delays

      17      on the F Line have picked up.

      18             I want to ask, is there a relationship

      19      between how new the cars are, whether there are

      20      consistent cars on each line, and delays on that

      21      line?

      22             And is that something that's impacted by the

      23      capital plan?

      24             THOMAS F. PRENDERGAST:  There's some

      25      relationship, but the overall level of mean distance







                                                                   85
       1      between failure, feet-wide and car-class-wide, has

       2      gotten to the point where it's not necessarily an

       3      issue of car reliability.

       4             There may be other factors that affect the

       5      performance of a line.

       6             And that's the importance of doing a line

       7      review, so you can identify what those factors are,

       8      and apply resources -- dollars, personnel,

       9      et cetera -- to try to address those.

      10             SENATOR SQUADRON:  What's the dollar

      11      amount --

      12             SENATOR MARCELLINO:  Senator Squadron --

      13             SENATOR SQUADRON:  Just very briefly --

      14             SENATOR MARCELLINO:  -- one more question,

      15      that's it --

      16             SENATOR SQUADRON:  Thank you.

      17             SENATOR MARCELLINO:  -- okay?  Because we

      18      have to move on.

      19             SENATOR SQUADRON:  One question, two parts.

      20             What's the dollar amount that we need --

      21                  [Laughter.]

      22             SENATOR SQUADRON:  And please let me complete

      23      it.

      24             What's the dollar amount that we need to

      25      maintain a state of good repair, which means we're







                                                                   86
       1      not going to see anymore delays; which means,

       2      whether it's my wife or any rider who depends on the

       3      on-time train for their job, doesn't have to wait

       4      four trains to get on?

       5             What is the dollar amount under which we are

       6      in crisis?

       7             And, secondly, one of the full-line reviews

       8      going on right now, the C Line, we're very excited

       9      for it.

      10             When is that going to be completed?

      11             And, can we count on the fact that, as you

      12      committed at your nomination, they're going to

      13      continue throughout the system?

      14             THOMAS F. PRENDERGAST:  We saved $22 billion

      15      for state of good repair, but it's not a firm line

      16      of demarcation, and I'll explain to you why.

      17             A communication-based train-control system

      18      replaces an out-of-date or end-of-useful-life

      19      wayside block-signal system, so that's state of good

      20      repair; but it provides an increased level of safety

      21      and reliability, so it's an enhancement.

      22             So it's an order-of-magnitude cost of

      23      $22 billion.

      24             But, there are favorite projects in the

      25      enhancement portion that wouldn't get funded if you







                                                                   87
       1      dropped as low as $22 billion.

       2             When is the line review for the C done,

       3      Carmen?  I'm sorry.

       4             CARMEN BIANCO:  Yeah, the C Line, I'm hoping

       5      to see that data come to me within the next month.

       6             We will share that with the chairman, and

       7      then certainly share that with --

       8             Oh, I'm sorry.

       9             The C is the end of the year, that's right.

      10             SENATOR SQUADRON:  I liked your first answer

      11      better.

      12                  [Laughter.]

      13             CARMEN BIANCO:  But the C will be later on in

      14      the year.

      15             SENATOR SQUADRON:  Well, right, a little more

      16      depth on that would be great, but I'll give time

      17      back to the Chair.

      18             Thank you.

      19             SENATOR GOLDEN:  One quick question, because

      20      I have to get going.

      21             SENATOR MARCELLINO:  Senator Golden, quickly.

      22             SENATOR GOLDEN:  Thank you, Mr. Chairman.

      23             According to the -- Senator Murphy, missed

      24      it, the -- we put the lockbox into place.

      25             If they didn't put the lockbox into place,







                                                                   88
       1      they'd just keep on sweeping the funds.  We still

       2      don't have a complete lockbox that -- to stop

       3      sweeping the funds so that you can continue to keep

       4      that money in the system.

       5             We're going to continue to work with that.

       6             I didn't get an answer on the last

       7      question -- my first question about the study on the

       8      express buses and the R Train.

       9             THOMAS F. PRENDERGAST:  I don't think we

      10      committed to a study, but we'll take a look at that.

      11             SENATOR GOLDEN:  You did, you did, you did.

      12             THOMAS F. PRENDERGAST:  We'll take a look at

      13      it and we'll get you an answer.

      14             SENATOR GOLDEN:  Okay.

      15             The New York City Mayor, did they cut their

      16      funding to the capital program?

      17             THOMAS F. PRENDERGAST:  Historically -- I'll

      18      let Bob answer that question.

      19             Bob?

      20             ROBERT FORAN:  The level of funding that they

      21      have in the current budget is $40 million a year.

      22             We expect that there could be continued

      23      discussions with them, but that is lower than what

      24      they had in the last --

      25             SENATOR GOLDEN:  What did they give, 136







                                                                   89
       1      last -- what was last year's?

       2             ROBERT FORAN:  Last year was, like,

       3      $100 million, excluding the Number 7 extension.

       4             I should point that out.

       5             So just the regular recurring, it was around

       6      $100 million.

       7             THOMAS F. PRENDERGAST:  In our plan, we're

       8      proposing 125.

       9             ROBERT FORAN:  125.

      10             SENATOR GOLDEN:  You're asking my colleagues

      11      here to put money in.

      12             You've got to make sure the City of New York

      13      is putting its fair share --

      14             THOMAS F. PRENDERGAST:  That's why I said

      15      "four."

      16             It's federal, state, local, and also people

      17      who benefit directly and indirectly.

      18             SENATOR GOLDEN:  I think my colleagues were a

      19      little shocked to hear it's only $36 million.

      20             The change that you're going to make with

      21      the -- on the buses -- the express buses, or

      22      anticipated changes, are they going to be

      23      community-board approval?  Or, because of safety,

      24      are they -- as of right, on the changing the

      25      crosswalks and putting the --







                                                                   90
       1             THOMAS F. PRENDERGAST:  We normally go

       2      through a community-board process, along with

       3      New York City DOT, especially for SBS routes, but

       4      other routes as well, and we try to get their

       5      approval.

       6             We don't always get their approval.

       7             SENATOR GOLDEN:  No, but then you're going to

       8      go through the community board --

       9             THOMAS F. PRENDERGAST:  Yes.

      10             SENATOR GOLDEN:  -- you anticipate.

      11             THOMAS F. PRENDERGAST:  Yes.

      12             SENATOR GOLDEN:  So there's a study underway

      13      for these crosswalk changes and removal of the

      14      crosswalks, and you're going to come back very

      15      shortly with a plan.

      16             Yes?  No?

      17             THOMAS F. PRENDERGAST:  I'm not sure where

      18      that's coming from, but --

      19             SENATOR GOLDEN:  Well, I'm asking.

      20             You said you were going to change the

      21      crosswalks --

      22             THOMAS F. PRENDERGAST:  No, no.

      23             I said, where there's agreement between the

      24      commissioner of DOT, John Samuelsen, and myself,

      25      we're going to look at issues where there's a high







                                                                   91
       1      likelihood or frequency of turning accidents where

       2      someone gets struck in a crosswalk.

       3             The first thing is, what can we do to

       4      eliminate the turn at that location?

       5             If we can't, then we'll talk about the idea

       6      of moving the crosswalk away from the intersection

       7      where it's a safer location where there are no

       8      turns.

       9             SENATOR GOLDEN:  Okay, last question,

      10      Mr. Chairman.

      11             The -- no, I thank you for being here, all of

      12      you, again.

      13             I have to go to another meeting with the

      14      Governor, and that's why I'm going to have to leave,

      15      but, this question is important.  It goes to the

      16      tolls on the Verrazano Bridge, and others: $16.

      17             At this rate, in the next few years, it will

      18      be over $20.

      19             People can't afford, and I perfectly

      20      understand Staten Island can't get off of that

      21      island, so I understand their issues.  And they

      22      deserve the fairness that they do get from the MTA

      23      and from the City and State, but, we, too, can't get

      24      on that island.

      25             So we have another issue going, and we need







                                                                   92
       1      to be able to get relief on that.

       2             Port Authority obviously has a program that

       3      works, where they give it, if you're over that

       4      bridge three times, it's a 58 percent reduction.

       5             Obviously, I would strongly suggest that the

       6      MTA look at that as well, for the people that work

       7      and live and do business on Staten Island, so that

       8      we can not impact a family.

       9             It's a -- what do you call it?  Pass --

      10      EZ-Pass.

      11             It's $16.

      12             If you are on EZ-Pass, it's $10.66.

      13             A 58 percent reduction would bring it down to

      14      $6.70, and that's, you know, not interrupting the

      15      $5 charge that the Staten Islanders get for their

      16      benefits, which we believe they are entitled to,

      17      which we keep.

      18             But that's something I'd like to see happen,

      19      going forward.

      20             THOMAS F. PRENDERGAST:  I understand.

      21             SENATOR GOLDEN:  Thank you.

      22             SENATOR MARCELLINO:  Just one quick question

      23      from me.

      24             We talk a lot -- this is almost a follow-up

      25      on what Senator Golden was talking about -- there







                                                                   93
       1      are some bridges that are not tolled at this point

       2      in time.  The 59th Street Bridge, for example.

       3             If these untolled bridges were tolled, could

       4      we reduce the toll on the other bridges, overall, so

       5      that there's no net loss, and not necessarily just

       6      to increase funding, but just to stop

       7      bridge-shopping, so to speak, which a lot of people

       8      do?

       9             It creates congestion in certain areas.

      10             And we might be able to lower the tolls on

      11      some of these other bridges if we tolled, and

      12      figured out so that you're held harmless, so to

      13      speak, with the money.

      14             THOMAS F. PRENDERGAST:  That's certainly what

      15      Move NY says is the case.

      16             I think we need to review the details to make

      17      sure that the net impact is what you say it is,

      18      which is neutral, but that's the proposal they have.

      19             SENATOR MARCELLINO:  What is your

      20      consideration?

      21             Have you considered this?  Are you looking at

      22      this?

      23             THOMAS F. PRENDERGAST:  We have been in

      24      dialogue with them throughout the entire process.

      25             We're concerned about the issue of whether or







                                                                   94
       1      not the net impact is neutral or generates the

       2      revenue they say it does.

       3             We need to look at it from a standpoint of

       4      just due diligence.

       5             The issue of how much is set aside to

       6      maintain the bridges that are currently maintained

       7      by somebody else is key.

       8             I think when anybody inherits the

       9      responsibility of maintenance of an asset, you've

      10      got to know exactly what the nature of that asset

      11      is.

      12             We know what our assets are that Bridges and

      13      Tunnels owns, and we don't give a dollar away and

      14      fund other parts of the system as we do until we are

      15      assured that that asset is fully maintained, and

      16      it's being replaced, and its assets are being

      17      replaced.

      18             Right now, we're making hundreds of millions

      19      of dollars of expenditures to extend the useful life

      20      of the Verrazano-Narrows Bridge for another

      21      50 years, I believe.

      22             And, Jimmy, did you want to add?

      23             JAMES FERRARA:  That is correct, Senator.

      24             One thing, we're secure in our knowledge, the

      25      assets that we maintain and control are in a very,







                                                                   95
       1      very good state of good repair.

       2             And most importantly, to support mass transit

       3      over the last 2 years, funding from collection of

       4      tolls totaled about $2 billion.

       5             So we know what our assets are.  We know the

       6      condition they're in.  We know the revenue

       7      collected, and where the revenue goes.

       8             When you start discussing, potentially,

       9      tolling East River bridges, there are many

      10      situations that have to be vetted, to determine what

      11      the asset will give you back in return, minus costs:

      12      minus repair, minus operating costs and capital

      13      costs.

      14             There are many things to be discussed --

      15             SENATOR MARCELLINO:  What I'm suggesting is,

      16      discuss them.

      17             Let's not just talk about it.  Let's do it.

      18             I mean, if there's a potential out there to

      19      ease this --

      20             THOMAS F. PRENDERGAST:  We've had discussions

      21      with them, and we will continue the discussions.

      22             SENATOR MARCELLINO:  I know, but, I mean,

      23      it's got to come to a conclusion.

      24             I understand discussions, but it's got to

      25      come to a conclusion at some point in time, that we







                                                                   96
       1      do this.

       2             I do know people do shop for -- a lot of

       3      people will come to an area where it's not tolled.

       4      They want to save the 15, 16 dollars.

       5             I don't blame them.

       6             But that adds to traffic congestion in those

       7      neighborhoods and air pollution in those

       8      neighborhoods, and a whole bunch of other things

       9      that happen in those areas, that might be alleviated

      10      if we moved along.

      11             I understand there's additional costs that

      12      has to be taken into consideration.

      13             I understand all that.

      14             And I understand repair and maintenance, and

      15      subtracting costs, with potential [unintelligible].

      16             But let's get those studies done.

      17             How much time does it take to do a study on

      18      numbers?

      19             Let's work it out, okay, gentlemen?

      20             Second round, last round, with this Panel,

      21      please, because we have a time problem, and we have

      22      three other panels.

      23             Senator Martins, and then Senator Dilan.

      24             SENATOR MARTINS:  Thank you.

      25             Let's take up where we left off, shall we?







                                                                   97
       1             $32 billion in this 5-year capital plan:

       2      3 billion for bridges and tunnels, for $29 billion.

