Public Hearing: To Provide the Committee with an Update of the Metropolitan Transportation Authority'S (MTA) Capital Spending Plan and Operating Budget as It Pertains to Each Agency

James Ferrara 65 73 16 President

MTA Bridges & Tunnels 17

Kenneth B. Bleiwas 183 189 18 Deputy State Comptroller

Office of the New York State Comptroller 19 20 21 22 23 24 25 1 SENATOR FUSCHILLO: Let me introduce my 2 colleagues. 3 To the right, Senator Marty Golden, 4 Senator Billy Larkin; and to my left, 5 Senator Liz Krueger. 6 Thank you very much for being here. 7 For the record, my name is 8 Senator Charles Fuschillo, and I am the Chairman of 9 the Senate Transportation Committee. 10 Let me also thank all the speakers that are 11 here today to offer testimony to the Committee. 12 We know how busy you are, and we appreciate 13 you taking time out of your schedule to be here. 14 The MTA, as we know, is the largest 15 transportation system in North America. 16 It covers -- its area -- its service area 17 covers of over 5,000 square miles. 18 Its transit systems have an annual ridership 19 of over 2.6 billion, and its bridges and tunnels 20 serve more than 280 million vehicles a year. 21 The operations are funded through a more than 22 $13 million budget. 23 The MTA has many longstanding issues with its 24 finances. 25 Fares have risen dramatically over the past 1 years, making MTA increasingly unaffordable for some 2 of its passengers. 3 Riders are paying 47 percent more for a metro 4 card, more than 30 percent more for a commuter-rail 5 ticket, and more than 30 percent more to use the 6 bridges and tunnels than we were in 2007. 7 These increases are far above the rate of 8 inflation. 9 Over the years, there have been numerous 10 cases of waste, fraud, and abuse, along with 11 questionable spending practices, which have cost the 12 Authority and ratepayers significantly. 13 The good news is, under new Chairman and 14 CEO Tom Prendergast, MTA's financial picture is 15 improving. 16 New York State delivered over $4 billion in 17 operating aid to the MTA this year, an increase of 18 over 10 percent from last year. 19 The MTA has instituted many cost-cutting 20 measures which have resulted in hundreds of millions 21 of dollars, and when combined with additional 22 State aid and increasing revenue, it has eliminated 23 its 2014 budget gap and currently reduced out-year 24 budget gaps; however, numerous challenges remain for 25 the MTA. 1 It is still recovering from enormous damage 2 caused by "Superstorm Sandy." 3 It has significant infrastructure needs and 4 must formulate a new capital plan to meet those 5 needs, and is facing substantial increases in debt 6 service and fringe-benefit costs. 7 The purpose of today's hearing is to get a 8 detailed update from the MTA leadership on the 9 state's Authority's finances, how it plans to spend 10 ratepayers' money, through its capital and operating 11 budget, and what steps it will take to reduce costs, 12 improve services, and continually try to strive to 13 make it more affordable for its riders. 14 During our hearing today, we will receive 15 testimony from Chairman and CEO Tom Prendergast, as 16 well as presidents of Long Island Railroad, 17 Metro-North, New York City Transit, MTA Bridges & 18 Tunnel, and MTA Bus, and, also, representatives from 19 State Comptroller Tom DiNapoli's Office will also 20 testify with regard to the finances. 21 I want to thank everybody for taking the 22 opportunity to being here. 23 And to my left is Senator Martin Dilan, the 24 Ranking Member of the Transportation Committee. 25 Good morning, Senator. 1 SENATOR DILAN: Good morning, how are you? 2 SENATOR FUSCHILLO: Good. 3 Do you want to make an opening statement? 4 SENATOR DILAN: No, I agree with everything 5 you said. 6 SENATOR FUSCHILLO: Well, say that for the 7 record. 8 SENATOR DILAN: I agree with everything you 9 said, sir. 10 SENATOR FUSCHILLO: We're going to continue 11 that through the next year as well. 12 [Laughter.] 13 SENATOR DILAN: I like that. 14 SENATOR FUSCHILLO: Was the record on with 15 that statement? 16 And we'll start with the chairman and CEO, 17 Tom Prendergast. 18 SENATOR GOLDEN: [Inaudible] Ms. Krueger to 19 chime in and agree. 20 What we'd like to do, and I'm going ask -- 21 Senator Krueger, did you agree to that also? 22 SENATOR KRUEGER: No, I think Marty Golden is 23 just trying to cause trouble here. 24 SENATOR FUSCHILLO: Okay. 25 [Laughter.] 1 SENATOR FUSCHILLO: What I'd like to do, just 2 for the members of the Committee up here, is we're 3 gonna ask for all the testimony first from all the 4 individuals we've asked to testify, and we'll ask 5 questions at the end of their testimony. 6 Good morning, Tom, and thanks so much for 7 being here. 8 THOMAS PRENDERGAST: Thank you very much, 9 Senator. 10 Chairman Fuschillo and members of the 11 New York State Senate Transportation Committee, good 12 morning. 13 Thank you for inviting the executive 14 leadership of the MTA for this important hearing. 15 Today is the perfect time to talk about the 16 MTA and our finances for a couple reasons. 17 First, we meet a few months after the 18 presentation of the July financial plan to the 19 MTA Board, a plan that strongly reaffirms our 20 company's commitment to cost-cutting, as well as a 21 fully transparent view of our current and 4-year 22 financial outlook. 23 And just a few weeks ago, the New York State 24 Comptroller issued a report on our finances. 25 That report found our financial outlook to 1 be, quote/unquote, much improved. 2 And, overall, we're pleased that it 3 recognized we're on track to cut $1.3 billion out of 4 our annual operating budget. 5 I'll talk more in a moment about both our 6 financial plan and our unprecedented cost-cutting, 7 but first of all, I would like to set the stage a 8 little with some basic facts about how -- the MTA 9 and how we're funded. 10 Every day, the MTA moves 8 1/2 million people 11 on our subways, buses, Metro-North, and 12 Long Island Railroad. 13 We're one of the few transportation systems 14 in the world that still operates 24 hours a day, 15 7 days a week, and our 7 bridges and tunnels carry 16 nearly 300 million vehicles a year. 17 When you put it all together, with a 18 lifeblood of a $1.4 trillion economy, second only to 19 the city and the region of Tokyo, Japan, and we make 20 up 11 -- this economy makes up 11 percent of the 21 nation's gross domestic product, but providing this 22 service is not cheap. 23 It costs $13.2 billion a year, and like every 24 transit network in the country, fares cover only a 25 portion of the costs needed to run the system. 1 In our case, just over half our costs are 2 covered by fares and tolls across the system, and 3 total fare revenue this year is projected to be 4 about $5.5 billion. 5 When you subtract that from our operating 6 expenses, you're left with a difference of about 7 $7.7 billion. 8 And here's the question I grapple with every 9 single day: 10 How do we make up that difference? 11 One source is the MTA Bridges & Tunnels, 12 where operating income this year is projected to be 13 about $1 billion. 14 About half of that goes to transit 15 operations. 16 That still leaves a budget difference 17 totaling some 50 percent of our costs, leading to 18 the other half of our funding equation: the state 19 and local subsidies, dedicated taxes, and other 20 fluctuating revenue services that make up that 21 difference -- sources. 22 Today the problems with this model are clear. 23 Revenues based on tax receipts vary with the 24 economy and can leave us with significant operating 25 deficits. 1 Other revenues, specifically real-estate 2 revenues, are extremely volatile. 3 Between 2007 and 2009, just two years, 4 real-estate revenue fell more than $1.2 billion. 5 This year, to date, real-estate revenues are 6 $80 million more than projected, but most of those 7 increase was attributable to just 9 transactions 8 that took place very early in the year. 9 This is an example of how volatile that 10 market is and that revenue source. 11 The payroll-mobility tax, which generates 12 $1.4 billion annually, is a more predictable revenue 13 source that is not as sensitive to downturns in the 14 economy, but I don't need to tell this audience that 15 the tax is very unpopular in many parts of the MTA 16 region. 17 Since it was enacted, the Governor and the 18 Legislature have agreed on new exemptions to 19 mitigate its impact on small businesses and schools, 20 and we were gratified that both the Governor and the 21 Legislature agreed to make the MTA whole for this 22 lost revenue. 23 Any subsequent erosion of this important 24 revenue stream would put tremendous pressure on our 25 overall budget. 1 The cost of running our operation is 2 increasing rapidly, leaving us to continually trying 3 to catch up, but the reason for these rising costs 4 has nothing to do with providing good service, 5 nothing to do with discretionary costs, nothing to 6 do with inflation, and nothing to do with effective 7 management. 8 It has everything to do with 9 non-discretionary costs that are largely beyond our 10 control: health care, paratransit, energy, and debt 11 service. 12 These costs comprise almost one-half of the 13 MTA's budget. 14 Every year, from 2013 to 2017, our employee 15 and retiree health-care costs are projected to rise 16 more than 9 percent; 17 Debt service is projected to increase more 18 than 7 percent; 19 And even after we have cut our paratransit 20 costs by $250 million a year through a more 21 aggressive management of that operation, they still 22 will rise by some 9 percent a year. 23 In total, costs in these three areas alone 24 are projected to be $1.5 billion a year higher by 25 2017. 1 That's "1.5 billion." 2 At the same time, our discretionary costs, 3 the costs we can control and we do control, are 4 projected to increase just 1.6 percent a year over 5 that same period, exactly on pace with the consumer 6 price index. 7 So what are our options? 8 Well, the subsidy part of equation is up to 9 the Legislature and others, and we look to you for 10 the help that you have given us in the past. 11 That means the best option I have as 12 chairman, and the people that run it, my only 13 option, is looking at our operation, and in that 14 sense, we're looking at three things: 15 The cost to deliver the services we provide, 16 the services themselves we provide, and the fares 17 for those services. 18 In my role as chairman, I am directly 19 involved in the services we provide and the fares, 20 because those are board actions. 21 Costs are under wearing my hat as 22 chief executive officer. 23 Let's start inside this MTA, because a lot of 24 people don't know how successful we actually have 25 been in holding down discretionary costs, and the 1 truth is, despite what some people have said, we 2 have been fundamentally overhauling the way we do 3 business. 4 We've cut more than $800 million out of our 5 annual operating budget, the most aggressive 6 cost-cutting in the history of the MTA and my entire 7 time there. 8 And I've been here, on and off, since 1982. 9 And I want to assure you that this work is 10 far from over. 11 We have to be continually on the mode of 12 cutting costs from operations. 13 As the State Comptroller noted, we're on 14 track to achieve annual savings of more than 15 $1.3 billion by 2017, and you'll see the increased 16 cost-reduction targets in our next financial plan 17 which will come out in November. 18 Just this year, we refinanced $6 billion of 19 our long-term debt to capitalize on lower interest 20 rates, and we're using the savings, more than 21 a billion dollars, to reinvest in our next capital 22 program. 23 To put that in context, that's the equivalent 24 of putting another billion dollars in our capital 25 program without increasing costs. 1 We're using $80 million in surplus 2 real-estate revenue, ones that were a one-time 3 windfall, to pay down unfunded pension obligations, 4 which will result in a $6 -- $6 million decrease for 5 the next 20 years in our operating costs. 6 Building on earlier administrative 7 consolidations, we've announced the consolidation of 8 our information-technology staff, which is expected 9 to make delivery of those crucial services more 10 efficient and cost-effective, and, we're hedging 11 against volatile energy prices, and, constantly on 12 the lookout for other cost-saving opportunities. 13 We're not just about cutting costs. 14 Ridership is at an all-time high. 15 Throughout all 5,000 square miles of our 16 network, many more people depend on us for the 17 services we provide. 18 That's why in July of this year, our board 19 voted to put $18 million back into service; in some 20 cases, restorations for services that were cut in 21 the dire years of 2010, and the addition of new 22 services, as the demographics of the region have 23 changed. 24 And that's $47 million over the past 2 years 25 that we put in back to either restore the service, 1 improved or expanded service. 2 And to achieve further gains, we must develop 3 new relationship with labor that focuses on 4 inefficiencies and controls the underlying drivers 5 of the MTA's cost increases. 6 Toward this end, our financial plan assumes 7 that each new labor contract will include 8 three net-zero wage increases; which means, wage 9 increases only if they're offset by productivity 10 improvements to be able to fund them. 11 Not incidentally, non-represented employees 12 at the MTA have been without any increases for the 13 past five years. 14 So I hope, as you can see, we're doing 15 everything we can to hold the line on discretionary 16 expenses, which brings me back to fares, the one 17 issue that, certainly, your constituents and our 18 customers will vocal the most concern about as they 19 rise. 20 Since 2009, in the passage of our current 21 subsidies, our annual financial plans have 22 acknowledged the necessity for regular biannual fare 23 increases and toll increases to reduce our revenue 24 shortfalls, and to avoid a high jump in fares, when 25 increases happen sporadically and unpredictably, and 1 go a long time in between them. 2 So, yes, we're looking at our financial needs 3 in 2015 and '17, and what sort of fare or toll 4 increase will be needed, but the size of these 5 increases, their magnitude will be dependent upon 6 the finances that exist at the time. 7 We have been transparent in our budget 8 discussions. 9 We've been transparent in letting the public 10 know. 11 We do it twice a year: the mid-year forecast 12 in July, and the roll-up to the budget for the 13 coming year that's presented in November and voted 14 on in December. 15 And that's a good dialogue we need to have as 16 we present those. 17 My goal will always be to keep future fare 18 and toll increases as low as possible, and that's 19 the objective of all our efforts at keeping the 20 focus on driving costs out of equation. 21 Still, transit fares today are clearly one of 22 the best deals in New York. 23 I'd like to read a brief passage from a 24 report by the New York City's Independent Budget 25 Office that came out after this year's increase and 1 speaks to the value we provide. 2 The report says, and I quote: 3 "Metro cards, free transfers, and discount 4 passes have reduced the average fare so much that, 5 after accounting for inflation, the typical amount 6 paid per trip is 18 percent lower than what it was 7 in 1996." 8 I don't know about all of you, but I can't 9 think of a single item in New York that, besides the 10 subway rides, selling nearly 20 percent below its 11 1996 price. 12 Meanwhile, according to Taxi and Limousine 13 Commission data, the average inflation-adjusted fare 14 for a taxi ride is up 36 to 43 percent since January 15 of 1996, depending on the distance. 16 But even as discounts have continued to keep 17 subways and bus fares one of the best bargains in 18 the city, I cannot ignore the fact that many of our 19 suburban customers, both those who ride our commuter 20 rails and those who cross our bridges, feel the 21 pinch with every successive fare increase, and are 22 increasingly frustrated if service does not meet 23 their expectations. 24 I understand their concerns, and it's why we 25 welcome a continuing dialogue with respect to how we 1 can identify sustainable funding sources for the 2 MTA's needs, and why my greatest challenge is to see 3 to it that operating costs are being managed 4 aggressively in a way that holds those costs down at 5 a time we need to ensure safe, reliable service, and 6 maintaining the physical asset that we are 7 responsible for. 8 New York City Transit alone is a $750 billion 9 (three-quarters-of-a-trillion-dollar) infrastructure 10 asset. 11 When the MTA does that, it at least gives our 12 customers and elected officials confidence that the 13 MTA revenue for measures they approved is being well 14 spent. 15 It's a charge I do not take lightly. 16 Before I wrap up, I want to touch on another 17 critically important aspect of the MTA's finance, 18 which is the capital program, which could very well 19 be an synonym for investment in transit. 20 In talking to this body, it's clear you 21 understand the importance of the capital program. 22 You have supported it over the last 30 years. 23 You brought the system back with the first 24 capital program in 1982, and we've spent over 25 $75 billion in capital improvements. 1 Before "Superstorm Sandy" and all the 2 devastation it wrought, the MTA's current 5-year 3 capital program was about -- the 4 2010-through-'14 program was about $24 billion. 5 Our board recently approved an amendment to 6 the program, adding another $5.8 billion for what we 7 call "resiliency work"; what we need to do to harden 8 the system against future storms of a similar ilk as 9 what "Sandy" was. 10 The systems, they need to be done, so that we 11 can protect this asset and have it available for 12 people. 13 We expect this work to be funded mostly 14 through reimbursements from the federal government, 15 and these funds come in addition to the $4.7 billion 16 that we are going to receive for recovery; restoring 17 the system to the day it was before the storm. 18 Those are two separate investments: 19 $4.7 billion, and 5.8. 20 We're close to the one-year anniversary of 21 that terrible storm, and it is, by far, the worst 22 disaster that ever hit this system. 23 You experienced it, you saw it. 24 You saw how important the MTA system was to 25 the region when it was out of service. 1 We were able to restore service piece by 2 piece and bring the region back to normal, but 3 restoring the service was just the beginning, and we 4 have years and years of work just to get back to 5 where we were the day before "Sandy" struck, and you 6 and your constituents are seeing those impacts 7 daily, as we have to take lines out of service to do 8 these critical repairs. 9 We're not wasting any time. 10 We started recovery projects as soon as the 11 hurricane cleared, and we have more than 12 $500 million in repair contracts already underway, 13 and around $3 billion more in construction projects 14 in design. 15 The idea is to get these behind us as soon as 16 possible. 17 In total, when you include "Sandy" repair and 18 mitigation projects, the current capital program is 19 about $35 billion. 20 That sounds like a lot, but you simply can't 21 run a system that runs 24 hours, 7 days a week, and 22 one that's 109 years old and the lifeblood of 23 New York, without the money to maintain its aging 24 infrastructure. 