       3             You said $7 billion would be what we were

       4      going to borrow, but we have a $15 billion

       5      shortfall, don't we?

       6             ROBERT FORAN:  Yes.

       7             SENATOR MARTINS:  So how does that get made

       8      up, and how does that factor into your "$7 billion"

       9      figure?

      10             ROBERT FORAN:  Well, as I said, the current

      11      financial plan, which is the one that we presented,

      12      is $15 billion short.

      13             So of the funding that we have for you,

      14      $16 billion, $7 billion of that was bonding.

      15             It's an ongoing discussion that you clearly

      16      will be very much a part of, in terms of coming up

      17      with how we're going to close that.

      18             To the extent that the State came up with

      19      more money, that would reduce the net deficit.

      20             To the extent the feds came up with more

      21      money, that's going to reduce the deficit.

      22             To the extent that the City, that will reduce

      23      the deficit.

      24             We're also, again, pushing very hard to see

      25      what we can get from the private sector.







                                                                   98
       1             So all I know right now, is the deficit looks

       2      to be about $15 billion.

       3             How that's made up with, I don't know, but we

       4      did not put additional bonding on the table.

       5             SENATOR MARTINS:  I understand.

       6             So, $7 billion, plus the $15 billion, for a

       7      total of 22 billion, right now, since there doesn't

       8      appear to be another funding source until we're able

       9      to reach consensus on something.

      10             What is the current level of the MTA

      11      outstanding debt?

      12             ROBERT FORAN:  34 billion.

      13             SENATOR MARTINS:  34 billion.

      14             In the history of the MTA, it's 34 billion,

      15      and you're conceptually asking for 22 billion for

      16      the next 5 years?

      17             ROBERT FORAN:  I'm not asking for 22.

      18             SENATOR MARTINS:  Okay.

      19             You've got 7 billion against the $29 billion

      20      proposal --

      21             ROBERT FORAN:  Right.

      22             SENATOR MARTINS:  -- so there's a $22 billion

      23      gap.

      24             ROBERT FORAN:  There is a $15 billion gap.

      25             There's $22 billion -- it's 15 gap, and we







                                                                   99
       1      have 7, that was your 22.

       2             SENATOR MARTINS:  That's my point.

       3             ROBERT FORAN:  I'm just saying that there's a

       4      $15 billion gap.

       5             SENATOR MARTINS:  Plus the 7 billion that

       6      you're already borrowing as against the other --

       7             ROBERT FORAN:  The amount of money that we

       8      have put into this plan for borrowing, the

       9      7 billion, that's -- a significant portion of that

      10      we've already set monies aside for.

      11             You heard us talk earlier about the

      12      pay-as-you go?

      13             Every time we did a refunding, and we have

      14      probably generated, on a present-value basis, the

      15      amount of money that we've saved with refundings

      16      over the last 4 years is about, I'd say, close to

      17      a billion three.

      18             Every time we saved money on our refundings,

      19      when interest rates were lower and we replaced

      20      high-interest debt with low-interest debt, we have

      21      been banking that money for this capital program of

      22      '15 to '19.

      23             When we've saved money by reducing costs, we

      24      either put it to reducing the fares or we also set

      25      it aside for the debt service.







                                                                   100
       1             So, effectively, we think that this

       2      $290 million that we still have set aside every

       3      year, beginning this year, 2015, will support about

       4      $5.4 billion of either debt and pay-as-you-go.

       5             So the commitment we're making, is every time

       6      we can save money, we're trying to figure out, if it

       7      was capital, capitally derived, can we put it aside

       8      for the next capital program?

       9             And that's what we're trying to do.

      10             SENATOR MARTINS:  No, I understand.

      11             This is the equivalent of somebody

      12      refinancing their house, saving a portion of that

      13      money, and then deciding, with that portion that

      14      they saved in their monthly mortgage payment, that

      15      they can then take out an equity loan and afford a

      16      certain amount as against that.

      17             ROBERT FORAN:  Yeah, if they were going to --

      18      it would make perfect sense if you're going to use

      19      that for a needed addition on your house or to

      20      reroof it.

      21             So that's what we're doing.

      22             SENATOR MARTINS:  Two more questions,

      23      Mr. Chairman.

      24             One is, very quickly, MTA payroll tax.

      25             Back when it was passed, I understood that







                                                                   101
       1      there was a downturn in the economy, and significant

       2      losses in revenues to the MTA that came through

       3      things like mortgage tax, the real-estate industry

       4      was in a different place.

       5             But, can you speak to those revenue streams,

       6      and how they have come back over the last five,

       7      six years, and whether or not we're back in a

       8      position where those funding streams are restored

       9      such that the MTA payroll tax is redundant?

      10             ROBERT FORAN:  At its height, we were about

      11      a billion seven.  That was the total amount of

      12      real-estate revenues that we received.

      13             I think we have something -- if you hold one

      14      second, I'll tell you what we have coming in.

      15             In the 2015 budget, we're talking about the

      16      urban tax, which is a real-estate tax; it's some

      17      mortgage recording; and it's also the real-property

      18      transfer.  It's 675 million.

      19             And our mortgage-recording tax -- excuse me.

      20             And the mortgage-recording tax is about

      21      365 million.

      22             So we're a little bit over a billion dollars.

      23             So we're still 600, 700 million dollars short

      24      of where we were at the peak.

      25             And during that time our costs have continued







                                                                   102
       1      to go.

       2             SENATOR MARTINS:  Sure.

       3             And just to highlight, or to piggyback on a

       4      point that Senator Golden and Senator Marcellino

       5      made, I understand, and I see this figure a lot,

       6      this $1 trillion asset that we have that is the MTA,

       7      and I appreciate it.  I truly do.

       8             You know, I thank God that this was done

       9      100-plus years ago, where we didn't to have pay for

      10      it today, and we, literally, have the benefit of

      11      this great investment that was made privately over

      12      100 years ago.

      13             But when you come right down to it, it comes

      14      down to people's ability to use mass transit.

      15             And, so, if a peaked ticket from Mineola to

      16      Penn Station cost me $20, if I don't -- if I buy it

      17      on the train, at some point there's a cost that is

      18      just -- it's impractical for a family to travel

      19      using the train, and we're being pushed into cars.

      20             And, so, when we consider the trillion-dollar

      21      figure, I get it, but, we also have to make sure

      22      that people can continue to use these trains.  And

      23      it's becoming evermore expensive.

      24             And, certainly, we've discussed this in the

      25      past.  These fare increases on top of fare increases







                                                                   103
       1      are significant.

       2             And though we have to maintain it, and

       3      maintain this system, I would just encourage you to

       4      take into consideration the actual cost to the users

       5      today.

       6             Not everybody's going into the city to work.

       7             Other people need to get into the city

       8      sporadically.

       9             They don't have the opportunity to buy these

      10      monthly passes.

      11             The idea is, mass transit should be cheaper

      12      than the alternative.  And when it's not, there's a

      13      real problem.

      14             And, folks, I would suggest to you that we're

      15      reaching the point where it's no longer

      16      cost-effective for a family to travel using mass

      17      transit into the city.

      18             Thank you.

      19             SENATOR MARCELLINO:  Thank you.

      20             Senator Dilan.

      21             SENATOR DILAN:  Yes.

      22             This year's executive budget proposes to

      23      repropose $104 million of surplus operating revenues

      24      into capital projects; however, the executive also

      25      reports that you will only realize $37 million this







                                                                   104
       1      year.

       2             Where did the other $67 million go?

       3             Is it being swept?

       4             ROBERT FORAN:  No.  No, that's not a sweep.

       5             What they did is, of the monies that we

       6      received from the Metropolitan Mass Transit

       7      operating assistance account, we call it "MTOA,"

       8      $104 million is being recharacterized as capital for

       9      us.

      10             We were expecting about $68 million of that

      11      to come to us as operating.

      12             There was actually $37 million more than we

      13      had anticipated receiving.

      14             So in one sense, we already had pay-as-you-go

      15      capital in our budget.  So, the $68 million that

      16      they have identified for capital, we'll just reduce

      17      our pay-as-you-go capital by that amount so that

      18      that money can go for operations.

      19             But the net effect of it is, they are giving

      20      us $37 million more than we had expected, and that's

      21      been earmarked, designated, for capital.

      22             SENATOR DILAN:  Okay.  Thank you.

      23             Since safety has also been an issue here

      24      today, I know the costs, for many years, subway

      25      entrances throughout the New York City subway system







                                                                   105
       1      have been closed.

       2             Can you get us a list of those closed

       3      entrances?

       4             And, for example, in my district, we have at

       5      least 10 stations that are closed.

       6             And, in view of the increased ridership,

       7      would it be appropriate to reevaluate those closed

       8      entrances?

       9             And it's something I would like to work with

      10      you on.

      11             THOMAS F. PRENDERGAST:  We'll get you a list

      12      of the closures, and we'll take a look at them in

      13      terms of reevaluation in terms of their opening.

      14             SENATOR DILAN:  So we'll follow up?

      15             THOMAS F. PRENDERGAST:  Yes.

      16             SENATOR DILAN:  Thank you.

      17             SENATOR MARCELLINO:  Senator Hoylman.

      18             Thank you, Senator.

      19             SENATOR SQUADRON:  Senator Hoylman's not

      20      here.

      21             I'll take the second round.

      22             SENATOR MARCELLINO:  Senator Squadron.

      23             SENATOR SQUADRON:  Thank you.

      24             Let me come at this just slightly

      25      differently.







                                                                   106
       1             We know the absolute minimum before the

       2      system starts to really fall apart, and we know that

       3      that'll happen quickly if it does.

       4             $32 billion was passed by the board, as you

       5      pointed out.

       6             In that $32 billion, do you see any wasted

       7      expenditures?

       8             THOMAS F. PRENDERGAST:  No.

       9             SENATOR SQUADRON:  None?

      10             THOMAS F. PRENDERGAST:  Not at all.

      11             If you take a look at the Urban Land

      12      Institute report, and you take a look at others that

      13      are third parties, compare it against a

      14      trillion-dollar asset, the size of the ask should be

      15      closer to $40 billion.

      16             There's a limit with respect to how much we

      17      could ramp up.

      18             "$32 billion" is a number that the board

      19      agreed upon, as submitted by the staff, in terms of

      20      this balanced approach to state of good repair,

      21      enhance, and expand.

      22             SENATOR SQUADRON:  Great.

      23             And so -- and when we hear about expand,

      24      we're talking not talking about some skyway to, you

      25      know, I don't even know.







                                                                   107
       1             We're talking about Second Avenue subway that

       2      we've already invested a huge amount in, East Side

       3      access, 7 Train extension --

       4             THOMAS F. PRENDERGAST:  7 Train extension is

       5      already funded.

       6             It's Penn Access for Metro-North.

       7             SENATOR SQUADRON:  So we're talking --

       8      okay --

       9             THOMAS F. PRENDERGAST:  Yes.

      10             SENATOR SQUADRON:  -- for Metro-North?

      11             THOMAS F. PRENDERGAST:  Yes.

      12             SENATOR SQUADRON:  And we're talking things

      13      like about countdown clocks, so that people can make

      14      smart, informed decisions about which subway to get

      15      on?

      16             THOMAS F. PRENDERGAST:  That's more in the

      17      enhanced part of the program: improve the level and

      18      quality of service.

      19             SENATOR SQUADRON:  Great.

      20             And, we're talking making sure that we don't

      21      have cars and switches and third rails that break

      22      down?  That's something that --

      23             THOMAS F. PRENDERGAST:  That's in the state

      24      of good repair.

      25             SENATOR SQUADRON:  Great.







                                                                   108
       1             So I just want to be very clear:  We cut that

       2      $32 billion, we're going to be cutting something

       3      that, in your 40-year experience, you think is

       4      valuable and important for the system?

       5             THOMAS F. PRENDERGAST:  Yes.

       6             SENATOR SQUADRON:  Thank you very much.

       7             I also just want to say, briefly, I think we

       8      all know that, as the Chair talked about,

       9      route-shopping is going on like crazy.

      10             It goes on across my district.  And

      11      Broome Street goes on through my district in

      12      Brooklyn Heights.  And so I think we do know that's

      13      a huge problem that we need to --

      14             THOMAS F. PRENDERGAST:  Route-shopping, or

      15      bridge-shopping?

      16             SENATOR SQUADRON:  Bridge-shopping.

      17             THOMAS F. PRENDERGAST:  Okay.

      18             SENATOR SQUADRON:  Thank you.

      19             SENATOR GOLDEN:  Thank you, gentlemen.

      20             SENATOR MARCELLINO:  Gentlemen, I appreciate

      21      your time.

      22             That's last question for this Panel, and

      23      thank you very much for coming.

      24             Tom, look forward to hearing from those --

      25      those reports, if you could send them to us, we







                                                                   109
       1      would appreciate that.

       2             THOMAS F. PRENDERGAST:  Yes.

       3             And we'll bring Pat out to meet with you.

       4             SENATOR MARCELLINO:  Thank you.

       5             THOMAS F. PRENDERGAST:  He really wanted to

       6      be here today.

       7             SENATOR MARCELLINO:  Send him our best

       8      wishes.

       9             The next panel is William Henderson and

      10      Ellyn Shannon.

      11             Thank you very much for your willingness to

      12      attend.

      13             You are part of the Public Citizen Advisory

      14      Council [sic].  And your mission, I guess, is to --

      15      and if I'm incorrect in this, you can correct me,

      16      please -- is to provide uses of the MTA subway, bus,

      17      and commuter-rail services, and give a voice in the

      18      formulation and implementation of MTA policy, and

      19      hold the MTA board and the MTA management

      20      accountable to the riders?

      21             WILLIAM HENDERSON:  That's essentially

      22      correct, Senator.

      23             SENATOR MARCELLINO:  Okay.

      24             You're on.

      25             WILLIAM HENDERSON:  Okay, we appreciate the







                                                                   110
       1      opportunity to testify this morning.

       2             The last eight years have been a difficult

       3      period for the MTA.

       4             It's hard to conceive that riding high in the

       5      revenue is from dedicated real-estate taxes.

       6             The MTA, in 2005 and 2006, was able to offer

       7      riders a holiday bonus that included half fare on

       8      weekends, bonus days, metro cards, free off-peak

       9      tickets on commuter rail -- and free off-peak

      10      tickets on commuter railroads.

      11             Soon after, the economy crashed, and the good

      12      times ended.

      13             Since 2008, MTA has struggled mightily.

      14             The MTA's efforts to budget the balance have

      15      been outlined by the chairman, including

      16      $1.1 billion in annual cost-saving measures.

      17             Unfortunately, they also included a package

      18      of service cuts approved in 2010 that produced a

      19      great deal of hardship for many riders.

      20             Improvements in the general economy have

      21      allowed the MTA to put back some of the those

      22      service cuts and improve service, starting in 2012,

      23      but fare increases agreed upon in connection with

      24      the MTA rescue package have really taken their toll

      25      on riders.







                                                                   111
       1             A series of fare increases that were put in

       2      effect since 2009 have severely impacted household

       3      budgets; at the same time, many riders are coping

       4      with stagnant or falling incomes.

       5             As a result of the upcoming fare increase, a

       6      family of two commuters from Wassaic on

       7      Metro-North's Harlem Line, who use New York City

       8      transit to complete their journeys, will pay over

       9      $1250 per month in monthly commuting costs, and

      10      that's before taking into account the additional

      11      cost of transportation to their home station.

      12             This is an extreme example, but it's not an

      13      isolated one.

      14             The situation is the same on Long Island.

      15             The situation is the same in the northern

      16      parts of the Metro-North area.

      17             People are hurting because of commuting

      18      costs.

      19             The PCAC and its councils don't believe

      20      riders should be held harmless from increasing costs

      21      that the MTA faces.

      22             It's long been our position that riders, like

      23      all who benefit from the system, must pay their fair

      24      share of the cost of operating the system.

      25             Our concern, is that MTA riders already pay







                                                                   112
       1      the highest percentage of operating expenditures of

       2      any public-transit users in the nation.

       3             In 2012, this figure was 53.2 percent,

       4      compared with 33.2 percent for systems nationally.

       5             Subway and bus riders pay 52.6 percent of

       6      expenditures.

       7             Subway riders alone pay 73.2 percent.

       8             The fare hikes in 2013 and 2015 have the

       9      effect of increasing the proportional costs that's

      10      borne by riders.

      11             The primary factor exerting pressure on MTA's

      12      finances, and, consequently, on the fare, is the

      13      authority's immense bond obligation for capital

      14      expenditures.

      15             We continue to be concerned about the MTA's

      16      debt load, which, as of the end of last year, as the

      17      chairman said, tops $34 billion.

      18             The MTA expects its annual debt-service

      19      expenses to rise, from 2.3 billion in 2014, to

      20      2.9 billion in 2018.

      21             To put in it perspective, the 2018 debt

      22      service that the MTA has to pay will amount to over

      23      49 percent of the fares that it collects.

      24             Increasing the burden without new revenues to

      25      meet debt-service needs is not a viable option.







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       1             The challenges facing the MTA system demand a

       2      balanced approach, but one thing that's out of

       3      balance is the authority's spending on capital

       4      investments.

       5             The MTA's spending on capital investments is

       6      programmed through a series of 5-year capital

       7      programs.

       8             The system has been in place since 1982 and

       9      it served the MTA system well.

      10             It's directed about $150 billion, in

      11      2014 dollars, to maintenance, improvement, and

      12      expansion, and it's enabled dramatic increases in

      13      service quality and quantity.

      14             Unfortunately, as you know, there's no

      15      approved capital program in place.

      16             The need for capital investment is ongoing,

      17      and we believe that the State has a responsibility

      18      to adequately provide for the MTA's capital needs so

      19      that vital work to maintain and improve bus,

      20      commuter rail, and subway service will not be

      21      delayed.

      22             There's a lot to do.

      23             Although infrastructure has been stabilized

      24      and reliability has improved greatly from the

      25      '70s and '80s, the MTA system requires constant







                                                                   114
       1      infrastructural replacement and renewal and

       2      maintenance to support this improved service.

       3             Rails and stations have to be renewed.  New

       4      buses, railcars, and locomotives must be purchased,

       5      and signal systems must be replaced and updated.

       6             The capital needs of the MTA go beyond

       7      maintaining the system in a state of good repair.

       8             This region faces great challenges in

       9      adapting to new weather patterns, and the MTA's

      10      assets must be hardened against more frequent and

      11      severe storms.

      12             Further, the ridership of the system is

      13      changing and expanding, as the chairman noted.

      14             We're seeing increasing demands on the MTA

      15      service.  Ridership is at levels not seen since the

      16      '40s and '50s, and not recorded at all.

      17             There has to be more capacity in the system

      18      to provide for these demands.

      19             The MTA needs modernized signal systems that

      20      include more trains to travel over the same tracks,

      21      and new fare systems that allow it to efficiently

      22      collect fares and speed bus boarding.

      23             It has to continue with development of better

      24      information systems, like the countdown clocks, the

      25      bus-time information system, help-point intercoms,







                                                                   115
       1      and these make travel more secure and efficient.

       2             The MTA has to follow through on the

       3      commitment that it and the City made to providing

       4      Rapid Bus service, and expanding and improving the

       5      bus network.

       6             It needs to provide new commuter-rail

       7      facilities and equipment to respond to changing

       8      population and development patterns on Long Island

       9      and the five MTA counties north of New York City,

      10      and to ensure that the ally RR and Metro-North

      11      service meets federal mandates and is as safe as

      12      possible.

      13             This isn't possible without a robust MTA

      14      capital program and the funding to carry that out.

      15             As the chairman noted, the PCAC, in

      16      cooperation with the Urban Land Institute of

      17      New York, recently released a study of the impact of

      18      investment in the MTA's capital stock on the economy

      19      of the area, and we have seen some notable

      20      conclusions from that.

      21             The findings are available online at

      22      KeepNYontrack.org, and we encourage people to take a

      23      look at those.

      24             For all the good that the capital program has

      25      done and all the promise it holds for the future,







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       1      there remain some serious issues in addition to the

       2      lack of a program.

       3             The first, is that the MTA investment and its

       4      capital assets is stunningly low.

       5             And you might think $32 billion is an awful

       6      lot of money, but the replacement value of the MTA's

       7      asset base is about a trillion dollars, as the

       8      chairman again noted.

       9             A more conservative figure that considers

      10      depreciation and other factors in a way consistent

      11      with the financials of major corporations is

      12      $485 billion.

      13             Even if we look at this lower figure, the MTA

      14      invests in its capital assets at a rate of

      15      1.1 percent per year, which is dramatically lower

      16      than private freight railroads that invest at rates

      17      between 6 and 7 percent.

      18             The MTA's relative investment rates is even

      19      lower when compared to regional utility companies

      20      and other firms in the transportation industry, like

      21      UPS and FedEx.

      22             Planning for investment in the MTA's asset

      23      base means nothing if the resources available are --

      24      necessary to achieve plans are unavailable.

      25             And the MTA, and -- the MTA program -- in







                                                                   117
       1      terms of the MTA program, the PCAC remains

       2      apprehensive that the resources available will not

       3      be -- the resources necessary will not be there to

       4      make the transportation investments that are needed.

       5             Even at the relatively low reinvestment rate

       6      that the MTA has proposed, only about one-half of

       7      the funding is there to make these investments.

       8             The MTA's proposed capital program has a big

       9      funding gap of $15.2 billion, and that assumes that

      10      federal support is going to be maintained as it has

      11      in the past.

      12             Recent history does little to quell our fears

      13      of getting an adequate capital program approved.

      14             In 2009, to 2014, the capital program was

      15      fully funded when it was initially adopted.  It was

      16      reduced to meet available funding, and was largely

      17      financed through increased debt backed by funding

      18      originally intended to provide capital funds on a

      19      pay-as-you-go basis.

      20             The outlook this time around is, if anything,

      21      worse.

      22             This year's executive-budget proposal is not

      23      encouraging.

      24             While the capital program is the MTA's most

      25      critical need for the future, the executive budget







                                                                   118
       1      does not address MTA's capital-resource needs.

       2             MTA is now unable to make substantial

       3      long-term commitments to capital spending,

       4      threatening the state's construction and industrial

       5      sectors and the thousands of jobs that depend upon

       6      them.

       7             We continue to be concerned that the -- by

       8      the ongoing diversion of revenues from dedicated

       9      transit funds to uses other than those for which

      10      they were originally intended.

      11             We've heard about the executive budget taking

      12      $121.5 million in transit revenues from the

      13      MTOA fund and using it to fund new capital

      14      expenditures.

      15             We also have heard last year about a

      16      diversion of dedicated funds.  Use it -- found that

      17      in -- use of $20 million per year of MTOA funds to

      18      pay off state service-contract debt.  And this is

      19      scheduled to be repeated every year through 2019.

      20             An improving economy is strengthening the

      21      MTA's financial position, but this positive

      22      development could be short-lived without adequate

      23      financial support from the State.

      24             The system is simply not in a position where

      25      it can afford to lose revenue sources without some







                                                                   119
       1      kind of replacement revenue.

       2             The MTA's adopted budget projects a closing

       3      cash balance of only $64 million for 2015.

       4             That's a lot of money, but it's a razor-thin

       5      margin for an organization with an annual budget of

       6      over $13 billion, and it's less than 1/2 of

       7      1 percent of the MTA's total expenditures.

       8             Because the budget is so precarious, funding

       9      stability is critical.

      10             The PCAC has, for many years, called upon our

      11      elected officials to provide the MTA with a balanced

      12      package of funding sources that, taken as a whole,

      13      are stable, reliable, and able to grow in line with

      14      the increased cost of providing the transportation

      15      sources and services that are needed.

      16             We continue to believe that safeguards, such

      17      as a meaningful lockbox for dedicated funds, should

      18      be in place to prevent raids on MTA funding.

      19             While there's reasons to be cautiously

      20      optimistic, changes can be quick.

      21             Many of us remember that -- as I said before,

      22      that the MTA, in 2005-2006 had plenty of money, and

      23      that evaporated very quickly in the financial crises

      24      of 2009, and service cuts and funding cuts in 2010.

      25             Without new debt -- without new funding, the







                                                                   120
       1      only way to fund the capital program will be more

       2      bonding against additional revenues.

       3             But it's not reasonable to ask an entity that

       4      can't meet its full operating costs through the fare

       5      box, and can only, with great difficulty, produce a

       6      self sustaining-budget, to fund capital expenditures

       7      through bonds.

       8             This strategy will only increase the MTA's

       9      debt load of $34 billion, and further increase the

      10      annual debt service projected to reach 2.9 billion

      11      in 2018, and amount to over 49 percent of fares

      12      collected.

      13             We believe that the State must return to its

      14      legacy of support for the MTA, and ensure that

      15      funding for the 2015-2019 capital program will not

      16      put pressure on the MTA's operating budget or on its

      17      fares and tolls.

      18             Along with riders, those who receive

      19      advantages from the MTA system also include

      20      motorists, business, and real-estate interests, and

      21      all who depend on the economic viability made

      22      possible by the MTA system.

      23             These persons and entities have traditionally

      24      paid their share of the cost of operating the MTA

      25      through a series of dedicated taxes and state







                                                                   121
       1      general-fund appropriation, and the State must now

       2      take a fresh look at funding sources that are tied

       3      to benefits that the system generates.

       4             Creating a strong and equitable funding

       5      structure for the MTA may include consideration

       6      measures such as a rationalization of bridge and

       7      tunnel crossing charges to generate additional toll

       8      revenue, while reducing the negative impacts of

       9      bridge shopping on neighboring communities.

      10             And you'll hear more about this, I'm sure, in

      11      Mr. Matthiessen's presentation.

      12             Revenues could also be increases -- increased

      13      through adjustments to some of the existing revenue

      14      sources, uncapping some of the revenue sources that

      15      are currently capped.

      16             Another possibility is capturable portion of

      17      the value created through the construction or

      18      improvement of transit system -- transit facilities

      19      through special-assessment districts or other means.

      20             The State once before rose to the challenge

      21      of rescuing the MTA from its financial crises, and

      22      we again ask for you to rise to this challenge and

      23      create a more useable and efficient system.

      24             The downstate region in our state would not

      25      exist in their present form without public







                                                                   122
       1      transportation service provided by the MTA and its

       2      operating agencies.