25 If those of you can remember what the system 1 was like in 1983 before the capital investments 2 kicked in, cars went -- subway cars went 8,000 miles 3 between failures. 4 They're now over 100,000. 5 The average commuter rail train went 6 15,000 miles. 7 And, today, those numbers are vastly 8 increased: a hundred and seventy, and a hundred and 9 forty thousand miles, respectively, between 10 failures. 11 Because of capital renewal, we have in our 12 system a whole new generation of customers who never 13 knew, because they never experienced how bad this 14 system was in a state of good [sic] repair, and 15 their expectations for what we may have thought were 16 luxuries or niceties, and they consider to be 17 entitlements, are gonna be an ever-increasing amount 18 of the customers we serve. 19 You may not realize how many jobs in 20 New York State are created about the MTA's capital 21 program, but I'd like to share them with you because 22 the numbers are staggering. 23 The New York Building Congress estimates the 24 last year -- that last year, MTA alone accounted for 25 25 percent of the downstate construction industry; 1 or 18,000 jobs. 2 But the capital's program -- but the 3 MTA's capital program is far beyond just the 4 downstate area. 5 It has a profound effect on economic 6 development in every corner of the Empire State, and 7 here are just two examples: 8 Last month, our board approved a nearly 9 $2 billion contract with Kawasaki to build new 10 trains for Long Island Railroad and Metro-North. 11 That order alone is expected to create up to 12 1500 jobs at the Kawasaki plant in Yonkers and its 13 suppliers in the state. 14 The MTA has also bought more than 2,000 of 15 the 3,000 cars -- railcars built at Bombardier's 16 100,000-square-foot facility in the North Country, 17 in Plattsburgh, including a new rail fleet of MTA 18 commuter railroads in -- MTA commuter railcars in 19 2007. 20 Overall, according to one estimate, the 21 current capital program will provide 22 350,000 New York jobs, while creating $44 billion 23 worth of economic activity throughout the state. 24 Early next year, we will be bringing our 25 2015 to '19, our next capital program, to the board 1 for approval, and we expect it to be roughly the 2 same size as our current capital program before 3 "Sandy" projects were added. 4 And we are committed to working with all of 5 you however you'd like, in every way possible, to 6 fund that program. 7 You've been force in the -- been together 8 with us in the past, and we know you'll be with us 9 in the future. 10 The bottom line is: 11 We must continue to renew for the sake of the 12 region. 13 Nothing less than New York's economy is at 14 stake. 15 Our mass-transit system will always require 16 public financial support, and in our region 17 especially, it should, because as I said earlier, 18 it's second only to the economy of Tokyo in terms of 19 being a world leader. 20 New York City has four times the job and 21 population density of any -- the next largest 22 U.S. city, once again, due to the transportation 23 network and the services it provides, and it 24 provides some of the most valuable real-estate 25 market in the country. 1 It should, because it makes New York State, 2 on a per capita base, the most energy-efficient or 3 sustainable one in the nation. 4 I know we can never take our subsidies for 5 granted, which is why we need to have dialogues like 6 this, make sure we answer your questions, meet your 7 concerns, and work with you as we get more. 8 We need to earn every cent we get by 9 continuing to provide safe and reliable service 10 throughout the region; 11 We need to earn every cent we get by 12 continually adjusting our service to fulfill 13 regional transportation needs; 14 And we need to earn every cent we get by 15 continuing, at every opportunity, to not only make 16 our operation as efficient and low-cost as possible, 17 but to demonstrate that on a perceptive level to our 18 riding public. 19 Once again, thank you for inviting me to 20 speak to the Committee today. 21 SENATOR FUSCHILLO: Thank you very much, Tom. 22 I appreciate it. 23 We're also joined by Senator Perkins, to my 24 left. 25 1 The next speaker is Carmen Bianco. 2 Carmen. 3 Good morning. 4 Just for the record, just state your name and 5 your title. 6 CARMEN BIANCO: Good morning. 7 My name is Carmen Bianco. 8 I am the president of New York City Transit. 9 SENATOR FUSCHILLO: Thank you very much for 10 being here. 11 CARMEN BIANCO: Thank you, Tom. 12 Good morning, Chairman Fuschillo and members 13 of the New York State Senate Transportation 14 Committee. 15 I am pleased to have this opportunity to 16 discuss MTA New York City Transit's operating and 17 capital budgets. 18 New York City Transit is the largest public 19 transportation agency in North America, and one of 20 the largest in the world. 21 The subway has a daily ridership of 22 5.4 million, and an annual ridership, in 2012, of, 23 roughly, 1.7 billion, the highest level of ridership 24 since World War II. 25 Our fleet of more than 6300 subway cars 1 traveled approximately 340 million miles in 2012 2 along 660 miles of track, making 7,817 weekday 3 trips. 4 And as Chairman Prendergast already 5 indicated, we are one of the few transit systems in 6 the world that operates around the clock: 24 hours a 7 day, 7 days a week. 8 There are 468 subway stations serving 9 Brooklyn, The Bronx, Manhattan, and Queens. 10 The Staten Island Railway, which serves 11 Staten Island, has 22 stations. 12 New York City Transit and MTA Bus, combined, 13 has more than 5,600 vehicles in 2012, the largest 14 fleet in North America. 15 The average ridership in 2012 was 2.6 million 16 a day, approximately 790 million annually, on 17 235 local routes, 5 select bus service -- select 18 bus-service rapid-transit routes, and 64 express 19 routes throughout the 5 boroughs. 20 Our buses made more than 54,000 revenue trips 21 and traveled more than 382,000 revenue miles on an 22 average weekday; over 149 million total miles 23 yearly. 24 New York City Transit also operates a 25 citywide paratransit system for customers with 1 disabilities. 2 In 2012, Access-A-Ride served an average of 3 21,679 weekday customers daily, and provided 4 6,770,759 trips utilizing a fleet of more than 5 1900 vehicles. 6 I cite all these statistics because I believe 7 that it's important to emphasize the vastness, 8 complexity, and expansive operating scope of our 9 system; a system that poses daily and ever-changing 10 challenges, has varied and sometimes competing 11 priorities, and, by necessity, has extensive 12 budgetary requirements for its maintenance and 13 operation. 14 Today, New York City Transit remains fully 15 committed to its mission of providing safe, secure, 16 reliable, and convenient transportation services for 17 its customers despite the lingering impacts of a 18 difficult economy and the devastating residual 19 impact of "Superstorm Sandy" on the region's 20 transportation network. 21 Just a few years ago, the MTA faced a severe 22 financial crisis. 23 In response, we implemented a large-scale 24 budget-reduction program which generated 600 million 25 in annual savings. 1 That amounted to about 75 percent of the 2 total MTA-wide annual savings of $800 million. 3 Our finances have improved in the last 4 two years, in large measure, because we have 5 continued our efforts to control costs. 6 For example, we put in place a revised 7 contract for prescription-drug benefits on favorable 8 terms, which includes a special employee-group 9 waiver plan that provides Medicare drug benefits at 10 a reduced cost, and will generate savings of more 11 than 20 million annually. 12 One of the most painful budget reductions 13 implemented in 2010 was an unprecedented package of 14 bus and subway service reductions that saved 15 $72 million annually. 16 As our finances have improved over the 17 last -- over the last -- over the past two years, we 18 have been able to selectively fund and invest -- 19 reinvestments in service. 20 This year, we are implementing a package of 21 major service investments costing $18 million 22 annually. 23 And in July, we just identified an additional 24 investment of $8 million for initiatives to be 25 pursued next year. 1 During 2012 -- 2012 and 2013, we also 2 introduced three new select bus-service routes which 3 provide speedier bus service to our customers, at a 4 cost of $6 million annually. 5 Over the same period, we've adjusted 6 schedules to accommodate increasing ridership, 7 primarily, by increasing the frequency of service, 8 at an annual cost of $12 million, including subway 9 changes scheduled for implementation next June. 10 And next year, we will implement extended 11 7-line service to the far west side of Manhattan, at 12 an estimated annual operating budget of $13 million. 13 Our cost-reduction initiatives has also 14 permitted us to make selective investments in 15 service quality and maintenance reliability. 16 One notable initiative launched in 2012, and 17 expanded in 2013, is FASTRACK, a program that shuts 18 down selected track corridors for four consecutive 19 weeknights, permitting intensive coordinated subway 20 maintenance efforts that will include activities 21 that cannot be performed efficiently while regular 22 service operates. 23 Starting in 2014, we plan to invest in 24 additional personnel to enable increased frequency 25 of track cleaning, to add 10 stations to our 1 intensive station-cleaning program, under which 2 rehabilitated stations are cleaned more frequently, 3 and, to add staff at our rail-control center to 4 improve delay management, that can reduce service 5 delays experienced by our customers. 6 These initiatives are being pursued even as 7 we proceed with our massive effort to recover from 8 the impact of "Superstorm Sandy." 9 The speed with which we restored service 10 after the storm has been well reported, and I'm 11 proud of our employees who accomplished that feat, 12 but, it has taken intensive efforts during this 13 year, at a considerable cost, to maintain service in 14 parts of the system that sustained the worst damage. 15 While we're on the topic of "Sandy's" impact 16 on the operating budget, let me address the matter 17 of overtime expenditures. 18 Historically, the more severe weather we 19 encounter, the greater our overtime expenses; thus, 20 the overtime expenditures related to last year's 21 Herculean effort to recover from the unprecedented 22 damage to the transit system caused by 23 "Superstorm Sandy" were not unexpected. 24 The decision to restore service for our 25 customers as quickly as possible is reflected in our 1 2013 overtime expenditures in an unprecedented way. 2 In the July 2013 financial plan, we added 3 36 million to recover 11 million in projected 4 overruns, primarily reflecting expenses related to 5 "Sandy" recovery efforts in 2012 that are being 6 incurred in 2013, and 20 million for ongoing repairs 7 to infrastructure damaged by the storm. 8 We expect to recoup the bulk of these costs 9 via Federal Transit Administration reimbursements. 10 The balance of the projected overtime 11 overruns are due largely to the adverse weather 12 events, particularly the major snowstorm on 13 February 8, 2013, as well as greater anticipated 14 traffic delays which generated unscheduled overtime 15 for bus trips, other unanticipated maintenance 16 requirements, and vacancy and absentee -- 17 absent-related coverage. 18 We are continuing to work on containing our 19 overtime expenditures by filling vacant positions, 20 and other means. 21 The overtime costs that will be presented in 22 our November financial plan will reflect the 23 realistic appraisal of overtime spending likely to 24 continue. 25 Moving on to New York City Transit's current 1 2010-through-2014 capital program, progress 2 continues. 3 Its total value is 11.6 billion, with 4 commitments and construction progress proceeding as 5 planned. 6 Highlights of the 2010-through-2014 period 7 include: 8 The purchase of 403 subway cars and 9 2,119 buses; 10 Component-based repairs at more than 11 125 subway stations; 12 Critical investments in core infrastructure, 13 including $2 billion worth of signal-system 14 modernization; 15 The continuing rollout of new 16 customer-focused technology, such as Help Point, and 17 bus time in all boroughs; 18 And construction of a new Arthur Kill Station 19 for the Staten Island Railway. 20 Major upcoming awards include: 21 The purchase of 690 standard, 22 256 articulated, and 300 express buses; 23 28 station-renewal projects on the Liberty, 24 Covert, New Lots, and Sea Beach lines; 25 Completion of communication-based train 1 control on the Number 7 line, and the start of 2 communication-based train control on the 3 Queens Boulevard line; 4 And replacement of our bus radio system. 5 We are increasing critical staffing and 6 outside engineering assistance so that all of the 7 capital work I've just outlined can be performed 8 effectively while we also proceed with 9 "Superstorm Sandy" repairs and mitigation efforts. 10 Looking ahead, New York City Transit is 11 developing its 2015-through-'19 capital program in 12 accordance with the priorities identified in our 13 20-year need assessment. 14 While, overall, the upcoming program will 15 look similar in content to the current program, 16 there will be an increased emphasis on upgrading our 17 signal system with communication-based train 18 control, as well as a wider use of component-based 19 investment strategies to target priority needs in a 20 cost-effective manner. 21 The 2015-through-'19 program will also 22 include the completion of wheelchair accessibility 23 at 188 key stations, and deployment of new 24 technology, such as a new fare-payment system, and, 25 enhanced customer communication, such as 1 train-arrival information on the B Division subway 2 lines. 3 Some of these enhancements, while providing 4 better service for our customers, will also require 5 additional operating resources, as we are mindful of 6 that as we prepare our financial plans. 7 In closing, having just been recently 8 appointed as New York City Transit's president, 9 I would like to take this opportunity to let you 10 know I am immensely honored to lead the 46,000-plus 11 dedicated, talented men and women who work for 12 New York City Transit. 13 They demonstrate their steadfast commitment 14 each and every day, and time and time again, during 15 crisis to keep New York City moving. 16 Thank you for your time and attention. 17 SENATOR FUSCHILLO: Thank you, Carmen. 18 We'd ask that you stay for some questions 19 after everybody has given their testimony, as well. 20 CARMEN BIANCO: Yes, sir. 21 SENATOR FUSCHILLO: Darryl Irick. 22 Good morning, Darryl. 23 DARRYL IRICK: Good morning. 24 SENATOR FUSCHILLO: Would you please state 25 your name and your title, affiliation, for the 1 record. 2 DARRYL IRICK: Good morning. 3 My name is Darryl Irick. I am the president 4 of MTA Bus Company. 5 Good morning, Chairman Fuschillo, members of 6 the Committee. 7 I appreciate this opportunity to speak with 8 you briefly about our bus operations in 9 New York City. 10 As you may know, I wear two hats: president 11 of MTA Bus Company, and senior vice president of 12 New York City's Transit Department of Buses. 13 Though distinct titles, in order to establish 14 consistent and uniform standards, I manage the 15 two bus agencies as one. 16 Since you've heard a great deal about 17 financial matters from Chairman Prendergast, and 18 about New York City Transit matters from 19 President Bianco, including facts about our 20 consolidated bus operations, I would like to spend 21 my time giving you an overview of MTA Bus Company's 22 operations. 23 The bus company was created in 2004 when 24 responsibility for operating routes, franchised by 25 New York City to seven private companies, were 1 transferred to the MTA. 2 To effect the transfer, the City agreed to 3 subsidize the net cost, after revenues, of the 4 MTA Bus Company's operations. 5 As a result, today, MTA Bus operates express 6 routes between Manhattan and The Bronx, Brooklyn, 7 Queens, and the city of Yonkers, as well as local 8 routes in The Bronx, Brooklyn, and Queens. 9 The merger of the private operations was 10 phased in between January of 2005 and February of 11 2006. 12 Major overhaul was necessary to bring the 13 services that were provided by the private operators 14 up to MTA standards, including the upgrading of an 15 aging fleet and facilities, instituting improved 16 maintenance and improving service reliability and 17 responsiveness to current ridership demands. 18 Among the steps that were taken in 2005 were: 19 We placed 1,000 -- over -- close to 1100 new 20 buses in service, representing, roughly, 86 percent 21 of that fleet; 22 Assessed conditions at each of the 23 eight depots, with a focus on deficiencies, 24 including fire protection, security, ventilation, 25 emergency backup systems, structural deterioration, 1 and age in inadequate depot equipment, and any 2 existed environmental conditions that preexisted. 3 By the end of the 2010 and 2014 capital 4 program, we will have programmed approximately 5 $150 million into our facility upgrades. 6 We also created a consolidated bus command 7 center; 8 Made all maintenance procedures consistent 9 with New York City Transit's inspection and 10 documentation standards; 11 Instituted a comprehensive bus-overhaul plan, 12 with fleet-specific work scopes at scheduled 13 intervals; 14 Provided training, support, at depots to 15 improve maintenance diagnostic skills; 16 Changed the focus to preventive maintenance 17 from a prior, quote/unquote, fix-as-fails mentality; 18 Focused initial scheduling efforts on routes 19 that were overloaded or had deficient running times; 20 We adopted loading guidelines used by 21 New York City Transit for analyzing and scheduling 22 service; 23 Established consistent service patterns and 24 streamlined routes to reduce travel times and 25 improve reliability; 1 We revised bus-stop locations to address 2 safety concerns and to increase travel speed; 3 Standardized customer communications, 4 including placing bus maps in every bus and 5 Guide-A-Rides at stops where they had not existed. 6 Today I am proud to say MTA Bus has gained, 7 since its inception, 30 million customers, and 8 established a reputation for reliability and good 9 service. 10 As a distinct agency, it is the seventh 11 largest bus company, as measured by ridership, in 12 North America. 13 To cite some facts: 14 We operate 81 routes, 46 local and 15 35 express, from The Bronx, Brooklyn, Queens, and 16 Yonkers; 17 We operate a fleet of 1252 buses out of 8 bus 18 depots, 5 which are leased and 3 owned by 19 New York City, 4 of which, I might add, were all 20 over 50 years old; 21 We employ 3600 talented, dedicated men and 22 women; 23 And do this all on MTA Bus agency's 24 2013 operating budget of $575 million, with an 25 anticipated fare-box revenue in 2013 of 1 $196 million. 2 Finally, I would like to emphasize the 3 ongoing coordination between the two bus operations 4 that I am in charge of. 5 The MTA Bus Company partners with 6 New York City Transit to provide such things as 7 in-service ridership monitoring, production of 8 schedule information at bus stops, printed 9 timetables and web-based schedules, and other 10 service information, and the inclusion of MTA Bus 11 information and customer information call center. 12 While two different corporate entities, 13 New York City's Transit Department of Buses and the 14 MTA Bus Company are very much complementary 15 operations which ensures that we are providing 16 MTA Bus customers with the same service as we 17 provide our New York City Transit bus riders. 18 Thank you, and that concludes my remarks. 19 SENATOR FUSCHILLO: Thank you, Darryl. 20 Again, I'll ask that you stay until everybody 21 concludes their testimony, and then take some 22 questions from the Panel. 23 Thank you very much for your testimony. 24 DARRYL IRICK: You're welcome. 25 1 SENATOR FUSCHILLO: Helena Williams, 2 president, MTA Long Island Railroad. 3 Just, please state your name and your title 4 for the record, please. 5 Good morning, Helena. 6 HELENA E. WILLIAMS: Good morning. 7 My name is Helena Williams, and I'm president 8 of the MTA Long Island Railroad. 9 Good morning, Senator Fuschillo and other 10 members of the Committee. 11 Thank you for the opportunity to discuss the 12 Long Island Railroad's many recent achievements, as 13 well as the challenges we have faced, and our goals 14 for the future. 15 During the last six years, the 16 Long Island Railroad has been focused on safety, 17 security, and service reliability. 18 We continue to modernize our infrastructure, 19 make improvements to expand capacity, and strengthen 20 our customer service. 21 I'm very proud of the dedicated workforce at 22 the Long Island Railroad. 23 Our workforce does a tremendous job of 24 keeping the railroad running 365 days a year, 25 24 hours a day, in all kinds of weather. 1 As you are all keenly aware, we've had our 2 share of weather in recent years, from "Irene," to 3 "Sandy," to "Nemo," and dozens of other snowstorms 4 and windstorms. 5 Allow me to brief you on the state of 6 Long Island Railroad's budget and capital plan, as 7 well as some of our important recent 8 accomplishments, many of which we achieved with your 9 input and support, as well as that of our customers 10 and the Long Island Railroad Commuter Council. 11 The 2013, July, financial plan contains the 12 resources necessary for the Long Island Railroad to 13 achieve its performance goals in train service, 14 fleet performance, and service reliability. 15 Equally important, the financial plan lays 16 the foundation for current and future 17 customer-service improvements through investments in 18 service, infrastructure, and technology. 19 These investments will support the 20 post-"Sandy" reconstruction, provide for future 21 service growth, and leverage technology to make the 22 purchase of tickets more convenient for customers. 23 The 2013 operating budget is approximately 24 1.6 billion, and supports a headcount of just over 25 6,900 positions. 1 The bulk of these positions are in key 2 operating departments: transportation, 3 engineering/right-of-way maintenance, and the 4 maintenance of equipment. 5 Like all large operating entities, a key 6 component of our staffing strategy calls for using 7 overtime. 8 Using overtime is essential when responding 9 to weather events, emergencies, or unscheduled 10 maintenance, backfilling open positions and when 11 working on projects of a limited short duration. 12 In these situations, overtime allows us to 13 efficiently match workload to staffing. 14 It is also critical that overtime be managed 15 and monitored closely. 16 To this end, each year, the 17 Long Island Railroad establishes an overtime budget 18 that reflects what is, essentially, our best 19 estimate. 20 The 2013 adopted budget included almost 21 90 million in funding to cover an estimated 22 1.8 million hours of overtime. 23 Through the first half of the year, actual 24 overtime was just over 53 million; or -- which was 25 about 11 million; or 26 percent above budget. 1 This overrun was driven by a few key factors. 2 We needed to respond and prepare for 3 different weather events, and restoration after 4 those weather events; 5 We did incur two derailments: one on the main 6 line, and a second within Penn Station; 7 And we have had a number of open operational 8 positions. 9 The cost of open positions is related to the 10 turnover in staff that we've had as retirements 11 continue. 12 We do offset the overtime by savings in 13 straight time, but we're moving forward on a 14 aggressive hiring and training schedule to fill open 15 operational positions as quickly as possible and 16 bring down overtime related to open positions. 17 We've also focused our budgetary savings on 18 tighter inventory management. 19 Purchase of parts is more closely tied to a 20 production plan, and we have successfully adjusted 21 minimum stock quantities without impacting 22 availability of parts or availability of the fleet. 23 In addition, several major capital-funded 24 initiatives are scheduled to come online during the 25 financial-plan horizon of 2013 to 2017. 1 This includes positive train control; a 2 rollout of the first M-9 cars, as the Chairman 3 referenced; the completion of the first segment of 4 the main line double-track project, and the 5 financial plan reflects all of the necessary 6 resources to ensure that the benefits of these 7 assets, and that they can be fully realized and 8 maintained. 9 The Long Island Railroad has made progress in 10 a number of customer-service areas in recent years. 11 This year, we've been able to implement 12 service enhancements, addressing some of the cuts 13 that were made during the economic downturn in 2010; 14 specifically: 15 Customers on the Ronkonkoma branch, one of 16 our strongest areas for growth, will see new 17 off-peak service, as well as a new PM peak train; 18 Fort Washington customers will see the return 19 of half-hourly off-peak service on weekends. 20 And, of course, that's very popular. It's 21 been an area where our customers have asked us to 22 please return to the half-hour schedule. 23 Customers on the Babylon branch will have 24 more options with the restoration of two PM peak 25 trains; 1 And a late-evening train to Hicksville will 2 address some of the crowding on the main line; 3 Finally, we were able to expand the seasonal 4 weekend service from Ronkonkoma to Greenport, which 5 will now run from April through Thanksgiving, and 6 give that area an opportunity to see customers who 7 come out for the fall season and enjoy the 8 opportunity to visit wineries and other events out 9 on the east end. 10 We've also seen an increase in ridership on 11 the Montauk branch. 12 This summer, following our decision to move 13 the Cannonball, which runs express to West Hampton 14 on Friday afternoons in 94 minutes, from 15 Penn Station -- we also have to Penn Station from 16 Hunterspoint Avenue departure. 17 Our Hampton service brings tens of thousands 18 of visitors to the east end each season. 19 And the Cannonball move proved to be 20 extremely popular, as we continued to see growth in 21 our Montauk service. 22 As you may be aware, the MTA has made 23 improving customer communication a priority. 24 The Long Island Railroad's around-the-clock 25 public-information office, located right in the 1 Long Island Railroad command center in Jamaica, 2 issues alerts and text messages on every train that 3 is ten minutes or more late to more to 4 43,000 customers who have signed up to receive 5 e-mail alerts. 6 They also coordinate station announcements, 7 electronic sign messaging, web updates, and stay in 8 regular contact with traffic-reporting agencies on 9 the radio. 10 The MTA press office works to keep the public 11 fully informed of any service-related issues on the 12 Long Island Railroad. 13 Within the coming weeks, you will see new 14 customer-assistance ambassadors on the floor of 15 Penn Station and in Jamaica, equipped with special 16 uniforms and smartphones to better assist customers 17 seeking information. 18 We are also continuing to modernize and get 19 ready for the future, including when 20 Long Island Railroad customers will be able to reach 21 Grand Central Terminal in a one-seat ride via 22 east-side access. 23 Many of you have toured the tunnels and 24 concourse areas that are being carved out of bedrock 25 140 feet below Grand Central. 1 This will to be largest expansion of 2 Long Island Railroad service in 100 years, bringing 3 Long Islanders to jobs on the east side and 4 improving Long Island property values and keeping 5 the region competitive. 6 We will transform Long Island Railroad 7 service, since we will no longer have scheduled 8 connections in Jamaica which tend to result in some 9 of our delays. 10 This is all good news, but we know we have 11 many challenges ahead. 12 Much of our infrastructure is old and we need 13 to maintain an aggressive track-maintenance program 14 and a robust capital plan to allow us to continue 15 our modernization efforts. 16 For that, frankly, we need your help. 17 The Long Island delegation in Albany has 18 always been a forceful advocate for the 19 Long Island Railroad, as has been the rest of the 20 Senate members. 21 We hope that you will continue to support our 22 capital-program efforts. 23 In reality, the keeping of our system vibrant 24 is a very complicated undertaking; it requires the 25 resources. 1 And we appreciate the opportunity today to 2 testify and tell you about our systems. 3 SENATOR FUSCHILLO: Thank you very much, 4 Helena. 5 As stated with the other members, I'd ask 6 that you to stick around, after all the testimony, 7 for some questions the members may have. 8 Thank you for your testimony. 9 Howard Permut. 10 Good morning, Howard. 11 HOWARD R. PERMUT: Good morning. 12 Good morning, Senator Fuschillo, and members 13 of the Committee. 14 Thank you for this opportunity to speak about 15 Metro-North's current situation and challenges. 16 SENATOR FUSCHILLO: Howard, can I just 17 interrupt you, just, to state your name and your 18 title. 19 HOWARD R. PERMUT: Oh, I'm sorry. 20 Howard Permut, president at MTA Metro-North 21 Railroad. 22 The mission of Metro-North Railroad is to 23 provide safe, reliable, and efficient transportation 24 services to our customers so that economic viability 25 of the region can continue to thrive and grow. 1 For the past several years, Metro-North's 2 on-time performance has consistently been at or 3 above 97 percent, which has now become what our 4 customers expect of us, and we fully embrace high 5 customer expectations, and as a result, our 6 ridership continues to grow. 7 We transported 83 million customers last 8 year, making us the busiest passenger railroad in 9 the country for the second year in a row. 10 Metro-North runs over 750 trains every 11 weekday into and out of New York City. These trains 12 serve your constituents from northern suburban 13 communities in Westchester, Putnam, Dutchess, 14 Rockland, and Orange counties. 15 The New Haven line additionally serves 16 southwestern Connecticut, and we operate these 17 trains under a formal service agreement with the 18 State of Connecticut. 19 Our services in Rockland and Orange county 20 are operated by New Jersey Transit under a formal 21 service agreement as well. 22 All told, our territory extends over 23 2700 square miles, the largest in the northeast. 24 Our growth and success over the last 30 years 25 have come about through the combination of 1 hard-working and dedicated employees, committed 2 leadership, efficient spending, and significant 3 capital investment. 4 Metro-North's 2013 annual operating budget is 5 approximately 1.4 billion which is paid for by 6 combinations of fares and subsidies. 7 We are seeing a continuation of our healthy 8 2012 ridership numbers, with year-to-date ridership, 9 through July, at 48.3 million. 10 Commutation ridership is strong, but drops in 11 discretionary ridership indicate that there's still 12 a level of economic uncertainty in the region. 13 We are constantly seeking ways to maximize 14 both fare and non-fare revenues to offset our 15 expenses. 16 Non-fare revenues are up over 43 percent over 17 the last 5 years through stronger advertising, 18 commissary and retail sales in historic 19 Grand Central Terminal, which, by the way, 20 celebrates its centennial this year. 21 While expanding our services and dealing with 22 a series of extreme weather events, we have been 23 able to keep our operating subsidies fairly 24 constant, averaging almost -- averaging, excuse me, 25 approximately $360 million a year for the last 1 5 years. 2 However, like most publicly entities, our 3 non-controllable expenses, such as health-care 4 premiums and pension costs, continue to rise much 5 faster than inflation, so we're working very hard to 6 contain the costs we do control. 7 Over the last few years, we have taken 8 proactive steps to reduce our expenses. 9 A major area of reduction has been 10 controlling material costs and the implementation of 11 strategic procurements. 12 Specific actions include continuous review of 13 reordering quantities of stock material, and 14 utilization of a new forecasting system which 15 improves our ability to track, distribute, and 16 anticipate material needs. 17 Through these and other measures, we have 18 saved $28 million in material costs since 2009. 19 We have also taken a number of actions to 20 reduce unscheduled overtime; 21 We have limited sick and vacation overtime 22 coverage; 23 We have changed the work-shift hours to 24 maximize the productivity of straight-time work 25 hours; 1 We have distributed the use of vacation time 2 more even throughout the year; 3 And we have aggressively filled vacant 4 positions. 5 Unfortunately, the response to extreme 6 weather events, such a "Hurricane Sandy" and 7 "Superstorm" -- I'm sorry, "Hurricane Irene" and 8 "Superstorm Sandy," and operating emergencies over 9 the last two years, have masked Metro-North's 10 progress in this area. 11 Excluding the extraordinary overtime required 12 for "Sandy" of $2.9 million in 2012, overtime would 13 have been just 52.3 million, a 6.5 percent reduction 14 versus 2008 levels. 15 Internal audits and outside reviews by 16 oversight agencies also help us to identify 17 efficiency improvements. 18 A recent MTA Inspector General report found 19 some Maintenance of Way employees who were not 20 working efficiently, and, in some cases, not working 21 at all, during their assigned shifts. 22 We take this report and its findings very 23 seriously, and have instituted improved time and 24 activity monitoring in this unit, in part, through 25 the utilization of additional features of our 1 Kronos timekeeping system. 2 In addition, we plan to install GPS tracking 3 devices in all our work vehicles by 2014, which will 4 provide an additional and critical tool for our 5 managers who often have workforces spread out across 6 our large operating territory. 7 Metro-North continues to make major 8 investments in our rolling stock and infrastructure 9 in order to provide safe and reliable service to the 10 riding public. 11 We are approaching the final year of our 12 $1.5 billion 2010-2014 capital program, of which 13 $700 million has been committed to date. 14 We have consistently completed projects on 15 time and on budget, but the needs of an aging system 16 are great, so the importance of continued capital 17 investment cannot be overstated. 18 This program has supported a number of 19 significant projects, including $225 million for the 20 purchase of 405 M-8 railcars which are replacing 21 40-year-old cars in the New Haven line, an 22 investment which is being done jointly with the 23 State of Connecticut; as well as, approximately, 24 $116 million in West-of-Hudson improvements, 25 including a brand new cab-signal automatic 1 train-control system, track work, and improvements 2 to bridges and viaducts. 3 Upcoming projects for the 2013 and 4 '14 include $290 million for Harmon Shop 5 rehabilitation, and $55 million in 6 customer-communication improvements, which is an 7 area of focus for us as we strive to provide 8 increased levels of accurate and timely customer 9 information. 10 A final area of investment needs come in 11 direct response to "Superstorm Sandy." 12 These are categorized into 13 restoration-resiliency projects, and are amendments 14 to the 2010-2014 program. 15 Totaling 313 million, restoration projects 16 include repairs to rolling stock, right-of-way, 17 power, communications, signal systems, that were 18 necessary after "Sandy" wreaked havoc on our 19 territory. 20 It was worth -- it's worth repeating, that 21 approximately half our Hudson line was underwater 22 during the height of the storm, damaging 30 miles of 23 communication cable and many of the electronic 24 systems that keep our railroad running. 25 In addition to repairing what was broken, 1 Metro-North also has identified $128 million in 2 projects to make our system more resilient, 3 including water-level monitoring systems and 4 improvements to our power and signal systems, to 5 harden them against water incursion. 6 Finally, we have identified the parts of our 7 territory that, if damaged, prevent us from 8 operating at all. 9 The recent power failure in Mount Vernon is a 10 stark example of the need to identify and address 11 single points of failure within our system. 12 All our East-of-Hudson trains run across the 13 Harlem River Lift Bridge at 138th Street. 14 Should it be out of service, more than 15 200,000 daily commuters would be prevented from 16 getting into and out of Manhattan. 17 It is a critical facility, and we have 18 included money in the capital-plan amendment to make 19 the structure more resilient. 20 Metro-North has had a 30-year track record of 21 safety enhancements and operational and financial 22 success. 23 In fact, Metro-North was recognized with a 24 prestigious Brunel Award in 2011, an international 25 award for railroading excellence. 1 With 30 years of operations also comes 2 rapidly growing attrition rates as large numbers of 3 our workforce become eligible to retire. 4 The hiring, training, and retention of 5 qualified people has become an urgent focus. 6 We are also dealing with other issues 7 important to continue in our record of safe and 8 reliable service. 9 In July, we began a comprehensive project to 10 improve the condition of our right-of-way in a 11 high-traffic section of the railroad in The Bronx. 12 We have augmented our own assessments with 13 new technologies to identify the track-repair needs 14 and prioritize the work. 15 These assessments and repairs have required 16 slower train speeds, schedule revisions, and delays 17 of five to ten minutes for our customers, so we're 18 working hard to complete the work and get back to 19 regular reliability and schedule as soon as 20 possible. 21 This year we have also been faced with a 22 number of incidents that include the following: 23 A derailment that resulted in a 24 sideswipe-collision in Bridgeport, Connecticut, on 25 the New Haven line on May 17th; 1 A very tragic accident that occurred on the 2 New Haven line on May 28th, resulting in the death 3 of a track foreman with 27 years of work experience 4 at Metro-North; 5 A derailment on the Hudson line near 6 Spuyten Duyvil of the CSX freight train hauling 7 garbage on July 18; 8 And just recently, a Con Edison power-cable 9 failure in Mount Vernon on September 25th, resulting 10 in New Haven line service disruptions. 11 The first three incidents are being 12 investigated by the National Transportation Safety 13 Board, and as part of that investigation, the first 14 two will be the subject of an NTSB public hearing. 