       3             It's only proper that those that are

       4      benefited by the system provide for its support.

       5             We ask our elected officials to initiate and

       6      guide a broad public discussion of the funding

       7      structure that assures long-term success of the

       8      MTA system.

       9             Thank you.

      10             SENATOR MARCELLINO:  Thank you.

      11             Question:  Does the PCAC support the MTA's

      12      policy of increasing fares and tolls every

      13      two years?

      14             WILLIAM HENDERSON:  We support the policy of

      15      the riders being one of many funding sources that

      16      meet increasing costs.

      17             We -- what we don't like is that the riders

      18      are being asked to pay an ever-increasing proportion

      19      of costs of providing service.

      20             Whether it's -- you know, there is some merit

      21      in doing fare increases every two years, I won't

      22      deny that.

      23             It's better than the system that prevails,

      24      say, in New Jersey, where you don't have any fare

      25      increases for 10 years, and then you have a whopper.







                                                                   123
       1      A 25 percent increase, I think, the last time they

       2      did it.

       3             That's really tough on a budget.

       4             If your subway fares have gone up a quarter

       5      every two years, and maybe every four years, because

       6      you're alternating the passes and the cash fare,

       7      that's a little bit easier to handle on the

       8      budgetary side.

       9             I mean, somebody's got to pay for this,

      10      Senator.  And we don't think that riders ought to be

      11      exempt, but riders should -- by the same token,

      12      riders shouldn't be taken advantage of.  Riders

      13      shouldn't continue to bear more and more of the

      14      cost.

      15             SENATOR MARCELLINO:  Well, the reason I raise

      16      it is because the fares and tolls, as you know, will

      17      be going up an average of 4 percent in -- which is,

      18      you know, 2 percent annually, later this month.

      19             The previous increase took place in 2013 at

      20      7 1/2 percent.

      21             And the next increase is scheduled for

      22      March 2017, 4 percent.

      23             And until the current increase, the MTA fare

      24      and toll increases over the past several years have

      25      significantly exceeded the inflation rate.







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       1             WILLIAM HENDERSON:  That's correct.

       2             SENATOR MARCELLINO:  So, by that, is the --

       3      in your opinion, is the MTA doing a good job?

       4             WILLIAM HENDERSON:  I think the MTA is doing

       5      what it has to do.

       6             Unfortunately, there's only -- there's

       7      basically only two things that the board can do to

       8      improve its financial position.

       9             One is increase fares and tolls; the other is

      10      cut services.

      11             In the absence of other funding -- in the

      12      absence of other funding --

      13             SENATOR MARCELLINO:  Do we reach a point

      14      where we drive people out who need the service?

      15             WILLIAM HENDERSON:  Yes.

      16             SENATOR MARCELLINO:  And do we reach a point

      17      where, if we keep cutting and cutting and cutting,

      18      we will drive people out --

      19             WILLIAM HENDERSON:  Yes, we do.

      20             SENATOR MARCELLINO:  -- and put them -- we

      21      don't want them back in their cars.

      22             WILLIAM HENDERSON:  Yes, we do.  And I think

      23      we drive people out who are -- you know, like you

      24      say, the household that's paying $1250 a month to

      25      commute, you're driving those people out.







                                                                   125
       1             You are saying, you know, don't work in the

       2      city anymore because you've got to generate a

       3      $15,000 nut, after taxed income, just to pay your

       4      commuting costs before you get dollar one to put in

       5      your family's needs.

       6             SENATOR MARCELLINO:  Where I live, the

       7      average income -- and then I'll move on to another

       8      question -- but the average income is about

       9      $60,000 a year.

      10             Use of the Long Island Railroad to the city,

      11      and then with a subway card, because they're going

      12      to need one after that, maybe a cab, puts it over

      13      about $5,000 annually.

      14             WILLIAM HENDERSON:  Yeah.

      15             SENATOR MARCELLINO:  That's a pretty big

      16      chunk of your money, and then you're living on the

      17      rest.

      18             That doesn't even get to food and fuel, and

      19      heat, which is, by the way, absent in this room.

      20             WILLIAM HENDERSON:  Yeah.

      21                  [Laughter.]

      22             WILLIAM HENDERSON:  It makes it very

      23      difficult.  And, you know, it's compounded by the

      24      fact that folks tend to move out farther to get more

      25      housing value for their money --







                                                                   126
       1             SENATOR MARCELLINO:  Absolutely.

       2             WILLIAM HENDERSON:  -- which increases their

       3      transportation costs.  So things that are --

       4             SENATOR MARCELLINO:  I use -- I use where

       5      I live, because it's Centre Island, basically.

       6             WILLIAM HENDERSON:  Yeah, I mean, folks who

       7      are living out in Smithtown probably are -- you

       8      know, they may enjoy the area, but they may also

       9      enjoy the fact that they can actually buy a house

      10      that they can afford out there, rather than a little

      11      bit closer in.

      12             SENATOR MARCELLINO:  I hear you.

      13             Senator Martins.

      14             And we've been joined by Senator Felder, and

      15      he can prepare his questions.

      16             SENATOR MARTINS:  Thank you both for being

      17      here.

      18             One of the concerns I have is, as we go

      19      through this process of capital reinvestment in the

      20      MTA, and we all understand how important the MTA is

      21      as an asset and economic engine, but I always get

      22      the sense that these reinvestments, rather than just

      23      being maintenance, are upgrades.

      24             And although upgrades are fine, if we can

      25      afford them, that, oftentimes, the same thing can be







                                                                   127
       1      done for far less if we're just talking about

       2      maintaining a system as it currently stands.

       3             And we understand that people can't afford to

       4      continue to pay ever-increasing costs.

       5             I don't live out in Smithtown.

       6             I'm from Mineola; and, so, you know, the cost

       7      of someone traveling to the city during peak hours

       8      is significant.  It is significant.

       9             And if you add a number of people, and if a

      10      family goes in, and I made the point before, it

      11      becomes prohibitive.

      12             So do you, as part of the PCAC, evaluate, not

      13      only the investment in infrastructure, but also,

      14      qualitatively, what types of investment they're

      15      making, and whether or not it is justified or

      16      reasonable to do it at this point?

      17             ELLYN SHANNON:  In this report that we

      18      partnered with the Urban Land Institute on, we

      19      looked at the global competitiveness.

      20             So, what are other systems doing?

      21             We also looked at the sustainability.

      22             And particularly after "Sandy," the need for

      23      upgrades has become that much more important to try

      24      and make the system a much more resilient system.

      25             And so, in light of those two things, and







                                                                   128
       1      then there's the third factor that they need to

       2      accommodate, is it gets very hard getting

       3      replacement parts and doing it the way it used to be

       4      done; whether you're upgrading your switches, which

       5      is a major need right now on a 100-year-old system.

       6             And, so, those three factors make it so

       7      they're not really luxury items.  They're items that

       8      are necessary in order to keep up and make it a

       9      system that functions as well as possible.

      10             WILLIAM HENDERSON:  I think I would add to

      11      that, some of these upgrades are necessary for the

      12      demands that are being put on the system.  And

      13      I mean that in terms of quantity and in terms of

      14      quality.

      15             The signalization improvements that the MTA

      16      is moving forward on are absolutely critical in

      17      putting more trains out on the same amount of track.

      18             We're not going to -- in -- with some limited

      19      exceptions, we're not going to be building many new

      20      subways.

      21             We have to put more -- move more people

      22      through the existing subways, and the only way you

      23      can do that is by improving signalization.  You

      24      know, basically, getting more trains on that same

      25      piece of track.







                                                                   129
       1             The other thing is, people are conditioned to

       2      want more information.

       3             So, you know, it used to be okay to lean over

       4      the track and look for the light down -- you know,

       5      down three or four stations down the track.

       6             Now people want to know when the next train

       7      is coming.  "How many minutes am I going have to

       8      wait?"

       9             You know, a lot of that has to do with, you

      10      know, the information age.

      11             But, if you look at the reaction people have

      12      had to the countdown-clock technology, it has been

      13      overwhelmingly positive, and, actually, has been one

      14      of the things that I think has improved people's

      15      view of the transit system more than any other

      16      element.

      17             What has happened -- what happened with those

      18      countdown clocks and -- is that they were,

      19      basically, an add-on to a system of train control.

      20             The countdown clocks, if you look at what --

      21      if you wanted to say, What would it cost us to put

      22      countdown clocks on the system, working from whole

      23      cloth? it would be a very high figure.

      24             If you said, What does it cost us to add on

      25      countdown clocks under the system where we're







                                                                   130
       1      already putting in fiber optics and train control?

       2      it wasn't all that expensive, and it's had big

       3      dividends.

       4             So I think it's -- it's not -- it's not a

       5      matter of -- in a sense, it's not a matter of being

       6      cheap.  It's a matter of looking for value.  And

       7      it's a matter of getting -- you know, if you can get

       8      something that improves people's experience, and do

       9      it in a way that's an acceptable value, you do it.

      10             And I think they've made -- you know, they've

      11      made the right decision there.

      12             SENATOR MARTINS:  No, I understand, but, you

      13      know, in the abstract, we can all sit here and agree

      14      that we need all of these upgrades, and we need to

      15      spend this money on capital improvements.  And then

      16      we sit back and we realize that it means borrowing,

      17      you know, an unimaginable amount of money.

      18             And, we also have to consider the

      19      consequences of authorizing borrowing that kind of

      20      money on future expenses, because they have to

      21      maintain that system as well, and the complexity of

      22      the new systems that are being placed in service; as

      23      well as, you know, what's it going to cost the

      24      average rider, whether on the Long Island Railroad,

      25      Metro-North, buses, or the subway system?







                                                                   131
       1             How much is it going to cost at a time when

       2      people just can't afford it?

       3             And, so, we can advocate for more, in the

       4      abstract, but, how much is it going to cost,

       5      ultimately, to put all this in place when there

       6      isn't a system to sort of absorb that cost right

       7      now?

       8             How do we do it?

       9             WILLIAM HENDERSON:  Well, as I said before,

      10      somebody's got to pay for this, and that's -- you

      11      know, that's the bottom line.

      12             And if the money isn't there to pay for this,

      13      you can't do it.

      14             However, there are some -- however, a lot --

      15      a lot of the money that's in the capital program is

      16      absolutely necessary for the system to operate.  If

      17      you don't spend it, the system will begin to break

      18      down, and begin to break down fairly quickly.

      19             You know, people look at the -- people look

      20      at what they call the "mega projects."  They look at

      21      East Side access and the Second Avenue subway.

      22             They really make up a fairly small portion of

      23      the capital program.

      24             SENATOR MARTINS:  Very small portion.

      25             WILLIAM HENDERSON:  Yeah.







                                                                   132
       1             Most of the money that's going in is going

       2      into maintenance, repair.

       3             And a lot of the money that's going in, in

       4      upgrades, or in the "enhanced" portion of the

       5      capital program, as the MTA calls it, is -- is a --

       6      expenditures on replacing things that are not

       7      available anymore.

       8             You can't go out -- you can't go out and buy

       9      the signal system that is in place now.

      10             At one time, the MTA had people working,

      11      rewinding relays by hand, because you can't buy the

      12      relays anymore.

      13             You have to move forward.

      14             It's like trying to -- you know, trying to

      15      work on a tube-type television.  It's almost more

      16      expensive to try to recreate what's there than it is

      17      to move on to the next technology.

      18             SENATOR MARTINS:  Which begs the next

      19      question:  How did we get here?

      20             I mean, how did we get to such a state of

      21      disrepair when we want to reach a state of good

      22      repair?

      23             How did we get to such a state of disrepair,

      24      where we're looking at the potential of borrowing

      25      that much money, literally, doubling the amount of







                                                                   133
       1      outstanding debt for the MTA that they've acquired

       2      over their entire history; doubling it in the next

       3      five years?

       4             And has there been a lack of attention to

       5      these details over the history of the MTA, that now

       6      places it more in focus for this next 5-year plan?

       7             WILLIAM HENDERSON:  Well, one thing

       8      I would say, is the quality of the system has been

       9      improving, from the beginning of the capital

      10      programs, up through the present time.

      11             That doesn't change the fact that it is

      12      incredibly expensive to maintain that system.

      13             I mean, it's -- you know, we're talking about

      14      a huge asset.  A trillion -- if you want to take the

      15      chairman's view of it, a trillion dollars.

      16             If you want to take an accountant's view of

      17      it, it's $482 billion; half a trillion dollars.

      18             It's still huge.

      19             And what we're investing in maintaining that

      20      system is, at the lower number, about 1 percent of

      21      the -- about 1 percent of its value.

      22             What the freight railroads, the Class 1's,

      23      the Union Pacific, the Norfolk Southerns, their

      24      investment is 6 to 7 percent of the value of their

      25      assets.







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       1             Now, it's not, strictly speaking, comparable.

       2      There are differences.

       3             But you look at FedEx and UPS, they're

       4      investing upwards -- close to double-digits of the

       5      value of their assets in maintenance, repair, and

       6      improvement.

       7             ELLYN SHANNON:  I think one other area, if

       8      you want to look at it over the 30-year period and

       9      what the investment money has done so far, it has

      10      increased the capacity of the system for a million

      11      riders -- a million more riders.