15 We have been cooperating fully with the NTSB 16 since the outset of these incidents, and we will 17 continue to do so. 18 We are not waiting, however, for the NTSB to 19 conclude its investigation before we take action. 20 Metro-North has taken numerous proactive 21 steps to ensure the integrity of our railroad and 22 the safety our customers and employees. 23 Within days of the May 17th derailment, 24 Metro-North retained the Transportation Technology 25 Center (TTCI), a world-class transportation research 1 and testing organization affiliated with the 2 American Association of Railroads. 3 TTCI has been assessing Metro-North's track 4 inspection, maintenance, and training practices, and 5 recommending improvements. 6 They also are utilizing specialized equipment 7 to do thorough inspection analysis of our entire 8 physical track network, which is leading to targeted 9 corrective actions which are being taken as we 10 speak. 11 Now, let me finally discuss a recent 12 disruption to our service that was outside our 13 control. 14 On the morning of September 25th, a 15 Con Edison voltage heater cable in Mount Vernon 16 failed at 5:22 a.m. 17 Without electric power to operate trains in 18 the 8-mile section between Harrison and 19 Mount Vernon, we were forced to operate only diesel 20 trains to and from Stamford, and between Stamford 21 and Grand Central, at best, 33 percent of our normal 22 schedule. 23 Of the two feeder cables in this area, one 24 had already been taken out of service, and Con Ed 25 was in the process of upgrading and relocating it to 1 be compatible with substation improvements being 2 made to the New Haven line in that area at the time 3 that the other cable-feeder failed. 4 After several days, Con Ed reengineered 5 temporary substations to provide limited additional 6 power. 7 At that point, we were able to provide about 8 half the scheduled number of trains. 9 In addition, we worked with New York City 10 Transit, New York State Department of 11 Transportation, the New York City Department of 12 Transportation, Westchester County, and numerous 13 local municipalities to pull together a Bus-And-Ride 14 plan to provide additional options. 15 Full service was finally restored this past 16 Monday. 17 We know this was a difficult and lengthy 18 disruption, and because of the unique magnitude in 19 duration of the disruption, the MTA board last week 20 voted to approve a credit for New Haven line 21 customers who had monthly and weekly tickets valid 22 for use during this time period. 23 Thank you for the opportunity to speak here 24 today, and for your continued support and financial 25 assistance which will enable Metro-North to provide 1 the kind of service the public expects and deserves. 2 That concludes my remarks. 3 SENATOR FUSCHILLO: Thank you, Howard. We 4 appreciate your testimony, and we ask that you stay. 5 Thank you very much. 6 Michael. 7 Michael, I've received two interpretations of 8 your last name. 9 MICHAEL HORODNICEANU: Only? 10 SENATOR FUSCHILLO: Only two. 11 So, I'm going to ask you to state your name 12 clearly for the record. 13 MICHAEL HORODNICEANU: Good afternoon. 14 My name is Michael Horodniceanu. 15 SENATOR FUSCHILLO: Horodniceanu. 16 MICHAEL HORODNICEANU: Right. 17 SENATOR FUSCHILLO: That was easy. 18 MICHAEL HORODNICEANU: Takes practice; right? 19 Good afternoon, Senator Fuschillo, members of 20 the Committee. 21 Our agency is responsible for the 22 construction of the MTA's, currently, four 23 mega-projects: The Second Avenue Subway, the 24 Fulton Center, East Side Access, and the extensions 25 of the Number 7 line. 1 I would like to take this opportunity to 2 briefly talk about each project, and provide the 3 Committee members with an update on progress, as 4 well as highlights of our major challenges, going 5 forward. 6 The first phase of Second Avenue Subway 7 project was, as you know, has been discussed for 8 decades, is well on its way to completion and is on 9 schedule to open service in December of 2016, and 10 currently projected to be completed under budget. 11 In June of this year, we awarded the last of 12 the ten contracts for the project, and the huge muck 13 houses which were built to protect the surrounding 14 environment while we excavated the station caverns 15 have been begun to being dismantled. 16 As we move forward towards the completion of 17 the projects, our greatest challenge will be the 18 coordination and installation of the various system 19 components, such as track signals, communication, 20 and power, with the station finishes. 21 We have a great management team and some of 22 the top contractors working on this contract, and 23 feel confident that we will meet these challenges 24 and open the long-awaited phase one of Second Avenue 25 Subway in December of 2016. 1 There has been much speculation about the 2 next phase of the Second Avenue Subway. 3 At this time, it is somewhat premature for me 4 to say anything more than the issue is one of the 5 many under discussion as part of MTA's development 6 of the 2015-2019 capital plan. 7 As many of you know, 11 different subway 8 lines converge at station within Lower Manhattan in 9 the proximity of Fulton Street and the 10 World Trade Center site. 11 Constructing a facility that integrates all 12 these lines and accommodates a projected 13 300,000 daily subway riders, as well as passengers 14 coming from the past system, requires the creation 15 of an environment that will be both seamless -- that 16 will create, both, a seamless passenger experience, 17 as well as a true great public space that will 18 contained state-of-the-art electronic way finding, 19 exciting retail and commercial activities, and 20 become a destination point for the Lower Manhattan 21 area. 22 This has been the goal of this $1.4 billion 23 project since we started construction in 2005. 24 I think that in the summer of 2014, when 25 open, the Fulton Center will have achieved these 1 objectives, and I am pleased to report to you that 2 we are on budget and on schedule to open this new 3 station in June of next year. 4 The Fulton Center will also have about 5 60,000 square feet of new retail and commercial 6 space, and MTA will shortly be designated a master 7 lessee to manage the leasing of this space. 8 Of the four projects that MTACC manages, 9 clearly, the most challenging has been the 10 East Side Access. 11 East Side Access will create, when completed, 12 a new station for the Long Island Railroad customers 13 about 160 feet below the Grand Central Terminal, and 14 shorten the commute for 160,000 Long Island Railroad 15 riders in and out of Manhattan by 40 minutes. 16 Significant progress has been made on the 17 project, and if one is to visit the area underground 18 Central Terminal today, you will be able to observe 19 all tunnels and caverns excavation has been 20 completed. 21 In Queens, while working in the area known as 22 "Harold," which is the busiest passenger-rail 23 interlocking in North America, we have completed all 24 of the over 2 miles of tunnels necessary for the 25 project. 1 As part of MTA's process of applying for a 2 RRIF loan from the Federal Railroad Administration, 3 we are currently coordinating with the FRA on a 4 review of our strategy to complete the project. 5 The next steps currently underway are to 6 complete the tunnels' lining, construct the station 7 fit-out, and install the rail, power, and 8 communication systems. 9 The challenge is to successfully coordinate 10 the Manhattan concrete tunnel lining and station 11 architectural finishes with the complex 12 system-installation activities. 13 As we move forward with the installation of 14 the signal, power, track, and communication 15 infrastructure necessary to support the 16 East Side Access operation, the work on Harold will 17 continue to require for the Long Island Railroad and 18 Amtrak forces to coordinate their work with our 19 third-party contractors. 20 The last project that I would like to mention 21 before I conclude is the Number 7 line extension on 22 the far west side of Manhattan. 23 This project, extending from 42nd Street, 24 west to 11th Avenue, and south of 26th Street, was 25 planned to encourage and support future economic 1 development in the area, and is funded by the City 2 of New York using a tax-increment financing 3 mechanism. 4 Current estimates forecast that the project 5 will be completed in the summer of 2014 and within 6 budget. 7 The major work now underway is focused 8 actually on track and system installations. 9 This concludes my remarks, and thank you for 10 the opportunity to do that. 11 SENATOR FUSCHILLO: Thank you very much, 12 Michael. 13 As with the others, I ask that you stay for 14 some questions the Committee members may have. 15 Thank you. 16 James Ferrara. 17 Good morning, James. 18 Good afternoon. 19 JAMES FERRARA: Good afternoon, 20 Senator Fuschillo and members of the Committee. 21 I am James Ferrara, president of MTA Bridge & 22 Tunnels. 23 MTA Bridges & Tunnels operates seven bridges 24 and two tunnels that link the five boroughs of 25 New York City. 1 We have a dual mission: To enhance regional 2 mobility and provide financial support for mass 3 transit. 4 Approximately 283 million vehicles crossed 5 our facilities in 2012, generating nearly 6 $1.5 billion in toll revenue. 7 Last year, our support to mass transit was 8 approximately $893 million. 9 Since the MTA was created in 1986, 10 approximately $19.6 billion has been provided to 11 support mass transit. 12 Our July 13, 2013, financial plan projects 13 toll revenue of $1.61 billion this year, and 14 $1.63 billion in 2014. 15 Toll expenses are budgeted at approximately 16 $451 million in 2013, slightly higher than planned, 17 primarily due to the timing of some "Sandy"-related 18 expenses. 19 In 2014, we project only a slight expense 20 increase of about 4 percent against February plan, 21 primarily for "Sandy"-related expenses. 22 Our 2013 and 2014 operating budget allocates 23 $21 million per year for overtime expenses. 24 Since 2009, we have reduced overtime expenses 25 by approximately 22 percent, and for the current 1 year, our overtime expenditures are under budget by 2 almost 7.8 percent; approximately $900,000. 3 Some contributing factors in this overtime 4 reduction are the following: increase of workforce 5 availability, fleet reduction, and the elimination 6 of material warehouse. 7 In our continuing efforts to improve regional 8 mobility, Bridges & Tunnels undertook several 9 initiatives to increase E-ZPass market share. 10 In June of 2011, we began selling E-ZPass 11 On-The-Go tags in cash lanes at every facility. 12 Nearly 250,000 tags have been sold in the 13 cash lane since the program began. 14 In January of 2012, Bridges & Tunnels 15 introduced Spanish-language versions of the E-ZPass 16 application, interactive website, and the 17 customer-service telephone voice-response system. 18 In February of 2012, we introduced the 19 MTA Reload Card. Utilizing the Visa Ready-Link 20 system, the Reload Card allows our customers to 21 replenish their E-ZPass accounts with cash at their 22 convenience. 23 In November of 2012, Bridges & Tunnels 24 introduced E-ZPass "pay per trip." This initiative 25 enables customers to set up an E-ZPass account 1 without a prepaid balance. Tolls are simply paid 2 each day through an ACH deduction from their bank 3 accounts. 4 These efforts have helped increase E-ZPass 5 market share to the current level, exceeding 6 83 percent, which represents a 2.2 percent increase 7 over last year at this time, and among the highest 8 market shares in the country. 9 Another mobility issue -- initiative is the 10 current all-electronic-tolling pilot project at the 11 Henry Hudson Bridge. 12 The implementation of electronic tolling at 13 this facility began November of '12, enabling 14 motorists to travel non-stop through the toll plaza. 15 While motorists are encouraged to use 16 E-ZPass, those who choose not to use an E-ZPass will 17 receive a bill in the mail. 18 We are completing the fourth year of our 19 2010-'14 capital program. 20 Our $2.1 billion program is primarily focused 21 on state of good repair and projects that improve 22 mobility. 23 Significant projects include demolition of 24 the unused Brooklyn-bound toll booths at the 25 Verrazano Bridge. This project was completed in 1 2012. 2 The second phase of this project will include 3 improvements to the entrance/exit ramps, and 4 rehabilitation of the roadway of the former 5 Brooklyn-bound toll plaza. 6 In June of this year, a new entrance ramp 7 from Narrows Road South was opened. This new ramp 8 will provide a smoother transition from the service 9 road onto the upper level of the bridge. 10 In September of this year, the newly 11 constructed Lily Pond Avenue entrance ramp opened 12 with an improved, wider, and more efficient 13 configuration. 14 Further, roadway improvements are expected to 15 be completed by summer of 2015. 16 Recently, a 5-year, $235 million construction 17 contract was awarded to replace the original 1960s 18 upper-level suspended-span roadway of the 19 Verrazano Bridge. 20 Upon completion of this project, a seventh 21 lane will be added to the bridge to be used as a 22 reversible high-occupancy vehicle lane. 23 The new reversible lane will allow for a 24 seamless connection between the New York State 25 Department of Transportation's bus HOV lanes on 1 either side of the bridge, providing for a 2 continuous bus HOV lane for the Staten Island 3 Expressway -- from the Staten Island Expressway to 4 the Hugh L. Carey Tunnel via Route I-278. 5 This project, when completed, will save time 6 for thousands of daily bus and HOV-lane commuters. 7 In addition to the nearly 600 million in 8 Verrazano Bridge capital-program improvements, a 9 $50 million design-build contract was awarded to 10 reconstruct the Manhattan/Queens ramp at the 11 Robert F. Kennedy Bridge. This project to 12 reconstruct the 54,000-square-foot ramp is expected 13 to be completed by fall of 2014. 14 At The Bronx Whitestone Bridge, a 15 $212 million capital-improvement project was 16 completed in August of '12. This project included 17 new roadways and piers for The Bronx approach that 18 allowed for widening the roadways to 12-foot widths, 19 in addition to providing new safety shoulders. 20 Currently underway is the $109 million 21 reconstruction of the Queens approach. 22 During both these projects, a movable barrier 23 is being utilized to maintain full capacity for the 24 morning and the evening peak travel hours. 25 At that Throgs Neck Bridge, we are currently 1 resurfacing 67,000 square feet of the southbound 2 roadway, which will result in a smoother ride for 3 our customers. 4 We are also progressing with a $47 million 5 capital project that involves cleaning, repairing, 6 and repainting 2.5 million square feet of steel. 7 This will result in the removal of lead paint and an 8 application of a new anticorrosive coating. 9 "Sandy" has been a big issue for all of us, 10 as well as Bridges & Tunnels, and, the $2.1 billion 11 capital program does not include the almost 12 $900 million needed to address the aftereffects of 13 "Sandy." 14 As you all know, both the Queens Midtown 15 Tunnel and the Hugh L. Carey Tunnel sustained 16 extensive damage due to flooding. 17 The resulting damage at each of these tunnels 18 was caused by the unprecedented tidal surge in 19 New York Harbor, the Lower Hudson River, and 20 East River. 21 The storm surge measured approximately 22 14 feet and caused severe flooding in 23 Lower Manhattan, which includes the Hugh L. Carey 24 Tunnel. 25 The storm surge at the East River and 1 Newtown Creek measured approximately 12 feet and 2 resulted in widespread flooding of the 3 Long Island City area of Queens, which includes the 4 Queens Midtown Tunnel. 5 The influx of millions of gallons of brackish 6 seawater overwhelmed the existing pumping systems at 7 both tunnels. 8 As a result of this flooding, both tunnels 9 were rendered completely impassable. 10 Based on preliminary assessments by our 11 in-house staff engineers, in conjunction with 12 independent engineers, the estimated capital costs 13 of restoration associated with "Sandy" is 14 $778 million, with an additional 96 million 15 projected for flood mitigation. 16 The cost of infrastructure restoration and 17 mitigation is expected to primarily be covered by a 18 combination of insurance and federal programs; FEMA, 19 in our case. 20 Thank you for the time and the opportunity to 21 speak to you. 22 SENATOR FUSCHILLO: Thank you very much, 23 James. 24 25 1 Tom, what we would like to do now, before we 2 ask the Comptroller to come up and give their 3 report, is to have all the agency heads come up to 4 the Panel. 5 James, we're gonna ask you to come back, so 6 don't sit down there. 7 I thank all of you for being here today. 8 Your testimony has given us greater insight 9 for the operations and the finances, and 10 I appreciate everybody being here. 11 Tom, Senator Larkin's gonna ask the first 12 round of questions. He's got a scheduled 13 appointment. 14 But before that, could you give us an update 15 of contract negotiations. 16 I know, obviously, you're limited with what 17 you can say, but, what contracts are open, and, any 18 status that you can provide us would be helpful. 19 THOMAS PRENDERGAST: Sure. 20 A number of contracts are open across the MTA 21 family, both, with the two commuter railroads, as 22 well as New York City Transit and MTA Bus. 23 Ongoing negotiations with the largest of 24 those groups, Transport Workers Union, and it will 25 continue to be ongoing. 1 We're about a year and a half, almost 2 two years, into an existing contract, and things 3 have been going very well in terms of the workforce. 4 Matter of fact, they've responded very well 5 to every challenge we had. 6 In terms of the Railway Labor Act and the 7 negotiations at Long Island Railroad, they're up as 8 part of the National Mediation Board process, and 9 they're ongoing. 10 It's one of our highest priorities. It's an 11 important thing for us to be able to do, not only to 12 have good relations with the union, but as you've 13 seen in some of the testimony given here today, the 14 importance of our being able to have sure-dollar 15 wage agreements with these unions is especially 16 important to us for the reasons we've stated. 17 SENATOR FUSCHILLO: Thank you. 18 Senator Larkin. 19 SENATOR LARKIN: First of all, Tom, I want to 20 thank you very much for coming to our area and 21 listening to our leaders. 22 We're gonna have a follow-up meeting, but 23 I just want everybody in our Committee to know the 24 out -- and we have had a very entertaining 25 afternoon. 1 A couple of other questions that I have. 2 You've got all of these agencies here. 3 THOMAS PRENDERGAST: Yes. 4 SENATOR LARKIN: How many purchasing agencies 5 do we have in all of these agencies? 6 THOMAS PRENDERGAST: Each one has its own. 7 There's an initiative under the -- started 8 under two administrations, going Jay Walder. 9 We've created a business service center, so 10 what we're trying to do is locate in one particular 11 entity across the MTA, functions that can be done by 12 one entity rather than having parallel functions 13 done other places. 14 And so, in some cases, the more 15 straightforward procurements for goods and services 16 could be handled out of that group. 