      12             And now they're expecting a million more on

      13      top of that.

      14             The complexity that's being faced right now

      15      is, ridership patterns are changing, and, you have

      16      times of day changing too.

      17             So where, on Long Island, you have a majority

      18      of a two-track system, and sometimes a one-track

      19      system, you have to find ways of, you know, getting

      20      more capacity out of your tracks.  And the same with

      21      the subway system.

      22             The subway system, really, on a signaling

      23      basis, the A Division has been done.

      24             The B Division is substantially bigger, and

      25      it hasn't even -- you know, they haven't gotten to







                                                                   135
       1      that.

       2             So I don't think it's a matter of that it's

       3      fallen down over the 30 years.

       4             It's that recovering from all those years of

       5      disinvestment on a 100-year-old system is taking a

       6      long time and it costs a lot of money.

       7             WILLIAM HENDERSON:  I mean, if you look at

       8      the -- look at it this way:  If the average life of

       9      an asset is 33 years, that means, to keep it up, you

      10      have to spend 3 percent every year on that asset.

      11      Either put it in a sinking fund so it can go and

      12      replace the asset, or, put it in periodic

      13      maintenance, improvement, renewal, so, you know, you

      14      spend it over the life.

      15             They're not doing that right now, you know,

      16      and we're concerned about that.

      17             We're very concerned that there is adequate

      18      money on the capital side to address the needs that

      19      are out there.

      20             Yeah, it's a lot of money, it's a big number,

      21      but, you know, so is the value of the system.

      22             SENATOR MARTINS:  Of course, and someone's

      23      got to pay for it in the end.

      24             The only other thing I'll leave, and it's

      25      more of a rhetorical point than anything else:







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       1             If there's going to be a $30 billion

       2      investment over the next 5 years, and then we can

       3      prepare for another $30 billion investment the

       4      5 years after that, this is not a cure-all or a

       5      fix-all.  This is just another step along the way.

       6             And, so, the commitment that needs to be made

       7      for this 5-year plan also has to be made in the

       8      context of the next 5-year plan, and the one after

       9      that, and the one after that.

      10             And if we're in a position where we're going

      11      to be borrowing tens of billions of dollars every

      12      five years, how much can the system sustain in terms

      13      of debt load, and how much can we expect our riders

      14      to have to pick up?

      15             If we consider that, if we make this

      16      investment, then we have to make the next one.  And

      17      if we make this one, then we can't afford not to

      18      make the next one.

      19             And it is just a self-perpetuating --

      20      frankly, self-perpetuating reality that it's going

      21      to add cost to the bottom line and increase fares to

      22      a level that is unsustainable.

      23             And I'm concerned about that because we're

      24      only talking about the next five years.

      25             But, inherent in our discussion is a much







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       1      longer commitment and much more expensive

       2      commitment.

       3             WILLIAM HENDERSON:  I absolutely agree with

       4      that.

       5             SENATOR MARCELLINO:  We are going to have to

       6      leave that as a rhetorical question.

       7             We're running out of time.

       8             Senator Felder?

       9             SENATOR FELDER:  No, I --

      10             SENATOR MARCELLINO:  No, you don't have to

      11      push that.

      12             SENATOR FELDER:  No, I know I don't have to.

      13             I just wanted to say that I apologize for not

      14      getting here earlier.

      15             It's such an important issue, I want to thank

      16      you both for all the work you are doing on this

      17      issue.

      18             SENATOR MARCELLINO:  Thank you, Simcha.

      19             I just have one quick question, and I'm not

      20      looking for a lengthy answer on this.  A yes or no

      21      would be great.

      22             Should the City increase its contribution,

      23      from $100 million, to $125 million as has been

      24      proposed?

      25             WILLIAM HENDERSON:  Yes.







                                                                   138
       1             The City was contributing much more in the

       2      past, and should return to a pattern that reflects

       3      that reality.

       4             SENATOR MARCELLINO:  Thank you very much for

       5      your time.  Appreciate it.

       6             WILLIAM HENDERSON:  Thank you.

       7             SENATOR MARCELLINO:  The next group is

       8      LaTonya Crisp-Sauray, from the Transit [sic] Workers

       9      Union; Dr. James Melius, of the New York State

      10      Laborers; and, George Trickio, from the New York

      11      State Laborers, Local 1298.

      12             LATONYA CRISP-SAURAY:  Thank you.

      13             Good morning.

      14             My name is LaTonya Crisp-Sauray.  I am the

      15      recording secretary of Transport Workers Union,

      16      Local 100, the largest transportation union in the

      17      nation, which represents 40,000 bus, subway, and

      18      bike-share workers throughout New York City and

      19      Westchester County.

      20             I want to thank Senator Marcellino and

      21      Senator Robach for giving me the opportunity to

      22      provide testimony on the Metropolitan Transportation

      23      Authority's budget and capital program.

      24             The purpose of my testimony is to encourage

      25      the full funding of the MTA's 32 billion capital







                                                                   139
       1      plan.

       2             As a bus operator, I have firsthand knowledge

       3      about the need for the government's full financial

       4      backing of the MTA capital program.

       5             As you all know, it is imperative that we

       6      keep New York's economy moving forward.

       7             Citizens rely on the MTA to get to their

       8      destinations, work, medical appointments, and places

       9      of worship.

      10             Businesses depend on the transit system for

      11      customers, and to allow their employees to get back

      12      and forth to work safely, quickly, and efficiently.

      13             Students rely on the MTA to get to school to

      14      further their education, and strengthen our city and

      15      state.

      16             Let's talk about public transportation and

      17      why it's important.

      18             The MTA's 4-year 32 billion capital plan

      19      entails critical investments to maintain 1 trillion

      20      in assets and to expand the system.

      21             This plan will meet the needs of New York's

      22      vibrant, growing economy.

      23             More than half of the capital program, or,

      24      approximately 17 billion, is allocated for the

      25      New York City Transit Authority and the MTA bus







                                                                   140
       1      company.

       2             These two agencies alone served more than

       3      2.4 billion passengers in 2014, accounting for more

       4      than twice the ridership of the top 14 transit

       5      agencies in the United States.

       6             These figures clearly demonstrate the transit

       7      system's importance in New York's economic health.

       8             The importance of state of good repair:

       9             First, we must invest in maintaining a state

      10      of good repair.

      11             Our transit system is over 100 years old and

      12      regularly encounters problems due to infrastructure

      13      deterioration.

      14             7 major asset categories are more than

      15      20 percent backlogged in state-of good-repair

      16      investments.

      17             These include stations, main-line signals,

      18      communications, tunnel lighting, power, ventilation,

      19      and subway shops.

      20             As a bus operator, I know firsthand that

      21      failing to properly monitor and rehabilitate

      22      structures, equipment, and vehicles results in

      23      frustration, and often in dangerous conditions, for

      24      all.

      25             Injuries and delays in service costs millions







                                                                   141
       1      of dollars in lost productivity.

       2             Investing in a state of good repair allows us

       3      to avoid preventable breakdowns that curb economic

       4      activity and pose risks to public safety.

       5             The role of public transportation is

       6      supporting job growth.

       7             We must invest in system expansions in order

       8      to adapt to population shifts and ridership trends.

       9             Workers require reliable transportation for

      10      their daily commutes.

      11             In Sunset Park in Brooklyn, and Hunts Point,

      12      recent government funding have invested into

      13      building the waterfronts and marine terminals.

      14             The revitalization of these projects have

      15      contributed to new emerging jobs.

      16             Neighborhoods, such as Sunset Park in

      17      Brooklyn and Hunts Point in the Bronx are adding

      18      thousands of jobs to the economy; yet, these

      19      communities lack adequate public-transit services

      20      that help residents get to work within 40 minutes.

      21             Proposals for bus rapid transit:

      22             Bus rapid transit is an ideal solution to

      23      this problem.

      24             At a fraction of the cost of new subway

      25      construction, bus rapid transit offers flexible and







                                                                   142
       1      fast surface transportation.  The incorporation of

       2      bus-rapid-transit elements, such as dedicated lanes,

       3      priority signaling, and real-time travel

       4      information, will produce greater travel speeds,

       5      frequency of service, and capacity.

       6             Full-featured bus rapid transit will provide

       7      New Yorkers with direct and accessible connection to

       8      subway services.

       9             BRT enhancement access to jobs for lower-wage

      10      workers throughout the entire city, to health care

      11      for people with disabilities, and seniors, and to

      12      greater educational opportunities.

      13             A true BRT network will also reduce citizens'

      14      reliance on cars, fossil fuels, and enable the city

      15      to shrink its carbon footprint.

      16             In view of these benefits, I propose that the

      17      State support investments in brand-new

      18      bus-rapid-transit routes in the Bronx and Brooklyn.

      19             The routes in the Bronx will connect

      20      Pelham Bay and East Chester to East Harlem,

      21      servicing Co-Op City, Baychester, Pelham Gardens,

      22      Morris Park, Port Chester, Sound View, Clason Point,

      23      Hunts Point, Port Morris, and Mott Haven.

      24             At its southern-most terminus, this route

      25      will serve passengers using the future Second Avenue







                                                                   143
       1      subway at 125th Street.

       2             The route in Brooklyn will connect

       3      Sunset Park with John F. Kennedy International

       4      Airport, servicing Borough Park, Windsor Terrace,

       5      Prospect Park, Lefferts Gardens, Flatbush Ditmas

       6      Park, East Flatbush, Brownsville, East New York,

       7      Lindenwood, and Howard Beach.

       8             Both of these routes would [unintelligible]

       9      residents in transit-underserved communities to

      10      major hospitals such as Jacoby Medical Center and

      11      Kings County Hospital which are key centers of

      12      employment in the health-care sector.

      13             Bus rapid transit will significantly improve

      14      the quality of life and broaden economic

      15      opportunities for 660,000 residents living within a

      16      half mile of these routes.

      17             Compared with local bus service, bus rapid

      18      transit in these communities will connect 27 percent

      19      more workers to jobs within a 40-minute commute,

      20      and, on average, each worker will have access to

      21      30,000 jobs.

      22             It should be noted that more than 60 percent

      23      of the workers who live along the proposed BRT

      24      routes earn less than $37,000 a year.

      25             However, enhanced funding for the BRT would







                                                                   144
       1      allow the average low-income worker traveling to

       2      over 20,000 jobs for which they qualify.

       3             A good return on investment:

       4             Together, these two bus-rapid-transit routes

       5      will cost 120 million in initial capital

       6      construction; yet, these projects will offer good

       7      return on the public's investment.  The routes will

       8      create 382 new jobs, including direct jobs for

       9      downstate transit workers and upstate

      10      bus-manufacturing positions.

      11             Also, bus rapid transit will add

      12      approximately 20 million in value to the state

      13      economy, produce over 50 million in industry

      14      activity, and result in a 2 million increase in

      15      state and local tax revenues during the year of

      16      construction.

      17             Once the routes are operating, they will

      18      directly employ 234 transit workers, supporting

      19      another 60 jobs throughout the economy, produce

      20      almost 10 million in industry activity, and result

      21      in an 800,000 increase in state and local tax

      22      revenues.

      23             Every dollar invested in these two projects

      24      will stimulate 1.68 in economic activity for the

      25      entire state.







                                                                   145
       1             Government financing of the MTA:

       2             Adequate funding is vital to ensuring

       3      quality, affordable, safe, and accessible public

       4      transportation for the present and for the future.

       5             Government financing of the MTA preserves the

       6      payroll mobility tax, payroll mobility tax

       7      replacement funds, and MTA to forestall fare hikes

       8      or service cuts.

       9             Consider requiring for-hire car-sharing

      10      companies to pay a 50-cent surcharge, like

      11      Yellow taxicabs.

      12             For example, in 2013, since Uber provided

      13      over 100,000 rides per week in New York City, a

      14      50-cent fee on those rides would have resulted in at

      15      least 2.6 million annually.

      16             The revenue from such a project would

      17      increase yearly.

      18             The bottom line, is that New York can't

      19      afford to delay investments in public

      20      transportation.

      21             Failing to act now will cost us millions in

      22      growth potential for our economy, and hundreds, if

      23      not thousands, of jobs around the state.

      24             We must fully invest now, and sustain our

      25      commitments to continue strengthening our economy.







                                                                   146
       1             Thank you.

       2             SENATOR MARTINS:  Well said.

       3             Thank you.

       4             DR. JAMES MELIUS:  Yes, good morning.

       5             My name is --

       6             SENATOR MARCELLINO:  I just would -- I'm

       7      looking at your lengthy --

       8             DR. JAMES MELIUS:  I am going to summarize.

       9             SENATOR MARCELLINO:  Summarize.

      10             DR. JAMES MELIUS:  Definitely.

      11             SENATOR MARCELLINO:  Bless you.

      12             DR. JAMES MELIUS:  Okay.

      13             That's what I was doing here, while I was

      14      sitting, just underlining certain sections.

      15             First of all, thank you both.

      16             I have with me, George Trickio, from our

      17      Local 1298 on Long Island.

      18             I knew that there would be two Long Island

      19      Senators still here this afternoon when I testified,

      20      so I foresaw that and brought George with me.

      21             And George also is in charge of our political

      22      action committee.

      23             Our union represents over 40,000 construction

      24      workers in the state, most of them living within and

      25      working within the area covered by the MTA.