17 There's some specialized procurements, 18 though, Senator, that really need to be held by the 19 agencies themselves: railcar procurements, bus 20 procurements; things that of nature. 21 But as part of our initiative to try to drive 22 out costs in the organization, and the movement 23 toward a business service center that provides the 24 support functions for the agencies, that's been 25 ongoing. 1 SENATOR LARKIN: Would you give us some 2 information as to how it's progressing, and, where, 3 and how, and why? 4 THOMAS PRENDERGAST: Yeah, what we'll do, 5 I can, under a separate letter, we'll give you a 6 summary of all the different activities that have 7 taken place, which functions have been centralized. 8 In my testimony, I talked about one of the 9 latest actions we took, which is information 10 technology, or, the systems work. 11 We are gonna, once again, centralize that 12 function as well, where it can be, but there are 13 some unique systems, like, the signaling systems or 14 the controlling information-technology systems that 15 the agencies have, that will remain there. 16 But we'll give you a summary report, Senator, 17 to show you what has been done, and what costs we've 18 driven out of the organization. 19 SENATOR LARKIN: And I think everybody -- you 20 know, I hear all about this. 21 You notice that I'm the only guy north of 22 The Bronx, but I do appreciate it. 23 I came here because, what happens here 24 affects the rest of the state. 25 The work at Port Jervis, ahead of time, under 1 budget; it was a great, great project. 2 And I want to thank you personally, Howard. 3 And, Tom, I know both of you came there when 4 we asked you. 5 And I think that's something that builds 6 credibility to the MTA, when we get projects like 7 this that you yourself are involved in, and I'd like 8 to see more of it. 9 Key issue for us upstate, when you talk to 10 Metro-North, you know, we get a quarter of a 11 quarter, and the public will never -- you heard that 12 the day you were there. 13 There's four bodies representing, and if one 14 is absent, then there could be three voting and we 15 get nothing. 16 I still really would wish that the MTA and 17 the Transportation would look at that. 18 I know what you're saying, but don't forget, 19 we contribute a lot. 20 And the other part about it is, is the tolls. 21 Now, the bridge -- the bridge; right? 22 Everybody upstate, whether you believe it or 23 not, of course, if you go up on this weekend and you 24 see all the trees falling down or the leaves falling 25 down, you realize that they want to know why they're 1 paying a tax to New York City when they don't work 2 in the city, nobody in their family works in the 3 city, but you don't want to touch the bridge or 4 tunnels. 5 I know the speaker's attitude on it, but, you 6 know, you have to start to think, everybody's being 7 crunched with dollars today, and we're being taxed 8 when, in fact, we don't have any say. 9 I think it's something that should be looked 10 at. 11 Yes, you do need money. 12 "Sandy" was terrible. 13 I -- the federal government says they're 14 going to do something, but, you know, the road to 15 hell is paved with good intentions. 16 Outside of that, I was very proud to be here 17 today. 18 I'm a supporter of you, I believe in it, 19 because without you doing the transportation that 20 you do, this state would be in default of a lot of 21 dollars. 22 So I thank each and every one of you. 23 And I thank you, Chairman, for letting me go, 24 because I have another meeting in my district at 25 2:00. 1 SENATOR FUSCHILLO: Thank you, 2 Senator Larkin. 3 Senator Golden. 4 SENATOR GOLDEN: Thank you, Mr. Chairman. 5 Thank you, gentlemen -- ladies and gentlemen, 6 for being here today. 7 I'm gonna try to be for brief questions and 8 answers, probably parochial in nature, so, I'm just 9 going to run through them. 10 President Bianco, the paratransit system, the 11 voucher system, how's that working out? 12 CARMEN BIANCO: So far, I mean, we're getting 13 good results out of the voucher system. 14 As you know, that was one our initiatives, as 15 a result of the economy that we faced in 2010, was 16 to look at the paratransit service, and determine 17 better ways that we could provide that service and 18 reduce costs at the same time. 19 The voucher system was one of those ways to 20 do that. 21 We are implementing that system, along with 22 the Metro Card, along with variations of the 23 service, using a feeder service and our accessible 24 buses. 25 SENATOR GOLDEN: And the pilot program that's 1 in Brooklyn, is that underway? 2 CARMEN BIANCO: I believe so, yes, sir. 3 SENATOR GOLDEN: Could you give me updates on 4 that when you get a chance, please? 5 CARMEN BIANCO: Sure. 6 SENATOR GOLDEN: The capital program on the 7 upgrades, on the R train, the R line, they seem to 8 be nonexistent in the areas between, say, 9 59th Street, back to 96th Street, in Brooklyn. 10 And I know that they have the -- the train 11 is, obviously, under construction, with the 12 Montauk Tunnel, so that's going to take a while. 13 I would imagine the Montauk line is running 14 on time, that schedule? 15 CARMEN BIANCO: The work, the 16 Montague Tunnel -- 17 SENATOR GOLDEN: Montague, I'm sorry. 18 CARMEN BIANCO: Yes, yes, yes. 19 -- that was severely damaged as a result of 20 "Superstorm Sandy." That tunnel was taken out of 21 service. 22 After an exhaustive amount of evaluation to 23 determine the best way to approach the problems in 24 that tunnel, the best situation was to take it out. 25 That tunnel will be out of service for 1 14 months. That started in August. 2 SENATOR GOLDEN: Running on time? 3 CARMEN BIANCO: And it is running on time, 4 yes, sir. 5 SENATOR GOLDEN: Okay. 6 On the R line, the -- there was a 7 construction for the 86th Street, for an elevator 8 line -- an elevator at that particular train 9 station, with the rehab. 10 That hasn't happened yet. 11 Is that -- what is that -- is that in present 12 plans, or is that for the next fiscal plan? 13 CARMEN BIANCO: Oh, geez, I'd have to get 14 back to you on that. 15 Let me -- 16 SENATOR GOLDEN: Tom, do you -- 17 THOMAS PRENDERGAST: I don't know. We'll 18 have to get back to you. 19 SENATOR GOLDEN: Okay, if you could -- 20 THOMAS PRENDERGAST: Whether it was in the 21 scope or not, we'll find out. 22 SENATOR GOLDEN: The scope, like, eight years 23 ago, so I'm wondering where it is, and I need to get 24 those stations -- 25 THOMAS PRENDERGAST: Well, one of the things 1 I will tell you, that one of the most challenging 2 parts of the program, is where we have to provide 3 access in terms of the Americans With Disabilities 4 Act. 5 But we'll get an answer for you. 6 SENATOR GOLDEN: Okay. 7 The bus -- the new S buses, the -- we were 8 giving out the summonses on those, if they were in 9 those lanes. 10 I believe -- what's the story with those 11 summonses that we were giving out in those new -- 12 THOMAS PRENDERGAST: ESBS enforcement for the 13 lanes. 14 SENATOR GOLDEN: How's that working? 15 DARRYL IRICK: I don't have specific numbers 16 for you right now, but it has been effective. 17 Particularly in Manhattan on the 18 M-15 Corridor, it's been extremely effective in 19 terms of enforcing and keeping people out of those 20 bus lanes. 21 I could get back -- 22 SENATOR GOLDEN: Could you get this Committee 23 numbers, please, so that we can take a look at that? 24 DARRYL IRICK: Sure, will do. 25 SENATOR GOLDEN: While we're over to you, 1 Jackie Gleason Depot and the Cropsey Avenue Depots, 2 were there any additional moneys put into those 3 depots? 4 CARMEN BIANCO: In terms of...? 5 SENATOR GOLDEN: Capital programs? 6 DARRYL IRICK: No, not in the recent program. 7 SENATOR GOLDEN: So they still can't handle, 8 then, certain buses that would be put there, express 9 buses and certain other buses that would be -- 10 DARRYL IRICK: Specifically for 11 Jackie Gleason, it is a CNG facility, so what we try 12 to do is maximize our CNG capacity by filling 13 those -- those -- we have four depots that are 14 CNG-outfitted, so, you know, to maximize clean-air 15 technology, particularly that's attributed to CNG, 16 we maximize the assignment of CNG buses to places 17 like Jackie Gleason, so we wouldn't expand to, say, 18 express buses or other diesel fleet to that 19 location. 20 SENATOR GOLDEN: The X37 is going into effect 21 the -- January 1, and that expects to go to Barclay, 22 is -- and no further than that, is that correct, 23 Tom? 24 DARRYL IRICK: I believe April. 25 SENATOR GOLDEN: April? 1 THOMAS PRENDERGAST: It's in April? 2 DARRYL IRICK: Yeah, I think it is. 3 THOMAS PRENDERGAST: And it's, about, 4 five-sixths of the route is being restored. 5 I believe it's the last piece of it in Brooklyn -- 6 in downtown Brooklyn that isn't restored. 7 SENATOR GOLDEN: I am already getting 8 tremendous complaints about that not going 9 completed -- to be able to complete its route. 10 So, I don't know what it's going to look like 11 when it's completed. We'd like to see the -- I know 12 you have copies of the route. 13 I'd like to get them distributed to our 14 community. 15 I'm getting a lot of complaints about the -- 16 that it's not going to its end. 17 I thought this was going to be January 1, not 18 April. 19 This is a little bit of a surprise to us. 20 THOMAS PRENDERGAST: I believe it's a 21 pick [ph.] issue. 22 DARRYL IRICK: It's a pick issue, and it 23 needs to go through governance also. 24 SENATOR GOLDEN: Pardon me? 25 CARMEN BIANCO: A pick issue; meaning, we 1 have to -- we have to actually put that out, our 2 employees bid on the job. 3 SENATOR GOLDEN: But we should have did that. 4 We already -- we already knew we were doing this; 5 right? 6 This is something that we agreed to several 7 months ago, so the pick should have already been out 8 there, and they should going out for January 1. 9 CARMEN BIANCO: It's a governance issue, and 10 it's generally done just before you put that service 11 in. 12 SENATOR GOLDEN: Well, we're not happy on 13 that, either, because that's -- you had plenty of 14 time to act on that. 15 The -- back again on the R line, on the new 16 capital program, I'd like to you to take a look at 17 the RR line. I guess it would be an "RR," which is 18 an express, that ran out of Brooklyn area into the 19 city of New York. 20 If you could, we'd like to get some of your 21 thoughts on that. 22 And, OT, you talked about "Sandy." 23 Did we get all of the money from "Sandy"? 24 I understand you, James, you said you're not 25 getting all the money back from "Sandy," on the 1 overtime. 2 Is that true? Are you getting all your money 3 back from the "Sandy"? 4 From the state? 5 From the federal government? 6 JAMES FERRARA: We're a little different than 7 the rest of the community. 8 We're working with FEMA. 9 Some of the money coming in has trickled in, 10 but not the amounts that I talked about in my 11 testimony, the $778 million, no. 12 SENATOR GOLDEN: Is any of you gonna suffer 13 losses because of FEMA and because of "Sandy," 14 because of the overtime above and beyond what you -- 15 THOMAS PRENDERGAST: Well, with the exception 16 of the Bridges & Tunnels, which gets their funding 17 from FEMA, the rest of the agencies get it from the 18 Federal Transit Administration. 19 And there's a tremendous structure set up, 20 both on the government side as well as our side, 21 with respect to making applications for those moneys 22 and getting reimbursed. 23 And so far, you know, we've not reached the 24 end of the rope on any one specific ask, where 25 they've told us, no, you're not gonna get money, so 1 it's an ongoing process. 2 So -- but we would certainly let the New York 3 delegation know if we were in a position where we 4 had to get support from them for funding. 5 SENATOR GOLDEN: Because of the number of 6 Senators here, and I don't want to hold up the 7 questioning, so, I just have one or two more 8 questions. 9 And the next one is the -- you guys did an 10 outstanding job in looking for savings, and putting 11 in additional services or restoring additional 12 services. 13 Have you any plans to restore service, or do 14 you have any plans on this fare increase that's 15 coming up, is there anyway that we're going to be 16 able to offset some of these fare increases because 17 of some of your savings going on, not only at the 18 Transit level, but at the Bridge & Tunnel level? 19 THOMAS PRENDERGAST: Senator, one of the 20 things I tried to articulate in my testimony, it's 21 worthwhile to go back over, there are four items 22 that are intrinsically related to one another. 23 SENATOR GOLDEN: You were very good on them. 24 THOMAS PRENDERGAST: One is the payroll 25 mobility tax; 1 The second is fares and tolls; 2 The third is the wage settlement we agreed to 3 with the unions that represent our employees; 4 And the fourth is the capital program. 5 They're intrinsically related because, if we 6 move one up or down in one area, it will affect 7 others. 8 So if reductions to the payroll mobility tax 9 were to occur, which is a revenue stream -- a 10 sustainable revenue stream, that would affect the 11 financial outlook. 12 What we're trying to talk about, in terms of 13 fares and tolls is, is that we're very comfortable 14 with the transparency we now have, because we have 15 this dialogue with people, so they see where our 16 puts and takes are gonna be. 17 But, for every 1 percent of a fare increase, 18 that generates about $65 million in revenue. 19 For every 1 percent of a wage increase, that 20 costs about $50 million in costs. 21 So -- and then we use a large portion of some 22 of the moneys that are sustained or generated under 23 the revenue side, PMT, to pay pay-as-you-go capital, 24 which offsets the need of what the ask of, we either 25 to have bond for financing or ask the state for. 1 So in answer to your question, is it's too 2 early to tell right now. 3 We would have to look for it about a year 4 from now, and we will have a July financial plan in 5 July of 2014, where we will be looking at revenues 6 incoming, sustainable, as well as one-offs; costs 7 going out, and, hopefully, we'll have some of these 8 labor agreements settled; and we'll able to say what 9 the size of the ask is for either a fare or toll 10 increase. 11 We feel very strongly, it's important to stay 12 on the biannual cycle, but we definitely want to 13 have a dialogue as to what the size is. We truly 14 understand the impacts this causes for your 15 constituents and our customers. 16 SENATOR GOLDEN: Well, the rate of inflation 17 is twice. You're up to 44 percent with these new 18 increases. It's going to be an impact. 19 And the bridges, I mean, getting a car over a 20 bridge is $15. And to get out of city of New York, 21 you have several bridges to get over. 22 I mean, so it's going to be a very tough ask 23 coming up for a lot of the people here in our 24 communities. 25 And I understand we have a very in-depth 1 service and it costs a tremendous amount of money to 2 maintain and to bring up to speed. 3 So, I understand your endeavors, and we want 4 to work closely with you, but, I don't know how much 5 more the people can take on an impact of $15 a car, 6 and the increases of 44 percent in inflation on the 7 raises on the toll -- on the fares. 8 THOMAS PRENDERGAST: The $15 toll is -- the 9 only bridge that has that is the one-way toll 10 collection on the Verrazano-Narrows Bridge. 11 But the average Staten Island E-ZPass 12 customer, I think, pays $3.16 to cross. 13 JAMES FERRARA: Uh, Senator, there's a 14 variation -- 15 SENATOR GOLDEN: That's one way. 16 JAMES FERRARA: -- there's a variation of 17 tolls, especially for the Verrazano Bridge. 18 I brought a pamphlet that designates all the 19 tolls across the system. 20 The variation includes, not only cash 21 payment, which is the largest, $15, and that's a 22 one-way trip over the Verrazano Bridge, which is, 23 technically, the same price that somebody would pay 24 back and forth over the Throgs Neck or 25 Whitestone Bridge. 1 But it goes as low as $2.96 for a carpool, 2 and $8.53 for a token. 3 And, recently -- recently, residents of 4 Staten Island pay as low as $6 after three trips. 5 SENATOR GOLDEN: James, I love you, but 6 I live in Brooklyn. 7 All right? 8 The Staten Island, it's excellent, and my hat 9 is off to the people in Staten Island, because 10 there's no other way of getting off that island, so 11 I understand the need. 12 But, to tell the people in Brooklyn that they 13 gotta pay the prices that they're paying, to go see 14 their sons and daughters in Staten Island, or to go 15 shopping, is just -- it's irrehensible [ph.]. 16 So, I can't do that. 17 And, you just can't continue to drive these 18 dollars up for the people in Brooklyn, and the other 19 people in the other boroughs that have got to get 20 out of the city. 21 So, you understand that issue, but, I'm not 22 going to go any longer on that. 23 Last question: Where are we on the -- and 24 I note that Chairman Fuschillo asked the question -- 25 are we close to a negotiated deal with the union? 1 Is that continue -- are we almost -- 2 THOMAS PRENDERGAST: Negotiations are 3 ongoing, that's the best I can say. 4 SENATOR GOLDEN: Are we at the goal line? Or 5 are we -- 6 THOMAS PRENDERGAST: Negotiations are 7 ongoing, that's the best I can say. 8 And it's very typical in labor negotiations, 9 that you reach a point where you just get a 10 breakthrough and you get a deal. 11 So it's very tough for me to say we're 12 80 percent of the way through, 70 percent of the way 13 through. 14 They're ongoing, and there's a dynamic that's 15 involved there. 16 So -- and by far, and we're in a strange 17 place, because one of the unions is coming back for 18 the second round of negotiations before we've closed 19 negotiations with all the others. 20 So, it's a very different place than we've 21 ever been before, for both labor and management. 22 SENATOR GOLDEN: Thank you very much, 23 gentlemen, and ladies. 24 SENATOR FUSCHILLO: Senator, you can stick 25 around and ask some more questions once we're done. 1 I know you have a few. 2 [Laughter.] 3 SENATOR GOLDEN: I have a lot, sir. 4 SENATOR FUSCHILLO: That's fine. 5 Senator Krueger. 6 SENATOR KRUEGER: Thank you. 7 And I want to thank the Chair and the Ranker 8 for allowing me to have a few questions before 9 I run. 10 I'm not on this committee. I'm on the 11 Finance Committee, so I'm sitting here from that 12 capacity. 13 In previous years, I don't know whether it 14 was ever part of testimony or a different report you 15 did, that shows what the percentage of subsidy per 16 rider is in the different MTA systems. 17 Do you have that information available? 18 A general ballpark, we have details, but if 19 you take a look at each particular agency, and the 20 modes within each agency, we have a term that we 21 call the "fare-box recovery ratio." 22 So, in simplistic terms is, for every dollar 23 of service operated, how much of that service is 24 paid for by the fare box? 25 So, the New York City Transit subway system 1 is about 70 to 72 percent; 2 The buses is a little bit below 50 percent; 3 Metro-North is about 60 percent; 4 And Long Island Railroad is about 50 percent. 5 ROBERT FORAN: Forty-six. 6 SENATOR FUSCHILLO: 46 percent. 7 So it varies across the region. 8 And one of the things we're trying to do, 9 I mean, it's part of the model that was part of 10 original governance structure of the MTA, is to use 11 revenues generated by Bridges & Tunnels, once 12 they're paying for their critical maintenance work 13 and capital-improvement work, to help-up subsidize 14 the cost of the ride for the other customers in the 15 region. 