                                                                   147
       1             We do have -- well, actually, probably, at

       2      the present time, several thousand of them working

       3      on MTA projects.

       4             We also are MTA customers.

       5             They and their families rely on the MTA to

       6      get to work.

       7             They rely on it functioning 24 hours a day

       8      because many of our members work evenings and night

       9      shifts, in some ways, to make sure that traffic

      10      keeps moving, and that projects can get done in a

      11      timely fashion.

      12             We are very supportive, obviously, of the

      13      need for an MTA capital plan.  And we think that

      14      what's contained in the current capital plan is both

      15      reasonable and appropriate, given the great needs of

      16      the MTA for increased investment.

      17             As we've already heard, many years of

      18      inadequate funding have left a large backlog of

      19      work.  And we can't go back and undo what's happened

      20      before, but we certainly need to maintain investment

      21      and maintain the growth.

      22             And, you know, the importance of that system

      23      means that we need to continue investing in a

      24      capital plan, as well as into the operational side

      25      of the program.







                                                                   148
       1             Right now we're at a stage where I think, in

       2      the last several years, our citizens and people

       3      throughout the state and the country understand the

       4      need for more capital investment, and for -- in our

       5      infrastructure; however, we've not really come up

       6      with an agreement and a consensus on how we're going

       7      to fund that.

       8             I think for the past few years, we've had the

       9      recession, and that sort of held us up in terms of

      10      being able to invest in infrastructure.

      11             But I think that we're, hopefully, past that,

      12      and we're, hopefully, at a time where we will have

      13      additional budget funding available to support this

      14      plan.

      15             I would like to make just four key points

      16      I think that need to be considered in looking at the

      17      funding of this plan, as well as addressing the gap.

      18             First, I think long-term funding is extremely

      19      important.

      20             It's important not only in terms of

      21      maintaining the system over a long period of time,

      22      as we've already heard, but it's also true for

      23      within the construction industry, to maintain a good

      24      base of contractors and trained workers for being

      25      able to conduct that work and do that work







                                                                   149
       1      efficiently and appropriately.

       2             And, so, we think it's important that that

       3      funding be maintained, and that 5-year plans and

       4      even longer-term plans are important.

       5             Secondly, we know that federal funding is a

       6      key part of the investment in our system.

       7             That's been very sporadic over the last few

       8      years in terms of the plan.

       9             We eventually have gotten the money, but it's

      10      been through a series of short-term fixes to the

      11      federal budget and not really long-term funding.

      12             So, I think one thing that we need to do as a

      13      state, and you as a legislator -- the Legislature,

      14      is to make sure that we are working hard down in

      15      Washington to get our fair share, and to continue to

      16      get long-term federal funding, because I think

      17      that's going to be key to helping us address this

      18      gap, as well as some of our other

      19      transportation-infrastructure gaps.

      20             Second -- thirdly, we need a balanced

      21      long-term approach.

      22             There's no single source of funding that

      23      I think is going to fill the gap or address the gap

      24      completely.

      25             The 5.1 billion wouldn't do that, what was







                                                                   150
       1      left from the bank settlements doing that, nor

       2      would, you know, increasing the payroll tax or

       3      increasing the fare, or any single area of source of

       4      funding for this system.

       5             We need to come up with a balanced approach.

       6             It's not easy to do.

       7             There are different priorities for different

       8      users, but I think that now is the time that we can

       9      address that.

      10             You'll hear later about the Move NY plan,

      11      which I think has a lot of good components to it.

      12             It also is still a work-in-progress, and it

      13      needs a lot of oversight and a lot of input,

      14      I think, from the Legislature, as well as other

      15      interest groups, in terms of what needs to be done.

      16             Our union did not support the original

      17      congestion pricing plan, because of concern of what

      18      that plan would do for our members that work in

      19      Manhattan, but, particularly, live outside of that

      20      area.

      21             And, people that live in Long Island,

      22      Brooklyn, Queens, and the Bronx, who would suddenly

      23      be paying much greater tolls to get into the city

      24      for their work, and it would take a significant

      25      amount out of their income.







                                                                   151
       1             Finally, I would just add one more concern;

       2      and that is, that there's the need for equity.

       3             We have other infrastructure needs.

       4             Our roads and bridges need more investment.

       5             Our water infrastructure, sewage treatment,

       6      we have aging utility gas pipelines, electrical

       7      systems, and so forth, that also need a significant

       8      amount of investment.

       9             That investment is in many billions of

      10      dollars.

      11             It's not going to be, you know, obtained

      12      overnight, but we need to balance what we do for the

      13      MTA, what we can do for roads and bridges, and what

      14      we can do for these other infrastructure needs.

      15             And let me end there, and I'll be glad to

      16      answer any questions.

      17             Thank you.

      18             SENATOR MARCELLINO:  Jack, any questions?

      19             SENATOR MARTINS:  No.  I think your point is

      20      well made.

      21             The MTA's critically important, but so are

      22      roads, bridges, and the need to continue to maintain

      23      the infrastructure that currently exist.

      24             And balance; balance is extraordinarily

      25      important.







                                                                   152
       1             But I did appreciate the comments with

       2      respect to the bus route, the transit, and the need

       3      to reinvest in infrastructure for mass transit.

       4             So, thank you very much.

       5             Thanks for your comments.

       6             SENATOR MARCELLINO:  I think that's the

       7      general concern that we all have here.  That one of

       8      the purposes of this hearing is to take a look at

       9      the Governor's proposals.

      10             In his budget, how can we, for lack of a

      11      better word, fix.

      12             I don't like that word.  It implies it's

      13      broken.  It isn't.

      14             Should we add to it?

      15             Should we adjust, should we realign some of

      16      the expenditures that were proposed?

      17             I don't know.

      18             We're looking at that now, so it's something

      19      that we need input on.

      20             Just a quick question.

      21             What suggestions might you offer, if you can

      22      be a little more specific, relative to that

      23      $15 billion gap that you heard about in the MTA's

      24      proposed $32 billion 2015-2019 capital program.

      25             How might that be funded, if we eliminate







                                                                   153
       1      that?

       2             DR. JAMES MELIUS:  I think we need to look at

       3      a balance.

       4             We need -- it's already been discussed here,

       5      New York City needs to invest more in it.

       6             I think, frankly, the State has.

       7             Where the State will -- you know, what's the

       8      particular sources?

       9             I think, you know, politically, and it's

      10      difficult with the issues like the payroll tax, as

      11      you both know.

      12             And I know, I live in Columbia County just

      13      north, and we are not included in the district, but,

      14      areas below us are and there's concerns there about

      15      it.

      16             We need to see where the federal funding will

      17      come from.

      18             But I think we need an overall.  We have to

      19      look at the gas tax; what can be done motor-vehicle

      20      taxes or other petroleum taxes to support our

      21      infrastructure.  And I think there are sources like

      22      that.

      23             And, frankly, at this point in time, I think

      24      we have to take a serious look at things like

      25      congestion pricing or tolling the East River







                                                                   154
       1      bridges, and coming up with an equitable system that

       2      spreads the cost of the system around the entire --

       3      all the users, and to the extent we can.

       4             It's not easy to do, but I think it needs to

       5      be done.

       6             SENATOR MARCELLINO:  No, it's not easy

       7      because, ultimately, we all know that the buck stops

       8      with the individual taxpayer.

       9             DR. JAMES MELIUS:  Yeah.  Oh, yeah.

      10             SENATOR MARCELLINO:  No matter where you get

      11      the money, it all is going to come out of somebody's

      12      pocket.  It's either the right pocket, left pocket,

      13      or back pocket, it's all coming out of the

      14      taxpayer's pocket.

      15             So, that's ultimately the end of it.

      16             Thank you very much for your information.  It

      17      goes into the record.

      18             We appreciate your time.

      19             DR. JAMES MELIUS:  Okay, thank you.

      20             Thank you both.

      21             SENATOR MARCELLINO:  Nadine Lemmon, and,

      22      Alex Matthiessen; New York and federal policy

      23      coordinator for the Tri-State Transportation

      24      Campaign, and, the campaign director for Move NY.

      25             And would I suggest the same situation.  If







                                                                   155
       1      you can summarize, it's better than reading the

       2      whole thing, because we have it from the report.

       3             NADINE LEMMON:  Sounds good.

       4             We understand.

       5             My name is Nadine Lemmon, and I am the

       6      New York and federal policy coordinator for

       7      Tri-State Transportation Campaign.

       8             TSTC is a non-profit policy and advocacy

       9      organization working for a more sustainable

      10      transportation network in New York, New Jersey, and

      11      Connecticut.

      12             I'm also testifying on behalf of the

      13      Empire State Transportation Alliance, a broad-based

      14      coalition of businesses, civic, and labor groups

      15      that came together in 1995 around the Transportation

      16      Bond Act, to advocate for the MTA capital plan.

      17             We support a fully funded MTA capital

      18      program, at $32 billion, as proposed by the MTA, and

      19      that is 22 billion for state of good repair.

      20             And, also, an additional 1 billion for the

      21      upstate capital program for transit.

      22             We're very pleased to hear the Governor's

      23      State of the State, that he supported several key

      24      components of the MTA's capital program, including

      25      the completion of Second Avenue subway, construction







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       1      of Metro-North's Penn Access project, and purchase

       2      of new railcars and buses; yet, much more remains to

       3      be done.

       4             While the MTA capital proposal represents a

       5      significant number, it still falls far short of what

       6      is generally acknowledged by the comptroller and

       7      other transportation experts as to what is needed to

       8      keep the New York's most valuable economic asset in

       9      a state of good repair and to continue modest

      10      expansion.

      11             It also must be considered, in the broader

      12      context, of the value of the economic health of its

      13      service region, with more than 14 million people,

      14      7 million workers, and generating 1.4 trillion in

      15      GDP every year.

      16             Moreover, maintaining the MTA system

      17      contributes significantly to the upstate economy

      18      given the number of suppliers and value-added

      19      services that exist in Upstate New York to support

      20      the MTA's capital plan.

      21             As in prior years, the 2015-2019 capital plan

      22      anticipated to be funded through a combination of

      23      revenue-backed and direct capital support from

      24      federal, state, and local partners, but the MTA

      25      cannot rely exclusively on these revenue sources to







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       1      address the $15 billion gap that we've been

       2      discussing.

       3             With a full 17 percent of the MTA's operating

       4      budget, some 2.2 billion a year already committed to

       5      pay debt service on bonds issued for previous

       6      capital programs, further borrowing would result in

       7      [unintelligible] pressure on existing fares and

       8      tolls.

       9             New, stable, and dedicated revenue sources

      10      must be found.

      11             We strongly support a commitment of 1 billion

      12      to maintain and improve the transit systems in

      13      New York State.

      14             Transit ridership is on the rise across the

      15      state, and fleets and facilities, from Albany to

      16      Buffalo, to Syracuse, need additional investment to

      17      accommodate growing demand.

      18             For these reasons, TSTC and ESTA support a

      19      fully funded MTA capital program at a minimum of

      20      32 billion, along with its additional billion for

      21      upstate, and there are viable funding options that

      22      exist to support these initiatives.

      23             We urge you to identify new revenue sources

      24      to fill any funding gaps.

      25             Now, we have attached to our testimony a







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       1      two-page memo that outlines new revenue options.

       2             And, another potential revenue source that's

       3      not listed in this memo is the Uber-fare surcharge

       4      that has been mentioned already today, a source that

       5      could bring in $90 million in annual revenues.

       6             Any new revenue sources should meet the

       7      following criteria:

       8             New revenue should be balanced among all

       9      indirect and direct beneficiaries of the system,

      10      given the affordance of the system to the region.

      11             New revenues must not replace nor reduce

      12      existing dedicated revenue sources, including the

      13      payroll mobility tax, fuel taxes, and other

      14      dedicated revenues.

      15             New revenues must be adequate to underwrite

      16      the 5-year capital program, and should not, whenever

      17      possible, lose purchasing power over the course of

      18      the program.

      19             A mechanism should be created to ensure new

      20      revenues are used exclusively to finance MTA capital

      21      projects.

      22             Road and bridge projects should be included

      23      in revenue scenarios to ensure funding equity for

      24      other regions' modes in the state.

      25             Most, if not all, of the options listed in







                                                                   159
       1      this memo could be further leveraged by issuing

       2      bonds.

       3             Almost 1 billion in bonds can be issued for

       4      every 62 million in new annual recurring revenues

       5      raised.

       6             And in answer to your question,

       7      Senator Marcellino, yes, the City should raise their

       8      contribution.

       9             SENATOR MARCELLINO:  Oh, you just took away

      10      my question.

      11             NADINE LEMMON:  Sorry?

      12             SENATOR MARCELLINO:  You just took away my

      13      question.

      14             NADINE LEMMON:  Thank you for the

      15      opportunity.

      16             There is one very good revenue option that

      17      Alex will --

      18             ALEX MATTHIESSEN:  And I'll mention at the

      19      outset, that ESTA (the Empire State Transportation

      20      Alliance) does also support the Move NY fair-tolling

      21      plan.

      22             So, thank you, Chairman Marcellino and

      23      Senator Martins for hanging around.  We appreciate

      24      that very much.