16 And that does two things: It helps to 17 control costs so people who use the system, but 18 limits the number of people that will use the 19 bridges themselves, opening the way up for others. 20 But those are the general numbers. 21 SENATOR KRUEGER: Changing to buses, so 22 I guess that's for Darryl, I've been reading that, 23 in various parts of the world, people are shifting 24 their fleets to both electric and fuel-cell 25 technology. 1 And I'm wondering whether we are exploring, 2 or see any potential for that, because I heard you 3 talking about the energy costs continuing to have 4 such a significant impact on your area. 5 THOMAS PRENDERGAST: I'll start, and then 6 Darryl can finish. 7 The industry has long had an initiative to 8 try to move away from diesel, for obvious reasons; 9 not only cost, but for pollution and health impacts. 10 I think New York City Transit has the largest 11 hybrid electric fleet in the country. 12 It also has a very large CNG (compressed 13 natural gas) fleet. 14 I'll let Darryl go into the details, but the 15 technology on the compressed natural gas is more in 16 line with what we are able to efficiently operate. 17 On the hybrid side, it's been extremely 18 challenging within the industry. 19 There's technology out there, but it's not 20 only costly to buy, it's exceptionally costly to 21 maintain, so the life-cycle costs on it are very, 22 very high, and it presents some very, very difficult 23 challenges for us, because the conflict is, on the 24 one hand, we would like to have a much smaller 25 carbon footprint, doing the right thing, but 1 its-ever increasing costs. 2 Darryl, do you want to go into a little bit 3 more detail? 4 DARRYL IRICK: Yeah, just to piggyback, Tom, 5 so we've been at the -- pretty much, the 6 cutting-edge of the technology piece of -- on bus 7 propulsion. 8 We operate about 1600 hybrid buses right now, 9 and our maintenance department is, you know, 10 constantly, you know, looking over the industry and 11 the technology field for new technology that -- you 12 know, in terms of clean air. 13 Currently, right now, we're operating an 14 electric bus. 15 We're investigating electric-bus technology 16 in Manhattan. 17 We have a 60-day test that's currently going 18 on right now. 19 So we're right -- we're always there, you 20 know, on the cutting-edge, looking for new 21 technologies, in terms of being more environmentally 22 friendly, but at the same time, maintaining and 23 reining in costs. 24 SENATOR KRUEGER: And for -- sorry, for 25 Bridges & Tunnels, so you were describing the pilot 1 project going across the Hudson River, where, if you 2 don't have an E-ZPass, you get -- you go through and 3 you get sent a bill after the fact. 4 Are people paying, or are we just losing 5 money? 6 JAMES FERRARA: Right now, at this point, 7 we're in a pilot program to make that assessment. 8 The pilot program has been operating for 9 about a year. 10 We've selected two ways of sending out 11 billing to customers that don't use E-ZPasses: a 12 30-day cycle and a 60-day cycle; and, thereafter, 13 their reminder, another bill goes out. 14 So you can understand how long it takes to 15 make that type of assessment in terms of people 16 paying their bills. 17 But I would say that the selection of the 18 Henry Hudson Bridge was very positive for 19 [unintelligible], because it has a better than 20 90 percent market share for E-ZPass. 21 So we're only talking about, approximately, 22 7 percent of the people that are getting billed over 23 the facility. 24 And at this rate -- at this time, the rate 25 has been bill repayment about 4 percent. 1 So we're only dealing right now with about a 2 3 percent delta here. 3 And I'm sure, over the course a 30-day, 4 60-day cycle, we will see that money trickling in. 5 SENATOR KRUEGER: So there's positives, so 6 far, are shown in the pilot program. 7 THOMAS PRENDERGAST: Senator, one of the 8 things, industry-wide, that is a challenge, is, is 9 we've all been accustomed with paying tolls, 10 paying -- driving motor vehicles. 11 You generally come up to a booth, back in the 12 old days, and still resident today in many places, 13 and you have a gate that stops you from proceeding. 14 You do not -- the gate doesn't get lifted 15 until you manually pay somebody or you throw it in 16 in a collection. 17 So with all-electronic tolling, you can 18 certainly keep track of people much better, but you 19 still need to have enforcement. 20 And what some people are doing, is looking at 21 legislative changes to be able to do that, tying 22 that to something else, like, vehicle registration, 23 or things of that nature. 24 This is not a problem just resident here in 25 New York; it's across the entire country. 1 And I think the challenges are, how do we -- 2 much the same way as E-ZPass technology was rolled 3 out, how do you do it in a way that's consistent 4 across a pretty broad expansion of a transportation 5 network, because, you'd like to have whatever 6 mechanism you have in place, that, you know, if you 7 drive up and down the Eastern Seaboard, it's 8 similar. 9 SENATOR KRUEGER: And follow-up: I use a car 10 sometimes, particularly when I'm heading off to 11 different work assignments, and, I've crossed the 12 Robert Kennedy Bridge, I've crossed the 13 Midtown Tunnel. 14 When I watch who -- I have E-ZPass. 15 When I watch who's in the cash lane, it seems 16 to be disproportionately cabs. 17 Why would cabs not want E-ZPasses at this 18 point in history? 19 JAMES FERRARA: To tell you the truth, 20 I don't know why they wouldn't select that mode of 21 payment, to be honest with you. 22 I -- I -- it doesn't make sense to us. 23 We have a very high market share. 24 We're pushing the issue by selling tags in 25 the lanes. 1 It's less costly for every customer that uses 2 an E-ZPass tag. 3 I couldn't answer the question "why?" but, we 4 go struggle with that question every day. 5 But, we're making inroads in trying to 6 convince our customers that the E-ZPass transponder 7 is the best way to move across the region. 8 SENATOR KRUEGER: [Inaudible] and they're 9 using, you know, credit cards, and Uber, and, you 10 know, we track every time they press the gas pedal 11 versus the brake. 12 It just doesn't seem logical, for some reason 13 to me. 14 THOMAS PRENDERGAST: Well, the only thing 15 I can say is, is that most cabs are leased out and 16 you have multiple drivers. 17 So it -- whereas, for you and me, we own the 18 same car, so the tag almost goes with the car. 19 There's nothing saying you can't have an 20 E-ZPass tag that can go from person to person, but, 21 most cabs are leased to a number drivers. 22 SENATOR KRUEGER: Can an E-ZPass be attached 23 to Liz Krueger as opposed to a car with a specific 24 license plate? 25 SENATOR FUSCHILLO: Sure. 1 JAMES FERRARA: The -- the "Liz Krueger" 2 tag -- 3 SENATOR FUSCHILLO: We'll attach all 4 E-ZPasses to Liz Krueger. 5 [Laughter.] 6 SENATOR FUSCHILLO: If that's what you'd 7 like, Senator. 8 [Laughter.] 9 SENATOR FUSCHILLO: I think, just to take on 10 Tom's point, what I've heard over the years, 11 Senator, is that they are a lease-for-hire, and, you 12 know, an individual leased a car for, a day, a week, 13 whatever it is, generally, the tolls are passed to 14 the customer that's in that car when they go 15 [unintelligible], so, it really wouldn't work, the 16 way you are. 17 But, we could talk to the individual 18 cab-for-hire and have it tolled to you, and I'm sure 19 they'd really like that. 20 SENATOR KRUEGER: Yeah, I'm sure they'll 21 agree to that. Thank you. 22 SENATOR FUSCHILLO: I'm sure they'll agree to 23 that. 24 THOMAS PRENDERGAST: Rental car is the same 25 problem. 1 SENATOR KRUEGER: All right, thank you. 2 And thank you for giving me some time. 3 SENATOR FUSCHILLO: Well, thank you. 4 I just wanted to follow up, it wasn't a 5 question I had, but, James, the pilot program's been 6 in existence for a year? 7 JAMES FERRARA: Approximately. 8 SENATOR FUSCHILLO: Right, and in that year 9 period, you still haven't quantified what you 10 haven't -- I mean, that's a pretty long time. 11 You still haven't quantified what you haven't 12 been able to receive? 13 JAMES FERRARA: I have to be honest with you, 14 Senator, it sounds like a long time, but we're 15 quantifying separate and distinct pieces of the 16 pilot program. 17 We first have to quantify the physical: Are 18 we using the right technology? 19 Meaning, are we capturing the vehicles? 20 Are we capturing them correctly? 21 Are we framing the vehicles that represent 22 the payment? 23 So there's a lot of technology at the site, 24 so we're quantifying that, making sure that's 25 correct. 1 SENATOR FUSCHILLO: And let me ask you a 2 question: After a year, that hasn't been 3 determined? 4 JAMES FERRARA: That piece, to be honest with 5 you, is working quite nicely. 6 SENATOR FUSCHILLO: Good. 7 JAMES FERRARA: The second piece is the more 8 difficult piece; that's the back-office piece. 9 We have to make sure that our business rules 10 are correct, because the last thing we want to do is 11 send out an incorrect bill, or charge somebody 12 incorrectly. 13 So would I say that we are being very careful 14 in our business rules, and we're trying find out 15 what the best billing mechanisms are. 16 30- and 60-day billing mechanisms were one of 17 the -- it was a chance for us to better understand 18 our customer. 19 Where would we find the money coming back in 20 timely manner? 21 What did the customer like to -- you know, 22 what does he want to pay? At what level does he 23 want to pay? 24 Also, you want to batch the bills. You don't 25 want to send out individual bills. 1 So, if you come across the 2 Henry Hudson Bridge consistently, you wouldn't want 3 a bill every day in the mail, based on your -- that 4 one day, and then the next day. 5 You want a batch-billing system. 6 We're also trying to coordinate with the 7 Port Authority on our business rules, and the 8 Thruway Authority. 9 The last thing, naturally, is -- E-ZPass is 10 very important to us, and we're trying to get more 11 of the customers there. 12 We're talking about a very small piece of 13 this puzzle that we're quantifying. 14 The reason we want to be accurate about 15 quantifying it before we declare success, is because 16 every dollar we lose is a dollar we lose to support 17 mass transit. 18 SENATOR FUSCHILLO: Sure. 19 JAMES FERRARA: So, if I wasn't so concerned 20 about the dollar value to the support of mass 21 transit, I would probably be less concerned at this 22 point, but, I have to be 100 percent sure that what 23 we're doing is right. 24 SENATOR FUSCHILLO: But how different is your 25 system than the red-light camera system? 1 JAMES FERRARA: The red-light camera system? 2 SENATOR FUSCHILLO: When somebody -- 3 JAMES FERRARA: Uhm, not much different -- 4 SENATOR FUSCHILLO: Somebody goes through a 5 red light, they capture the license plate, the bill 6 goes out simultaneously. 7 JAMES FERRARA: It's very similar, but the 8 difference is, that there's controls in place for 9 height detection, because we quantify a toll based 10 on the height requirements of the vehicle. 11 Naturally, the Henry Hudson Bridge doesn't 12 have trucks, but there are trucks and vans that do 13 try to come down that roadway. 14 The other thing is that, when you're looking 15 at paying a bill, you want to capture the individual 16 to the action; meaning, your picture, your photo, 17 needs to show that it's in place at the right time 18 the bill -- the toll is being paid. 19 So all of that is being quantified in the 20 back office, and there's double-looks at these 21 photos. 22 It's timely, and that's why we're considering 23 the pilot. 24 We're saying to everybody, it is a pilot 25 program, because there's so many little things that 1 we want to quantify. 2 SENATOR FUSCHILLO: Are you billing now? 3 JAMES FERRARA: Yes. 4 SENATOR FUSCHILLO: You are. 5 Because I -- because your concern as well, 6 that every dollar you lose is a dollar that's going 7 to raise something to fund your operation. 8 JAMES FERRARA: Yeah. 9 And to tell you the truth, I'll give you an 10 example. 11 When we started, we didn't send out the bills 12 for probably a month or two, just to quantify that 13 we were doing it correctly before we sent out the 14 bills. 15 SENATOR FUSCHILLO: Okay. 16 JAMES FERRARA: We don't want to be 17 second-guessed that we're doing it just for the sake 18 of doing it. 19 We want to do it right. 20 SENATOR FUSCHILLO: Got it. 21 THOMAS PRENDERGAST: I'd like to just add on 22 to that, Senator, there's two things; one of which 23 is, the stop-lane light enforcement is for a 24 violation, not revenue generation. 25 This is revenue generation. 1 The other issue about the Henry Hudson is, is 2 that there's no commercial vehicles, and the 3 exposure is different for no commercial vehicles 4 versus commercial vehicles, because the highest 5 tolls that are generated are the big 6 tractor-trailers out of state, where you, really, 7 once you lose them, they're gone, and you don't get 8 that revenue. 9 And right now, we have that revenue. I mean, 10 he's -- they're stopping them at the gate, they 11 don't let them through until the revenue is 12 collected. 13 And, so, we just want to be -- we don't want 14 to be slow, in the sense that, because we do know 15 automatic electronic tolling will give us 16 efficiencies, clearly. 17 We just don't want to lose the revenue. 18 SENATOR FUSCHILLO: And just to follow up, 19 James, do you envision this for your other 20 operations as well, cashless, all electronic 21 tolling? 22 JAMES FERRARA: I would say to you, Senator, 23 that -- 24 SENATOR FUSCHILLO: And is the overall 25 picture to get away from the toll gates? 1 JAMES FERRARA: Naturally, everybody assumes 2 that's the vision. 3 SENATOR FUSCHILLO: Right. 4 JAMES FERRARA: Based on the dollars -- 5 SENATOR FUSCHILLO: Well, I'm not assuming. 6 I'm just asking you the question. 7 JAMES FERRARA: But one doesn't lead to the 8 other, to be honest with you. 9 SENATOR FUSCHILLO: Okay. 10 JAMES FERRARA: The business rules and plans 11 for the Henry Hudson Bridge are very much different 12 than the RFK Bridge, because, as Tom has indicated, 13 the trucks are a problem. 14 License plates on trucks, if you look at 15 them, they're not as easily recognizable. There's a 16 difference in the trailer and the tractor. 17 There's legislation issues that we need to 18 address. 19 SENATOR FUSCHILLO: Right. 20 JAMES FERRARA: So, we're really piloting 21 here, the technology, the infrastructure, the 22 hardware, at the location, and the back office 23 functions. 24 If we nail that, if we nail that right, then 25 the next steps would be to look at a larger facility 1 that incorporates larger trucks and congestion. 2 So, it sounds simple. 3 It's not that simple if you want to do it 4 right. 5 SENATOR FUSCHILLO: Okay, thank you. 6 Senator Dilan. 7 SENATOR DILAN: Thank you very much, 8 Mr. Chairman. 9 First, I would like to follow up on two 10 questions that were asked by Senator Golden. 11 The first one is with respect to the toll on 12 the Staten Island Verrazano's Bridge. 13 Now, my understanding is that that's a $15 14 toll going one way, and the other way they don't 15 pay. 16 However, if I compare that to the 17 John F. Kennedy Bridge, I'm paying 7.50 one way, and 18 7.50 coming back. That equals $15. 19 Is that correct? 20 JAMES FERRARA: That is correct. 21 SENATOR DILAN: Right? 22 However, the residents of Staten Island are 23 getting a discount when they use E-ZPass, and 24 everyone else is not getting a discount when they go 25 over the other bridges within your jurisdiction. 1 What's the explanation for that? 2 JAMES FERRARA: There is a discount 3 associated with the E-ZPass tag for everyone that 4 belongs to the customer service center, and they 5 receive the discount if they travel through the 6 New York State Thruway System, the MTA Bridges & 7 Tunnels system, and the Port Authority system. 8 Now, there's an additional discount in 9 Staten Island called a "resident discount," and 10 that's based on how many trips you take over the 11 bridge. 12 So as I had said before to Senator Golden, 13 there's various toll rates. 14 And I would offer to give this to the 15 Committee to look over. 16 SENATOR DILAN: So, someone who has easy -- 17 let's say, an E-Z tag -- E-ZPass, and lives in 18 The Bronx, they go over the John F. Kennedy Bridge 19 several times a week, they get a discount? 20 JAMES FERRARA: They get a discount, but not 21 a resident discount. 22 SENATOR DILAN: What's the difference? 23 JAMES FERRARA: A resident discount is an 24 additional discount on top of the E-ZPass discount. 25 SENATOR DILAN: My question is: Why is there 1 an additional when they're both paying $15? 2 THOMAS PRENDERGAST: The issue in 3 Staten Island came up a while back, because there 4 was an argument made that they didn't have access to 5 the -- direct access to subway system. 6 There's been a resident discount for the 7 Verrazano-Narrows Bridge for how long, Jimmy? 8 JAMES FERRARA: Oh, it goes back a number of 9 years. The history goes back to 1983. 10 SENATOR DILAN: No, you know, I think 11 I understand that, but my point is, that they're 12 both paying $15. 13 And, you know, $15 is $15. 14 And, you know, I hear at many of these 15 hearings, complaints about -- residents of 16 Staten Island complaining about $15; however, the 17 other individuals crossing the bridge also pay $15. 18 I'm not going to belabor that here today. 19 Hopefully, you can send me some kind of 20 explanation with respect to that program. 21 JAMES FERRARA: Okay, Senator. 22 SENATOR DILAN: Then the second question that 23 I wanted to follow up on, was with respect to 24 progress with the federal government regarding the 25 reimbursements of the system hardening. 1 I know that you gave a response, but, what 2 are the expectations that we expect there, with 3 respect to reimbursement for mitigation of future 4 storms, or even the past storm, like "Sandy"? 5 THOMAS PRENDERGAST: There's two different 6 sources. 7 The one is the 4.7 billion for recovery; 8 restoring the system to the way it was the day 9 before. 10 There's another 5.3 billion, I believe, for 11 mitigation; that's resiliency. 12 And those are ongoing and being processed. 13 We can share with you that -- those numbers 14 change on a daily basis. 15 And as a matter of fact, even with the 16 shutdown of the government, that office is open. 17 They're processing that, and we're working with 18 them. 19 But we'll be glad to share that information 20 with you, Senator. 21 SENATOR DILAN: Thank you. 22 Now, with respect to fares, and the -- 23 Comptroller DiNapoli indicated that the MTA has 24 identified the $1.9 billion since February, of new 25 resources, and 50 percent of that was used for 1 discretionary spending. 2 Who determined what were the priorities of 3 using this 1.9 billion? 4 And why be weren't other remedies for, let's 5 say, keeping fares in line with the rate of 6 inflation? 7 According to his report, it has been much 8 higher than the rate of inflation, and if we 9 continue, the riders will continue to take money out 10 of their pockets, and they're not being considered 11 when there are additional resources. 12 Also, tolls were not considered. Pay 13 increases were not considered. 14 So, who made the determination of how to 15 allocate this money? 16 THOMAS PRENDERGAST: It's the MTA's job, 17 primarily in finance, and I'll have Bob elaborate in 18 more detail, as the chief financial officer, to keep 19 track of where revenues are and where expenses are. 20 And we give that report in -- well, first of 21 all, we have a budget that's proposed for the coming 22 year, in November, so we're going to do that next 23 month, for 2014. And then it's voted on and 24 approved by the board in December. 25 And at the mid-year point, in July, we report 1 on how well we're doing against those. 2 In the case of new revenues coming in above 3 projections, there are two things: 4 The first determination that's made is, is 5 this a sustainable revenue? 6 Is it a revenue that we expect to be 7 recurring, versus a one-off revenue? 8 A sustainable revenue would be payroll 9 mobility tax, it would be fares, it would be tolls. 10 A one-off revenue would be an increase in 11 property-tax receipts, because we can't ensure that 12 the property-tax receipts would be that high if the 13 economy's not doing well. 14 We -- then that determination is made. 15 If you're going to hold down fares, you want 16 to make sure that you're using resources and 17 revenues that are recurring and not one-offs. 18 And that's the start. 19 I'll let Bob go into greater detail, in terms 20 of -- and that goes to the heart of issue of when we 21 say, that, okay, there's an expected toll or fare 22 increase in 2015, the size of which we do not know 23 at this time, because we do not know what the 24 revenues will be as we lead up to next July. 25 That's when the decision point starts to get 1 made, and it will be made in the public-dialogue 2 way. 3 ROBERT FORAN: I'd like to back up just a 4 second. 5 In 2009, when the Legislature came up with 6 the package to provide the payroll mobility tax for 7 the MTA, to offset that tremendous drop in the 8 real-estate taxes, a billion two just in two years, 9 it was the payroll mobility tax, and it was also a 10 10 percent fare increase immediately in 2009, and 11 then a 7 1/2 percent fare and toll increase. 12 And, again, gross revenues, revenue yield, in 13 2011 and in 2013. 14 What we've done thus far, and while it may 15 have exceeded the inflation rate during this period, 16 was to put in place the fare and toll revenue yields 17 that were part of the bargain. 18 Okay, so that was -- that's what we've done. 19 Now, the bargain didn't speak to what would 20 happen in '15 or '17. 21 And, though, as the Chairman says, we will be 22 looking at the overall financial condition of the 23 MTA as we approach '15, and as we approach '17. 24 But in terms of what we use the money for, 25 first of all, we had, still, significant deficits 1 that remained. 2 We all recognize, and you know as well as 3 anyone, that the revenues that were projected to 4 come in from the payroll mobility tax and certain 5 other revenues did not come in as expected. 6 It was a new tax. 7 No one did anything, it was just hard to 8 forecast a new tax. 9 So we had a significant reduction in what we 10 expected to come in from that. 11 So we went on this massive cost-cutting 12 effort, and we've been pushing through on the 13 cost-cutting. 14 But of the moneys, the new resources, that we 15 identified in the July plan, the change from the 16 February plan to the July plan, we spent about 17 $400 million, or used $400 million, of that to 18 offset deficits that already remained. 19 They were gonna have to be dealt with. 20 We used about $400 million, $420 million, 21 thereabouts, for additional investment in 22 maintenance, additional investments in service to be 23 provided; things like that. 24 We put about $435 million into pay-as-you-go 25 capital, not for the current capital program, which 1 is winding down, but for the next capital program, 2 the '15-'19, where, as you know, we really don't 3 have a funding plan yet for that. 4 And as the Legislature, in their wisdom, 5 decided that some of the PMT money should be used 6 for pay-as-you-go capital, to relieve the burden of 7 debt service on the fare box, we're trying to do the 8 same thing. 9 We're saying, we should be able to use some 10 of the moneys that are generated for a down payment 11 to the next capital program. 12 And I would say, much of that money came from 13 the refundings that the Chairman mentioned. 14 We were funded over, last year and this year, 15 more than $6 billion worth of bonds, generating 16 present-value savings of almost $1.2 billion that we 17 are putting in to the next capital program. 18 We also had lower interest rates. 19 We took advantage of those lower interest 20 rates in our projection, to use moneys for the next 21 capital program. 22 So, this wasn't found money that was hidden. 23 This was just reestimates, and things like 24 that, that we laid out in the financial plan. 25 But I think as -- even the Comptroller's 1 reporter said, all the uses of this money were 2 appropriate. 3 SENATOR DILAN: I'm not questioning the 4 appropriateness. 5 My question was: Who made the priorities as 6 to the allocation? 7 THOMAS PRENDERGAST: The staff brings 8 together, to the board, a recommendation with 9 respect to how it thinks those revenues should be 10 allocated, and where the money should be spent. And 11 then the board approves them. 12 There is a review in the July financial plan 13 that the board sees. 14 There's no action taken by the board. 15 The board asks all the questions, to make 16 sure. 17 But, then, we're teeing up the submittal that 18 will be in November of this year, in terms of the 19 budget for 2014. 20 I mean, years ago, it was all done in one 21 fell swoop at one board meeting. 22 We do it a month before, it's a public board 23 meeting. We show it, there's a dialogue, and then a 24 decision is made on the budget. 25 There will be -- there is no scheduled fare 1 increase at all in 2014, so there won't be a 2 dialogue on that. 3 But, the way in which we project and we say 4 there may be a fare increase in 2015, the dialogue 5 starts. 6 So one of the things we're unmistakably clear 7 on, we're being as transparent as we can in terms 8 of, where the revenues are, what the funding amounts 9 are, what's sustainable, what's not sustainable, and 10 how we're making those decisions. 11 But, it is a recommendation of the staff 12 brought forward to the board, and the board votes in 13 December. 14 CARMEN BIANCO: Okay, thank you. You've 15 answered the question. 16 Just, I have one question: This revenue of 17 $1.9 billion was since the -- according to the 18 Comptroller's report, since a period of 19 February 2013; is that correct? 20 ROBERT FORAN: What that is, is the -- 21 I think the Comptroller uses the terms, additional 22 resources that were identified after the February 23 plan in 2013. 24 SENATOR DILAN: Okay, so seven months have 25 passed. 1 Has anything changed in terms of the trend? 2 Is there additional funds available, as we 3 speak today? 4 ROBERT FORAN: We are, right now, getting 5 information from each of the agencies, and we're 6 also looking at general trends. 7 So -- 8 SENATOR DILAN: Has the trend continued? 9 ROBERT FORAN: Yeah, we're seeing -- we're 10 seeing our revenues -- 11 SENATOR DILAN: Are we above -- 12 ROBERT FORAN: -- yes, on revenues, the 13 additional revenues that we saw, changes in 14 subsidies, we're probably about $450 million, and 15 that was, basically, through a variety of things 16 here, and that's over the planned period. 17 So it's not just one year. It's over the 18 2013-2017. 19 Right now, we're getting the information 20 together, and in a couple of weeks, when we come out 21 with the November plan, we'll have the details. 22 Expenses; we're seeing some still favorable 23 trends in expenses. 24 And much of those resources that the 25 Comptroller pointed out, we had energy savings, we 1 had health-and-welfare costs, that were lower than 2 we had estimated back in February. We had pension 3 costs that were lower than what we had estimated, 4 and we had debt-service costs that were lower. 5 So when the Comptroller's Office talks about 6 resources, he means lower expenses than we had 7 estimated in February, and some higher revenues; so, 8 it's the combination of those two. 9 SENATOR DILAN: So that means that, in 10 November, we can expect to see if this trend is 11 continuing? 12 ROBERT FORAN: Yes, Senator. 13 SENATOR DILAN: Okay. 14 My next question is, with respect to the 15 capital budget, and I know that you're putting that 16 plan together. 17 How do you intend to fund that? 18 THOMAS PRENDERGAST: Well, the first thing we 19 do is, is we go to a 20-year needs assessment, and 20 we look at state-of-good-repair needs, Senator, 21 which is where assets are reaching the end of their 22 useful life: track, signals, power, communications, 23 stations, et cetera. 24 A large part of money is now going to have to 25 start going into what we call the "infrastructure"; 1 the tunnel structure itself. That's one piece. 2 The second piece is, of the 20-year needs 3 assessment, you know, we're aiming for a point in 4 the middle of this century where our ridership is 5 going to change; that there's changing going on 6 inside the New York -- you know, we're gonna see a 7 million more people in outer boroughs, not in 8 Manhattan, so we need to be able to provide means of 9 service for them. 10 And those all go into the capital program 11 decision-making process. 12 And then what we normally do is -- not what 13 we normally do. 14 What we do do, is the staff brings forward, 15 for board approval, a program, and then it's brought 16 forward to the State Legislature for how it gets 17 done. 18 There's a certain amount of money that we get 19 from the MTA in terms of federal financing. 20 There's a certain amount of money that we 21 bring to the table in terms of pay-as-you-go 22 capital. 23 There's another segment of money that we get 24 in terms of what we can bond and get and generate 25 additional money. 1 And then the remainder is the difference 2 between what the size of the program is, and the 3 subtraction out of all those others that I just had. 4 And that, basically, we get from the State. 5 Is that it? 6 ROBERT FORAN: That's State, or sale of 7 real-estate assets, or some of the other self-help 8 things that we're continually trying to do. 9 SENATOR DILAN: Thank you. 10 Okay, my final question is: With respect to 11 the seal procurement, with regard to the 12 Tappan Zee Bridge, do you have any update on that? 13 THOMAS PRENDERGAST: Tappan Zee is the 14 New York State Thruway, but, if you're speaking 15 about the Verrazano-Narrows, I can give you an 16 answer on that. 17 Is that the one that you meant? 18 SENATOR DILAN: I believe there was one that 19 the MTA, according to a "Daily News" article -- 20 THOMAS PRENDERGAST: The Verrazano-Narrows. 21 SENATOR DILAN: Yeah. 22 THOMAS PRENDERGAST: I'll give an overview, 23 and I'll let Jimmy provide the detail. 24 We are very concerned in everything we do, in 25 terms of spending capital dollars, to trying to 1 maximize, not only U.S, content, but New York State 2 content. 3 In my testimony, I talked about the fact, we 4 actually use local funds to buy railcars locally. 5 And, we are probably one of the largest -- we 6 are the largest procurer in this country of 7 railcars, and a lot of that money comes right back 8 to New York, because they're built at either Yonkers 9 at Kawasaki, or up in Plattsburgh from Bombardier. 10 There is an issue with respect to Chinese 11 steel, at a federal level. There's a concern about 12 Chinese steel being dumped on the American market 13 and sold at below market prices. 14 And, that's a tremendous hardship to the 15 steelworkers that not only fabricate and install the 16 steel, but the people who actually produce it. 17 And the Verrazano-Narrows procurement, 18 there's a need to re-deck that upper level of the 19 bridge. 20 It's a bridge that will be 50 years old next 21 year, is that right, Jimmy? 22 JAMES FERRARA: That's correct. 23 THOMAS PRENDERGAST: And they want to get 24 another 50 years' life out of it, and so one of the 25 ways you do that, is you lighten the deck, and you 1 use a steel material that is -- is not easily 2 fabricated in this country. 3 And, so, there is an award of a contract, 4 where they're using a certain amount of Chinese 5 steel. 6 A large amount of steel is still being 7 produced in this country. 8 To go beyond Verrazano's, we've had a 9 meeting, at a state level, between the Port 10 Authority and MTA, as well as the steelworkers and 11 the fabricators, to see what we can do to try to 12 maximize the capability of U.S. producers to 13 actually make that steel for us. 14 And that will be an ongoing -- that will be 15 an ongoing discussion, because we are all very 16 committed to trying to get maximum content of 17 U.S. steel. 18 SENATOR DILAN: Was the decision a 19 revenue-savings decision, or was it -- 20 THOMAS PRENDERGAST: It was based on three 21 factors: revenue, production capability of 22 suppliers, and the quality. 23 The type of steel, the way it was being 24 fabricated, it's called "orthotropic steel," which 25 is a lighter-weight steel structure that'll get you 1 the additional use for life. 2 There were three factors: It was the quality 3 of the steel, the production capability of somebody 4 to manufacture it for a very critical project in a 5 certain time frame, and cost. 6 It was all three factors. 7 The Verrazano-Narrows is the largest 8 suspension bridge in the western hemisphere, and the 9 replacement of the deck drove an awful lot of 10 production capacity. 11 And, I believe there was one -- one bidder 12 that we actively solicited, or the contractor did, 13 to bid, did not bid. And the other one was not 14 cost-effective. 15 But, Jimmy -- 16 Or couldn't meet production capabilities. 17 JAMES FERRARA: What I'd like to state for 18 the record, also, the project's a $235 million 19 capital program, of which 201 million will go 20 towards course work on the bridge, in addition to 21 the steel that we're talking about. 22 Up to 1 million labor hours over the course 23 of 4 years will be required on site. 24 Portion of the work, significant shares of 25 this work, will go to a unionized American 1 workforce, which will include Local Unions 40 and 2 361 of the Iron Workers; Local 806 painters union; 3 Local 731 and 1010 laborers; and Local 3 4 electricians; Local 14 and 15 of the operators 5 union. 6 A large portion of this work will go to 7 American workers. 8 Primarily, "primarily," the problem with 9 fabricating orthotropic deck is the logistics: the 10 size of the factory, and can we find a contractor 11 that will commit his entire plant to fabricating 12 this type of deck? 13 So far we've been unsuccessful in finding 14 that individual. 15 Now, the general contractor goes out to try 16 to find the fabricator. 17 When a procurement goes out, it's not MTA 18 that's procuring the steel. It's the contractor 19 that's procuring the steel. 20 The contractors that did bid for this job, 21 none of them, "none of them," checked the box for 22 "Buy America." 23 We have provisions in our procurement 24 contract that allow for a 6 percent differential in 25 bid. 1 The problem is not so much the cost. It's 2 the actual fabrication of this unique type of deck. 3 And the reason we chose and choose this type 4 of deck, is to keep the state of good repair, the 5 main cable, from fatiguing; so you lighten the 6 weight of the bridge with an orthotropic deck. 7 And in the instance of the Verrazano Bridge, 8 it also provides a seventh lane for that continuous 9 HOV lane. 10 So those are all of the thoughts that went 11 into this project. 12 I hope I answered your question. 13 SENATOR DILAN: The only thing I would say is 14 that, you know, according to the article in the 15 "Daily News," the steel companies in China are 16 subsidized by the state. 17 So it really means that an American company 18 wouldn't have a chance, apparently, if that's where 19 we're gonna get our steel from. 20 So, thank you very much. 21 THOMAS PRENDERGAST: And there is a dialogue, 22 at a national level, with the New York and other 23 delegations, to deal with that issue, because 24 they're concerned about it as well, Senator. 25 SENATOR FUSCHILLO: Thank you, Senator. 1 Senator Perkins has a few questions, but 2 before that, Howard, I want to ask you a question 3 about, in your testimony, you said that the cable 4 failed -- and the Con Ed cable had failed. 5 And this was an 8-mile stretch of track that 6 wasn't electrified at that moment; correct? 7 HOWARD R. PERMUT: Yes. 8 SENATOR FUSCHILLO: Okay, let ask you a 9 question, and it may be simplistic in nature. You 10 obviously know the complexities of your business a 11 lot better than me. 12 But, "Superstorm Sandy," we saw alternative 13 generation to power. You know, massive office 14 buildings in New York City, the metropolitan area, 15 on Long Island as well. 16 There was nothing that Con Ed or the MTA 17 could have done to brought in any alternative 18 generation to hook up? 19 I mean, whether it's, you know, even on a 20 limited basis during peak or off -- you know, peak 21 in the morning, peak at night, to keep that going? 22 HOWARD R. PERMUT: So, Senator let -- yeah, 23 let me address that. Let me -- 24 SENATOR FUSCHILLO: The reason I ask you 25 that, is the dependency, and the way you were held 1 hostage because of Con Ed's failure, as you stated 2 in your testimony, that's not me, really strapped 3 your hands, where you were -- you were powerless to 4 do anything. 5 HOWARD R. PERMUT: So let me just -- let 6 me -- I can expand a minute on that circumstance and 7 what happened. 8 The -- we are -- in essence, the operating 9 system was designed a hundred years ago, the 10 New Haven line. 11 And when they designed the line, it was 12 designed so that you basically had one single point 13 of power to single point of failure in this 14 8-mile -- critical 8-mile section. 15 This is not unusual. 16 Rail lines -- this is part of the northeast 17 corridor, as you know. 18 This type of design is fairly common. 19 In fact, we are working to eliminate 20 everyplace we can along the New Haven line, this 21 circumstance. 22 What happened was, the feeders -- there were 23 two feeders at Mount Vernon. 24 One was being taken off line, because we're 25 improving the substation. 1 The second feeder -- these are both 138-kV 2 feeders, so they're very, very high-voltage feeders 3 to serve the lines. 4 The other one was damaged during an operation 5 by Con Edison. That's when we lost the power. 6 We talked, we did everything we could, with 7 Con Edison. 8 And I want to say we had full cooperation 9 from the very highest level of Con Edison almost 10 within an hour of the event. 11 We worked with them, to see what could be 12 done. 13 The power draw -- it is an extreme power draw 14 for the trains when they're accelerating and 15 decelerating. 16 Particularly in an 8-mile section, where you 17 have other third-rail on Metro-North, the 18 Long Island subway, you have substations much closer 19 together. 20 This being AC power, they're much further 21 apart. 22 So what Con Ed was able to do is something 23 that they -- they actually took an action that they 24 had never done before, and was unique in their 25 history, when they built a temporary substation in 1 Harrison. 2 That's what they did over the weekend. 