      25             I am going to just read from notes.  I'm not







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       1      going to read a prepared statement, so, hopefully,

       2      it will go a little quicker.

       3             But I will just warn you, that there's quite

       4      a lot of detail to this plan, so allow me a little

       5      bit of time.

       6             So, my name is Alex Matthiessen.  I'm the

       7      president of Blue Marble Project, which is a

       8      environmental consulting firm.

       9             And, I'm the director of the Move NY campaign

      10      and coalition on whose behalf I'm testifying today.

      11             Move NY is a campaign, it's a region-wide

      12      campaign, that is dedicated to coming up with a new

      13      dedicated, sustainable recurring revenue source for

      14      the MTA region, and also for the city's roads and

      15      bridges.

      16             And we were founded in 2010 in response to

      17      the growing transportation crisis that we've seen in

      18      the form of reduced service, pothole-ridden roads

      19      and deteriorating bridges, and a lack of sustainable

      20      funding sources, going forward.

      21             New York is facing a transportation crisis,

      22      and I don't think that we can expect to try to

      23      thrive and compete as a region, and as a state, with

      24      a system that struggles to meet the standards that

      25      other global cities have surpassed decades ago.







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       1             The $32 billion that Chairman Prendergast and

       2      others have talked about, most experts agree that

       3      that's at the low end of what's required to not only

       4      maintain the system, but to bring it up to

       5      twenty-first-century standards.

       6             I think we all agree that there are other

       7      cities around the world with whom we compete are way

       8      ahead of us in terms of investing in their

       9      transportation infrastructure.

      10             So, Move NY has put forward a fair-tolling

      11      plan that would fully fill the $15.2 billion funding

      12      gap that the MTA is currently facing with their

      13      2015-19 capital plan.

      14             It would slash tolls in the outer parts of

      15      the city.  That's, essentially, the MTA's outer

      16      bridges, which is the Verrazano, Throgs Neck,

      17      White Stone, Tri-Borough, two Rockaway bridges, and

      18      the Henry Hudson Bridge.

      19             So those 7 bridges would not go down by a

      20      token 25 cents or 50 cents.  They would go down by

      21      nearly 50 percent.

      22             $5, round-trip, off the major bridges.

      23             $2, round-trip, off of the Rockaway and the

      24      Henry Hudson Bridge.

      25             The significantly reduced traffic is another







                                                                   162
       1      benefit of this.

       2             New York boasts, if you will, the

       3      second-worst traffic congestion in the country, only

       4      second to L.A., and we're constantly vying for that

       5      top spot.

       6             And it costs an estimated $16 billion a year

       7      to the regional economy and job creation that would

       8      come as a result of not having traffic.

       9             And then, finally, the plan would provide

      10      $375 million per year to put into our city's roads

      11      and bridges, which would be the first time we would

      12      actually have a dedicated fund for roads and bridges

      13      in the city of New York.

      14             So despite the fact that it is a tolling

      15      plan, this Move NY plan has the support of groups

      16      and -- quite a few groups around the region.

      17             But particularly interesting, is it has the

      18      support of the groups that represent the -- New

      19      York's motorists and truckers best, which is the

      20      New York State Motor Truck Association that has

      21      endorsed the plan, and, AAA New York, which has also

      22      provided support and has been working very closely

      23      with us and supports the idea of the plan.

      24             Labor unions, like TWU, 32BJ, ATU, and others

      25      are signing on.







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       1             Business associations, like the New York

       2      Building Congress; three out of five New York City

       3      chambers of commerce, have officially endorsed the

       4      plan, et cetera.

       5             And then nearly all of the region's major

       6      environmental and transit organizations.

       7             So here's how it works:

       8             It's, essentially, a toll swap.

       9             And the idea -- as the chairman has pointed

      10      out earlier during this hearing, the idea is to

      11      create a more equitable and balanced tolling system.

      12             Right now, as of March 22nd, we're going to

      13      be tolling people, they're in the outer parts of the

      14      city where there's not as much congestion.  They

      15      don't have a lot of good transit options.  We're

      16      going to be tolling them $16, round trip, cash

      17      tolls, even though, again, they don't have a lot of

      18      other alternatives.

      19             In the meantime, there's 1.1 million trips a

      20      day that go into the most congested part of the

      21      city, and they go for free.

      22             As Sam Schwartz [ph.] has pointed out, just

      23      in the last 15 years alone, we have seen 7 toll and

      24      fare increases, again, over that 15 years, and

      25      there's only one group that's never had to







                                                                   164
       1      contribute anything to helping with those fares and

       2      tolls; and that's the group that goes for free right

       3      now.

       4             So, essentially, you would be tolling the

       5      East River bridges at the same rate that you

       6      currently toll the Midtown Tunnel and the

       7      Brooklyn Battery Tunnel, and, again, across

       8      60th Street; and, therefore, you would harmonize,

       9      essentially, the tolls entering and leaving the

      10      central business district, which is important,

      11      because then you eliminate bridge-shopping which

      12      causes increased emissions, road wear-and-tear on

      13      our old city bridges, fatalities, and then

      14      accidents, caused by vehicular crashes, et cetera.

      15             So you greatly reduce all of those kinds of

      16      impacts.

      17             I want to point out that the 60th Street's

      18      green-line piece of this is particularly important,

      19      and for a couple of reasons.

      20             One, more than 50 percent of the traffic

      21      coming into the central business district is

      22      actually coming from the north.  It's not coming

      23      from Long Island.  Only about 40 percent comes from

      24      Long Island.

      25             So, if you want to really tackle traffic, and







                                                                   165
       1      you also want to generate revenues and create a

       2      truly fair tolling system, you've got to also toll

       3      those drivers that are coming from the north, and

       4      for reasons that I just mentioned.

       5             So, the tolling system we're proposing is all

       6      electronic.

       7             So, it would be, like, the Henry Hudson

       8      Bridge, where it's, basically, no toll gates, no

       9      toll booths.  You, basically, drive at speed through

      10      and you're tolled.

      11             85 percent of the drivers out there in the

      12      New York region -- or, 80 or 85 percent are already

      13      using EZ-Pass.

      14             By the time this gets implemented in a couple

      15      of years, smartphone technology would probably be

      16      catching most of the remaining 15 percent.

      17             For those who don't have either, you could

      18      just have a snapshot of your license plate taken,

      19      and you get a bill in the mail and you pay it.

      20             That's already used at the Henry Hudson

      21      Bridge and many other place around the country.

      22             Fixed ratio:

      23             This is a really important one to people who

      24      live in the so-called "outer boroughs" and in the

      25      suburbs, which is:  How do we know the MTA won't







                                                                   166
       1      turn around and jack those tolls back up once

       2      they're reduced, you know, a year or two later?

       3             And in the legislation that we're proposing,

       4      we would fix that new ratio of the lowered tolls in

       5      the outer parts of the city and the new central

       6      business district tolls, which is a .55 ratio.

       7             That would be fixed forever, and that way,

       8      you can't raise one without raising the other, and

       9      that just puts downward pressure on excess increases

      10      in tolls overall.

      11             Taxi and car apps, this is a really important

      12      piece.

      13             One of the criticisms of the last plan that

      14      was proposed by Mayor Bloomberg, is that it felt to

      15      those people who lived in the suburbs and outer the

      16      boroughs that they were shouldering the costs, they

      17      weren't getting as many of the benefits, and

      18      Manhattan was kind of getting off scot-free.

      19             The way we addressed that, is that we add a

      20      taxi and Uber and Lift surcharge, just within

      21      Manhattan, 96th Street South, surcharge that,

      22      basically, acts as a proxy for the traffic that they

      23      contribute by using these for-hire vehicles.

      24             That puts Manhattan in the number-one spot,

      25      in terms of the 12 counties, who pays what, who pays







                                                                   167
       1      the most.  And I think it appropriately puts

       2      Manhattan in the number-one spot as a result.

       3             We raise $1.5 billion a year in revenue, and

       4      that comes from both the new tolling, the

       5      fairer-tolling system, plus this taxi surcharge.

       6             And that's even after you pay for all the

       7      toll discounts in the outer parts of the city, and

       8      you've paid for implementing this new tolling

       9      system.

      10             So, a net 1.5 billion a year.

      11             Unlike the Bloomberg plan, or any plan that's

      12      come before it, we say to drivers:  Listen, you're

      13      being asked to help shoulder some of the costs of

      14      our regional transportation system, you need to get

      15      something back.

      16             So drivers get a quarter of these 1.5 billion

      17      in revenue, which means better roads and bridges for

      18      drivers, they get much lower tolls in the outer

      19      parts of the city, and they're getting much faster

      20      commutes into and around the central business

      21      district.

      22             The other three-quarters goes to the

      23      mass transit system, as I said.

      24             If you bond that, that will actually get to

      25      exactly to your $15 billion that the MTA needs.







                                                                   168
       1             So, you can have money for mass transit and

       2      roads and bridges.

       3             Lockboxing is very important.

       4             We do agree, I agree, with Nadine and others

       5      who have said, this is only going to work and help

       6      us modernize and maintain our transportation system

       7      if we preserve the existing dedicated taxes that are

       8      already out there.

       9             But I think that there's inherent protections

      10      in a tolling mechanism because the tolls are

      11      collected directly by the MTA.  It could be done by

      12      the New York City DOT as well.

      13             That's to be determined by you all.

      14             But the advantage of that, of course, is it

      15      doesn't have to go through an appropriation's

      16      process.  It can't be raided by the Legislature.

      17             The money goes directly to where it's

      18      invested.

      19             And then, the bonding, we would have to

      20      create some kind of subsidiary of the TBTA, which

      21      allows to us get a very good credit rating on the

      22      money that's bonded, and also just to control the

      23      source of money and where it's allocated.

      24             Investment priorities, we mainly, as I said,

      25      would help support the MTA capital plan.







                                                                   169
       1             There are some other things that we would

       2      want to see changed in that capital plan.

       3             For the most part, we agree with the capital

       4      plan and its investment priorities, but, we think

       5      that a small amount of money would go a long way to

       6      filling a lot of the transit gaps that still exist

       7      in too many parts of the city.

       8             So, we have a 5-point strategy for how to

       9      improve transit access, and improve access by making

      10      the fares more affordable.

      11             One, is to restore more of the 2010 service

      12      cuts that happened.

      13             Two, is to expand express bus service, and,

      14      to knock express buses down from the newly-enacted

      15      6.50, which is what they're going to be in March --

      16      or later this month, down to $5, or 5.50, to give

      17      some folks some relief there.

      18             We can help fund Mayor de Blasio's BRT, SBS,

      19      vision of 20 new buses, et cetera.

      20             We can extend city tickets to seven days a

      21      week, which basically offers discounted fares on

      22      Metro-North, Long Island Railroad, within the city

      23      bounds, which can help fill some of those transit

      24      gaps.

      25             And then, of course, the normal expansion







                                                                   170
       1      projects that have been talked about.

       2             And then, in terms of suburban investments,

       3      we want, and I have been trying very hard to talk to

       4      various legislators and other interest groups on

       5      Long Island and in the Hudson Valley to find out

       6      what your transportation priorities are.

       7             And I've gotten some good feedback, but

       8      there's more discussion I think that needs to happen

       9      in terms of concrete investments.

      10             But, right now, we're talking about the kinds

      11      of investments that Tom Prendergast and others

      12      talked about to improve the service of the

      13      Long Island Railroad, Metro-North, and improve

      14      frequency of that service.

      15             Rail-station access is an important piece of

      16      that.  And I think there are some select places

      17      along Long Island and the Hudson Valley where we can

      18      benefit from improved or expanded parking-garage

      19      capacity at some of these stations.

      20             And then other last-mile strategies, shuttle

      21      buses and others, that will help commuters get to

      22      Long Island Railroad, Metro-North, more easily; and,

      23      therefore, take advantage of that terrific service.

      24             And then, finally, county buses.

      25             Suffolk, Nassau, Rockland, and Westchester







                                                                   171
       1      have these county bus systems, but I think almost to

       2      a county, they're very underfunded.

       3             We could use some of this revenue to help

       4      subsidize those county bus systems, and improve

       5      local bus and transportation access for people who

       6      aren't necessarily making the trip into the CBD, but

       7      need to get around Nassau and Suffolk and elsewhere

       8      for jobs, et cetera.

       9             I'll just kind of briefly mention the

      10      alternatives, because I think it's worth talking

      11      about.

      12             You know, we could increase the gas tax, but,

      13      we crunched the numbers, and in order to raise the

      14      kind of money that Move NY raises, you'd have to

      15      increase the gas tax, just in the 12-county

      16      MTA region, by over 50 cents a gallon.

      17             We think that's kind of a political

      18      non-starter.  It's hard to imagine how that happens.

      19      Plus, it puts pressure on suburban drivers who

      20      aren't necessarily creating the kind of congestion

      21      problems that the folks in the city are creating.

      22             Sales tax.  We could increase the sales tax

      23      around the 12-county region, but you'd have to do it

      24      by three-quarters of a percentage point in order to

      25      raise the $1.5 billion that we generate.







                                                                   172
       1             And, again, that's highly regressive, very

       2      hard on poor people, working families, et cetera.

       3             You could reinstate the commuter tax, but

       4      something tells me the two of you aren't going to be

       5      too excited about that.

       6             Another idea is, you could more than double

       7      the payroll mobility tax.  That's what you'd need to

       8      do in order to raise the money that we raise here.

       9             I don't think that that's something that is

      10      going to be popular in the Senate these days.

      11             And then the only other thing you could do,

      12      is you could underfund the system.

      13             And I think we've heard earlier from various

      14      folks why that is, I think, such a bad idea.  That's

      15      going to put us further behind in terms of being

      16      able to compete with other cities.

      17             And then the other piece, which I think is

      18      the biggest threat, I think the biggest likelihood

      19      that we face, is that the easy decision will be,

      20      let's just kick the can down the road, and we'll

      21      just kind of coddle some short-term, non-recurring

      22      sources of funds together and we'll make do for the

      23      next couple of years.  And then, when it really hits

      24      the fan and we really have to figure out what to do,

      25      then we'll come back to the drawing board and figure







                                                                   173
       1      out how to do that.

       2             I hope we don't do that, and I especially

       3      hope we don't do that, if the answer ends up being

       4      issuing more fare- and toll-backed debt.

       5             And that is typically what happens, is that,

       6      Oh, let's go to the riders and the current toll

       7      payers and get them to pay even more than they're

       8      already paying to help, basically, subsidize the

       9      rest of the system.

      10             Tom DiNapoli, the comptroller of

      11      New York State, issued a report last fall that said,

      12      if you fill that $15 billion MTA gap with fare- and

      13      toll-backed debt, you're talking about 15 percent

      14      increases in existing tolls and fares above and

      15      beyond the 4 percent biennial increases that

      16      Tom Prendergast talked about earlier.

      17             So you're talking about, over the next

      18      5 years a 24 percent increase in fares and tolls on

      19      those who are already paying a whole lot.

      20             We don't think that's fair or appropriate.

      21             So, just to kind of summarize:

      22             You know, one of the things we've heard, the

      23      "$15 billion" number bandied about.

      24             Chairman Marcellino, it's terrific that you

      25      keep on asking the question:  How are we going to







                                                                   174
       1      fund that $15 billion?

       2             We're not, unfortunately, hearing a lot of

       3      solutions, and, we feel like we've got a very good

       4      solution.

       5             We spent, literally, five years, going around

       6      the region, talking particularly to opponents of the

       7      Bloomberg plan and other plans like it, to really

       8      get that feedback and make sure this plan

       9      represents --

      10             SENATOR MARCELLINO:  What's been the City's

      11      response?

      12             ALEX MATTHIESSEN:  Uhm, Mayor De Blasio, last

      13      week, when we went public with our final version of

      14      the plan, he said something to the effect of, We

      15      think that the plan deserves to be looked at very

      16      seriously.

      17             Something like that.

      18             You know, listen, he's not a decision-maker,

      19      ultimately, in this, so we don't expect him to be

      20      leading the charge, but our sense is that he's

      21      certainly open to it, he's not opposed to it.  And

      22      I think he's interested to see how this will all --

      23             SENATOR MARCELLINO:  In your reading of your

      24      own plan, would the Legislature have an ongoing

      25      role?







                                                                   175
       1             ALEX MATTHIESSEN:  An ongoing role?

       2             SENATOR MARCELLINO:  Yeah.

       3             ALEX MATTHIESSEN:  In what respect?

       4             SENATOR MARCELLINO:  In the Move NY proposal?

       5             ALEX MATTHIESSEN:  Well, I think the main

       6      thing, is that we would hope that the Legislature

       7      would pass the plan that we're proposing.

       8             And then once it's passed, essentially, what

       9      we're proposing, is that the Legislature authorize

      10      the MTA and/or New York City DOT to impose tolls on

      11      the East River bridges, and to, essentially, manage

      12      a more balanced tolling system, and that they

      13      mandate a few features, like the fixed ratio, so you

      14      can't increase one toll without another.

      15             SENATOR MARCELLINO:  The way we read it, the

      16      Move NY proposal would remove the Legislature's

      17      ability to appropriate -- I'm reading this -- "to

      18      appropriate the annual revenues from the new tolls

      19      and congestion pricing.

      20             "Although it's approval is necessary under

      21      the Move NY plan, the Legislature is removed from

      22      the annual appropriation process."

      23             ALEX MATTHIESSEN:  I don't think it's -- and

      24      forgive me, Chairman, because I'm not an expert on

      25      this.  I'm more of an organizer type, so I'm not an







                                                                   176
       1      expert in terms of all of the nuances of MTA funding

       2      and financing.

       3             But my understanding is, is all we're saying

       4      there, is that this is money that would be raised

       5      through a tolling system.  And like the MTA's other

       6      tolls that they collect revenue on, the money goes

       7      directly to the MTA, and they can bond on it --

       8             SENATOR MARCELLINO:  No, it's an extension.

       9             ALEX MATTHIESSEN:  -- et cetera.

      10             So it's not removing an authority --

      11             SENATOR MARCELLINO:  No, that's by statute.

      12             ALEX MATTHIESSEN:  What's that?

      13             SENATOR MARCELLINO:  That's done by statute.

      14             ALEX MATTHIESSEN:  Right.  So --

      15             SENATOR MARCELLINO:  You're taking that out

      16      of it.  You're taking our ability to appropriate,

      17      out.

      18             ALEX MATTHIESSEN:  Okay, well, then, maybe --

      19      it's possible that I'm misunderstanding that, but

      20      I don't think so, because we've been -- I've been

      21      talking to lawyers and all the people who really are

      22      expert in this.

      23             My understanding is, we're just doing

      24      exactly -- we're just simply saying, that like the

      25      revenues collected on current MTA bridges and







                                                                   177
       1      tunnels, this revenue also would go directly to the

       2      MTA, it could be bonded by the MTA, et cetera.

       3             So we're not looking to remove anything.

       4             If could I just finish --

       5             SENATOR MARCELLINO:  Very briefly, because

       6      we've got to get out of here.

       7             ALEX MATTHIESSEN:  Okay.

       8             We've gotten terrific editorial endorsements

       9      from "Cranes Business," "Fox 5 News," "Newsday,"

      10      "New York Post," "Daily News," et cetera.

      11             We did polling on this by global-strategy

      12      group.  They showed a 2-to-1 in favor, support for

      13      this, including in the suburbs.

      14             Long Island and the Hudson Valley support

      15      this plan, again, according to the poll, 57 percent,

      16      even after hearing criticisms of this kind of idea.

      17             So we think it's an idea that its time has

      18      come.

      19             We expect that the idea would be to marry

      20      this Move NY plan with some other resources, so that

      21      we can fund a statewide transit and road and bridge

      22      program.

      23             Thank you very much.

      24             SENATOR MARCELLINO:  Jack?

      25             SENATOR MARTINS:  Mr. Matthiessen, you spoke







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       1      to a million-plus cars going into that central area

       2      in Manhattan.  I guess below 60th, right, or below

       3      96th?

       4             ALEX MATTHIESSEN:  Yes, the tolling piece of

       5      this is 60th, south, to the financial --

       6             SENATOR MARTINS:  1.1 million cars, I think

       7      you said?

       8             ALEX MATTHIESSEN:  Yes.

       9             SENATOR MARTINS:  And can you identify where

      10      those cars are coming from?

      11             You said a percentage comes from Long Island,

      12      another percentage comes from the north.

      13             How many of those come in through, tunnel,

      14      the tolled bridges?

      15             How many are coming through from non-tolled

      16      areas?  And of those, how many of those are coming

      17      from the north, and how many of them are coming from

      18      the east, or from other places?

      19             ALEX MATTHIESSEN:  I can give you very

      20      specific numbers on those.  I'll have to get back to

      21      you on the specific numbers.

      22             But, I can characterize, generally.

      23             SENATOR MARTINS:  Get back to the Committee

      24      so we can circulate to it everybody.

      25             ALEX MATTHIESSEN:  Okay, I'll do that.







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       1             So I'll do that through Debbie, if that's

       2      okay?

       3             SENATOR MARCELLINO:  Yes.

       4             ALEX MATTHIESSEN:  So -- but roughly

       5      speaking, of all the cars that are going into the

       6      central business district on a daily basis:

       7             About 50 percent, or a little bit more than

       8      50 percent, come from the north; so that means

       9      Connecticut, Hudson Valley, northern New Jersey, the

      10      Bronx, et cetera.

      11             About 40 percent come from Long Island; so

      12      that means Suffolk, Nassau, Queens, and Brooklyn.

      13             And then about 10 percent come from New

      14      Jersey.

      15             SENATOR MARTINS:  Of the ones that are not

      16      being currently tolled, or just generally?

      17             ALEX MATTHIESSEN:  No, just total.

      18             SENATOR MARTINS:  And of those, how many of

      19      those are not being tolled right now?

      20             ALEX MATTHIESSEN:  The 1.1 I believe is the

      21      number that's not being tolled.

      22             Yes, so --

      23             SENATOR MARTINS:  And of those that are not

      24      being tolled, what are the percentages and where are

      25      those cars coming from?







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       1             ALEX MATTHIESSEN:  I -- to be absolutely

       2      accurate, let me get back to you with those numbers.

       3             But --

       4             SENATOR MARTINS:  Because it may not

       5      necessarily follow that same percentage, I'd like to

       6      see that.

       7             ALEX MATTHIESSEN:  That's why I want to

       8      confirm before I just apply the same 50, 10, and

       9      40 percent.

      10             SENATOR MARTINS:  And under the plan, as it's

      11      being proposed, is there an opportunity, or is there

      12      a guarantee, that a car coming into that area will

      13      not be tolled twice?

      14             ALEX MATTHIESSEN:  Well, the way we designed

      15      it, is that we're assuming, and I think probably

      16      rightly, that most of the cars that are coming --

      17      the passenger vehicles that are coming into the

      18      central business district are coming because,

      19      either, that's their destination, or they're just

      20      simply taking advantage of free bridges and they're

      21      passing through to New Jersey or to go somewhere

      22      else other than Manhattan.

      23             So for those that are just passing through,

      24      we're not -- we're trying to discourage that kind of

      25      passing-through traffic, and trying to get them to







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       1      take the most direct route because they don't have

       2      to bridge-shop anymore.  They can -- they'll find,

       3      you know, the most direct route will also be about

       4      the same price as everywhere else.

       5             In terms of those who have a destination

       6      there, we're figuring that they're going in, they're

       7      doing their thing, and they're leaving; so, yes,

       8      they will only pay once -- once in, once out -- just

       9      like they would on the Queens Midtown Tunnel.

      10             SENATOR MARTINS:  And if they come back in?

      11             ALEX MATTHIESSEN:  And if they came back in

      12      again, then, yes, in theory, they would pay a second

      13      time, but we don't think the vast majority of

      14      passenger vehicles do that.

      15             However, we don't want to do anything to

      16      discourage business activity, and that's why, for

      17      commercial vehicles, they do only pay once in and

      18      once out, even if they're making multiple trips back

      19      and forth into the central business district all

      20      day.

      21             If you're a dry-cleaning business, if you're

      22      a carpenter and doing service calls, you may cross

      23      60th Street a few tames in a day, or you may go

      24      over to Queens and then come back, you only pay once

      25      per day.







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       1             SENATOR MARTINS:  Or if you're visiting a

       2      couple of offices during a trip into the city, and

       3      you happen to see somebody uptown, and then somebody

       4      downtown, and go back uptown again, there's a

       5      possibility that -- so just something to think

       6      about.

       7             ALEX MATTHIESSEN:  Yeah, okay.

       8             Thank you.

       9             SENATOR MARCELLINO:  Yeah, that was always

      10      the biggest problem for those of us who have

      11      businesses on Long Island that sell to people in the

      12      city with other businesses, going back and forth, or

      13      maybe making more than one trip a day to deliver

      14      produce or products.

      15             So it was a concern, and still is a concern.

      16             Thank you very much for your time and your

      17      input.

      18             We look forward to those numbers that you

      19      submit to the Committee, because your proposal's

      20      very interesting.

      21             ALEX MATTHIESSEN:  Thank you.

      22             SENATOR MARCELLINO:  It was interesting, and

      23      worthy of -- as I commented to our first Panel, I'm

      24      getting a little tired of constantly hearing, Oh,

      25      we're going to look at that.  Oh, we are going look







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       1      at that.

       2             It's a great answer, but nothing ever happens

       3      when they look at that.

       4             So we want to see more looking and coming to

       5      a decision.

       6             ALEX MATTHIESSEN:  Well, we appreciate that

       7      very much.

       8             And I would just say that we feel confident

       9      that if we could just simply have a public debate

      10      about this and people really understand what the

      11      plan is, and understand it's really not the

      12      Bloomberg plan, and how much there is in it, not

      13      just for transit riders, but for drivers; not just

      14      for city residents, but suburban residents, we

      15      think, actually, there will be a lot of support for

      16      this thing, and it will reflect the polling that

      17      we've done.

      18             SENATOR MARCELLINO:  Thank you very much.

      19             NADINE LEMMON:  Thank you.

      20             SENATOR MARCELLINO:  The hearing before the

      21      Committee is adjourned.

      22                  (Whereupon, at approximately 1:38 p.m.,

      23        the public hearing held before the two Senate

      24        Standing Committees concluded, and adjourned.)

      25                            ---oOo---