3 Starting that Wednesday, they built a 4 substation -- which Tom and I toured that weekend, 5 as I recall, Saturday -- and put it online over that 6 weekend, which allowed us to run a few electric 7 trains. 8 So that's why we went from zero electric 9 trains in that 8-mile stretch, so we could run 10 two an hour. 11 They then built another -- added to that 12 substation, so we got to three an hour. 13 The problem was, in the rush hour, we 14 normally have ten trains in that section. 15 So the focus -- and that's as much as could 16 be done, and that was tapping into the 17 residential -- and the reason why, because it was 18 tapping into the residential network of Con Ed. 19 They better than I can explain what their 20 limitations are on their power network. 21 THOMAS PRENDERGAST: There's very few 22 locations in their system where they can provide 23 power to you at 138,000 volts. 24 In Manhattan, in Bronx, it's 13,000. 25 In Queens, Brooklyn, and Staten island, it's 1 26,000. 2 So, there were a finite number of locations, 3 and it just so happened, this one was one where we 4 had two feeds; one was already out, and the other 5 one left. 6 So, we need to identify other places on the 7 system where we have single-point failures like 8 these, for not just Long Island -- not just 9 Metro-North, but for Long Island. 10 The power grid at the Transit Authority is 11 far more resilient. 12 You can take two stations off, in line, and 13 still have enough power to run the service. 14 It's the nature of the design. 15 SENATOR FUSCHILLO: Are there many 8-mile 16 gaps like this? 17 HOWARD R. PERMUT: This is -- 18 SENATOR FUSCHILLO: On your line? 19 HOWARD R. PERMUT: This is, on the New Haven 20 line -- first of all, Harlem and Hudson is similar, 21 as Tom said, with substations, so we don't have that 22 problem, because it's third-rail. 23 SENATOR FUSCHILLO: Right. 24 HOWARD R. PERMUT: On the New Haven line, 25 this is unique. 1 We have two other sections that are similar 2 to this, based on the original design. 3 We are -- they are in the state of 4 Connecticut. We have projects underway, which will 5 be completed by the end of the year, that eliminate 6 this problem. 7 So we will then be able to, except for this 8 section, from Harrison to New Haven, we don't have 9 the problem anymore. 10 We are -- given what has happened, we are 11 working with Con Edison to look at, how do we fix 12 this problem for this 8-mile section? 13 Because, clearly, we want to have the 14 redundancy, so if we lose -- again, if we were to 15 lose the Mount Vernon substation, we have an ability 16 to power the line. 17 The thinking, up until this event, was the 18 substation itself is actually two substations, and 19 you could lose one of the two substations. 20 The problem was, is that there's a common, in 21 a manhole, where the two key feeders were next to 22 each other, that's where the problem occurred. 23 SENATOR FUSCHILLO: Lost both. 24 Okay. 25 Thank you very much. 1 Senator Perkins. 2 SENATOR PERKINS: Thank you. 3 And thank you, especially, Mr. Chairman, 4 for bringing us -- convening this very, very 5 important hearing; an opportunity for us to catch up 6 to what's happening with our public transportation. 7 So, I want to congratulate you on the end of 8 your journey with the Second Avenue Subway. It's as 9 if things are coming to a very positive and -- 10 conclusion. 11 And I'm reminded, though, that when we first 12 met, there was a rat problem, as you were starting 13 to work along the Second Avenue Subway, and it 14 reminds me to ask the question: How we doing with 15 the rats in the subway system? 16 THOMAS PRENDERGAST: I'll give that one to 17 you. 18 [Laughter.] 19 CARMEN BIANCO: Thank you, Mr. Chairman. 20 There's a number of ways that we're 21 approaching this problem. 22 One is, through the work of the -- working 23 with the City, and, also, with an outside agency, 24 there is a treatment called "ContraPest." 25 SENATOR PERKINS: "ContraPest"? 1 CARMEN BIANCO: ContraPest. And that's a -- 2 SENATOR PERKINS: With a "K" or a "C"? 3 THOMAS PRENDERGAST: "C." 4 CARMEN BIANCO: "C." 5 And that is a method to actually interfere 6 with the reproductive nature of the female rat. 7 So, there's a pilot going on to actually -- 8 to actually roll that out. We hope to expand that. 9 The second thing we've done at 25 stations, 10 is we've actually looked at where we store the 11 refuse that we pick up each and every day. 12 There's generally a room at the end of each 13 platform where we store it. It's stored there until 14 the evening hours. We bring special trains in, 15 those trains pick up that material, 39 tons a day. 16 We take about 39 tons of refuse out of 17 New York City subway system each and every day. 18 But those rooms, we had to actually go into 19 25 stations, and we disinfected the rooms, we 20 cleaned them. We looked for every crack and 21 crevice, to seal those rooms. 22 And then we put on new doors, doors -- in 23 some cases, where they needed new doors, were 24 definitely sweeps, to keep population -- you know, 25 the rat population out of those rooms. 1 And the third aspect of this is, that we're 2 actually -- the treatment, actually the bait 3 [unintelligible] program, has actually been stepped 4 up. 5 And, so, there's three aspects to that. 6 Where we've done this, we've seen an 7 appreciable difference in the population. 8 We just hope to keep expanding it. 9 And we have money in budget set aside for 10 that. 11 SENATOR PERKINS: How much money, by the way? 12 CARMEN BIANCO: Oh, I'd have to -- I'd have 13 to dig that figure out, but we -- let me see if 14 I can find it quickly for you. 15 SENATOR FUSCHILLO: Some of the investments 16 that were made weren't to direct service. They were 17 things -- customer service improvements, and that's 18 what Carmen's talking about, but we'll provide that 19 number you to, the additional reinvestments we made, 20 in terms of -- some were service-related, in terms 21 of more trains and buses. Others were things like 22 this, where we're trying to improve the customer 23 experience. 24 SENATOR PERKINS: The -- I'd appreciate that 25 information, your budget, and, also, as much on this 1 ContraPest situation as possible. 2 So, there's a lot of money, I hear, and I'm 3 wondering, with the Minority Women and Business 4 Enterprise aspects of this, is there a report of 5 anything in that regard? 6 THOMAS PRENDERGAST: We've been very 7 aggressive, actually, starting two administrations 8 back, under Jay Walder, there was a new approach. 9 Michael Garner is leading that effort for the 10 MTA. 11 We've raised the bar in terms of requirements 12 for each of the agencies, in terms of MWDBE, 13 minority- and women-owned enterprises. 14 And we've extend those particular targets to 15 even the "Sandy" work. 16 I believe we're currently committed to 17 22 percent, if I'm not mistaken, but, we'll get you 18 those numbers. 19 SENATOR PERKINS: 22 percent of [inaudible], 20 or 22 percent in general? 21 What -- 22 THOMAS PRENDERGAST: Well, I'll have to get 23 back to you. 24 I should know the number off the top of my 25 head, sir, and I don't. 1 SENATOR PERKINS: So you'll let us know as 2 soon as possible? 3 THOMAS PRENDERGAST: Yes, absolutely. 4 SENATOR PERKINS: And, is it a growing 5 number? 6 What -- anything you can -- 7 THOMAS PRENDERGAST: We'll provide the 8 schedule to you, but, it started out at lower 9 numbers, with a continued increase in the 10 percentage. 11 And that continues into the next capital 12 program. 13 SENATOR PERKINS: So the sooner we can get 14 that, you know, the sooner we can get it into our 15 newsletter, and -- and -- so that the community can 16 know what's going on. 17 That's a big deal for a lot of us. 18 There was a report on the select bus service, 19 and I'd like to get a little bit more information 20 about how that is working out. 21 I know that it was reported that there are 22 three places where it's in play. 23 My district is getting ready, I think, to 24 experience it. 25 I want to get a sense of how that's working 1 out in other places. 2 Some of the challenges that we're -- that 3 have been overcome that, perhaps, we won't have to 4 experience, once it comes into my neighborhood, into 5 my district. 6 THOMAS PRENDERGAST: Sir, let me start, and 7 Darryl or Tom can pick up at that point. 8 Currently, there are five select bus-service 9 routes in the city. 10 We have the BX-12 up at Fordham Road. 11 The BX-41. 12 We also have, on First and Second Avenue, the 13 M-15 and the M-34 and 34-A, and the S-79 in 14 Staten Island. 15 What we're seeing, as we roll out this 16 service, is that it -- you know, because of the 17 dedicated lanes, and because of the way the service 18 is delivered with the off-board fare media, that 19 we're actually seeing about a 20 percent improvement 20 in the time it takes for that bus to move over its 21 route. And we're also seeing ridership increases at 22 about 5 or 10 percent. 23 So, we plan to continue on with SBS. 24 If we can bring one line on, one route on, a 25 year, that's our plan. 1 And the latest one to come on, is the B-44 on 2 Nostrand Avenue in Brooklyn. That will start on 3 November 17th, if I'm correct. 4 SENATOR PERKINS: And what is the cost of 5 this? What is the savings? 6 What are we seeing? 7 I know you mentioned increase in ridership, 8 to some extent. 9 CARMEN BIANCO: There is a cost -- 10 SENATOR PERKINS: "$6 million" figure 11 mentioned in the report that was given, so, for the 12 three. 13 I'm just wondering, since you're talking 14 about more, what -- 15 THOMAS PRENDERGAST: The primary focus is to 16 actually provide additional service at reduced 17 costs, but not necessarily reduced net cost. 18 What we're trying to do is identify corridors 19 in the city where they're not in competition with 20 the existing subway corridors, where we can, as 21 Carmen said, improve the speed of the commute, have 22 on-board off -- all off-board fare collections so 23 there's less time waiting at stops, dedicated lanes 24 with some level of enforcement. 25 But the primary function of the program is to 1 increase ridership, and provide better service. 2 SENATOR PERKINS: I want to thank you, 3 Mr. Prendergast, for the conversations we've had 4 about the one in my district, and the interest that 5 you've shown in terms of trying to help us overcome 6 some of the concerns of the neighborhood. 7 And, I'm looking forward to the meeting that, 8 ultimately, we'll probably have about it. 9 But, one of the other concerns that has come 10 to our attention, particularly in my district, is 11 the handicap-accessibility problems. 12 It seems as if the handicapped community -- 13 organized handicapped community, the advocates for 14 that community, that we've been working with, are 15 concerned that the buses don't quite accommodate 16 them. 17 Have you -- have you encountered that? 18 How have you overcome it? 19 And what -- 20 CARMEN BIANCO: I mean, I'll just start 21 that -- the discussion. 22 I'm not familiar with that -- with that 23 concern. 24 I can tell you that our bus fleet is 25 100 percent accessible. 1 SENATOR PERKINS: It's not so much the bus 2 per se. It's the stops. 3 CARMEN BIANCO: The stops itself? 4 Okay. 5 SENATOR PERKINS: Some of them are at places 6 where there are cafes, or maybe the gap between 7 the -- 8 SENATOR FUSCHILLO: Curb cuts? 9 DARRYL IRICK: The curb? 10 SENATOR PERKINS: -- curb. 11 And, you know, they have those -- where you 12 wait for the bus -- 13 DARRYL IRICK: Bus shelters. 14 SENATOR PERKINS: -- bus shelter, and the 15 wall behind the bus shelter, whatever that may be, 16 it seems to be some issues related to wheelchairs, 17 and the like, that the handicapped community has 18 brought to our attention, and needs to -- somehow 19 ought to be addressed. 20 Are you familiar with this? 21 DARRYL IRICK: No, not specifically. 22 Like President Bianco stated, the entire 23 fleet, at 100 percent, is outfitted with 24 wheelchairs -- 25 SENATOR PERKINS: I'm not talking about the 1 fleet per se. 2 I'm talking about the structures on the 3 street with -- like, the bus shelters -- 4 THOMAS PRENDERGAST: What would be probably 5 best, is if you could put us in touch with who 6 you're hearing the complaints from. 7 A bus has to be, basically, curbed properly. 8 It's got to be close to the curb. 9 It's got to be so that the wheelchair lift 10 can access that curb. 11 If there would be a stop -- a bus-stop 12 shelter in the way, that would be a potential 13 interference. 14 So, most likely, if you're getting 15 complaints, we'd have to be specific with respect to 16 location. 17 And then, if we had an issue with respect to 18 training of a bus operator, to make sure that they 19 were stopping, if they saw someone in a wheelchair, 20 stopping in a location, still in a bus stop -- we 21 want to stop on a bus stop, because that's a 22 protected area for them to stop -- but far enough 23 away from the bus shelter that the shelter doesn't 24 provide an interference for them to board. 25 DARRYL IRICK: Right, if you could get us 1 that information, we'll, you know, aggressively look 2 at it. 3 SENATOR PERKINS: Okay. 4 The -- one of the good news is, the 5 Metro Card. 6 And it's -- how are -- how is that growth? 7 Is it growing in its use? 8 Is it -- what's the story of the Metro Card? 9 THOMAS PRENDERGAST: Well, there's -- 10 SENATOR PERKINS: Good news. 11 THOMAS PRENDERGAST: Well, the good news is, 12 we're gonna replace it with new technology, and 13 we're gonna replace it with new technology that 14 tries to reduce even the total cost that we have in 15 collecting fares, because it's reaching the end of 16 its useful life. 17 But you take a look at the ridership growth 18 of the New York City subway system, when I left, 19 I was senior vice president of operation in 1994, we 20 were carrying 3 1/2 million people a day on the 21 subway. We're now carrying 5.4 million people a 22 day. 23 And, primarily, that was not done with 24 expansion of the system. That was done with a fare 25 card, and, you know, a monthly fare card and weekly 1 fare card at reduced value. 2 And that's where the majority of the 3 ridership has gone. 4 If you recall, also, the last fare 5 increase -- maybe two fare increases ago, we had the 6 dollar surcharge -- no, it was less fare increase -- 7 dollar surcharge, to provide an incentive, or a 8 disincentive, for people to throw a card away and 9 keep having a new card, because that's costly for 10 us; but, also, it littered the stations with a lot 11 of -- with unused Metro -- I mean, discarded 12 Metro Cards. 13 And that has been a very successful program, 14 because we're getting far less Metro Cards thrown in 15 the subway stations, and a much higher reuse of -- 16 reloading of an existing card. 17 UNKNOWN SPEAKER: And that reuse is up around 18 88 percent. 19 SENATOR PERKINS: 88 percent? 20 UNKNOWN SPEAKER: Yes, that's through 21 September. 22 SENATOR PERKINS: Wow, that's very good. 23 Just to keep it moving, I've been reading 24 about naming rights for the system, you know? 25 I've seen that some places. 1 I didn't like it. 2 I was wondering what is the thought behind 3 that? 4 What -- why -- why does somebody's name have 5 to be -- you know, somebody rich-and-important's 6 name have to be -- you know, be the -- my station's 7 name. 8 THOMAS PRENDERGAST: Senator, if you go 9 beyond -- 10 SENATOR PERKINS: Or anybody's station. 11 THOMAS PRENDERGAST: -- if you go beyond -- 12 SENATOR FUSCHILLO: You could always name it 13 the Senator Perkins Memorial Station. 14 SENATOR PERKINS: Well that's not a rich and 15 important person, so I would agree. 16 [Laughter.] 17 SENATOR PERKINS: But I'm just saying -- 18 THOMAS PRENDERGAST: I'll start very general 19 and go to -- 20 SENATOR FUSCHILLO: I don't think he heard me 21 when I said "memorial station." 22 SENATOR PERKINS: Oh, "memorial station." 23 [Laughter.] 24 SENATOR FUSCHILLO: Kidding, Bill. 25 SENATOR PERKINS: I should learn to listen. 1 THOMAS PRENDERGAST: In the industry, a 2 number of transit systems trying to find new revenue 3 sources have decided to, basically, sell naming 4 rights to stations and facilities, and some have 5 done it to a far greater degree than we have. 6 We have done it in a few locations. 7 I mean, Barclays Center is one. 8 We've had requests from others to do it. 9 There's a station at Aqueduct that I believe 10 a -- the casino operator has asked to have naming 11 rights for. 12 And the underlying objective is to try to 13 gain revenue for the system. 14 Just recently, we brought forward to the 15 board, and the board approved the policy, that talks 16 about when we would consider the idea of selling 17 naming rights to generate revenue. 18 And the basic tenets of that are, that we're 19 not gonna just sell to the highest bidder. 20 There has to be some tie between the 21 overwhelming majority of people who would want to go 22 to that station, and that's why they would have it. 23 So, we're not going sell it to Coca-Cola, for 24 example. 25 You can make an argument for or against, but, 1 you know, Barclays was located in a very, very good 2 place. 3 That's why it's -- you know, it's, I think, 4 close to, I think, as many as seven lines, or maybe 5 more than that. And bus lines. 6 I don't want to pick out any particular one, 7 but the majority of stations in the system wouldn't 8 fit that criteria. 9 So, it's gonna be a criteria that, we didn't 10 want to be arbitrary and capricious in saying, we're 11 gonna do this station, we're not gonna do that 12 station. 13 So, it's general criteria, but you're not 14 gonna see a widespread application. 15 SENATOR PERKINS: And how much would it 16 provide? 17 How much -- 18 THOMAS PRENDERGAST: It depend -- well, one 19 of the things the policy also calls for is, we would 20 use an independent person to come through to 21 appraise, and decide what that value is. 22 That's not a core competency of our 23 organization. 24 We would go to somebody who would, because, 25 if we're gonna to do it, we want to maximize the 1 amount of revenue and not sell below what the market 2 value would be for. 3 SENATOR PERKINS: So in terms of your 4 scheduling of this, how far away is it in the 5 future? 6 THOMAS PRENDERGAST: I think we can count the 7 number of times that somebody's asked for naming 8 rights to a station on the fingers on one hand over 9 five years. 10 It's not -- it's not -- 11 SENATOR PERKINS: Who is it that asked you, 12 by the way? 13 THOMAS PRENDERGAST: Well, Barclays is one. 14 The other is the casino gaming operator out 15 at Aqueduct, Genting. 16 Those are the only two that I know of. 17 SENATOR PERKINS: And what are they offering? 18 THOMAS PRENDERGAST: We're -- I'm not gonna 19 get into that level of detail. 20 But, I mean, in terms of the criteria that 21 the board and the policy approved, those are ones we 22 would entertain the discussion on. 23 We're a long ways from reaching an agreement. 24 25 SENATOR PERKINS: The last, but not least, 1 you know, I've noticed in my travels, a great deal 2 of tourists on the system, which I -- you know, 3 I think is a good thing. 4 Do we get a chance to measure them in terms 5 of what value they have? 6 I mean, how much is tourism contributing to 7 the running of the system? 8 Do you know? Do you have any idea? 9 Or is there any -- is that a reasonable thing 10 to look at, to understand? 11 HELENA E. WILLIAMS: I'm just gonna respond 12 with regard to Air Train, Senator. 13 We've done a couple of counts, and Air Train, 14 of course, is at Jamaica station. It's accessible 15 by an automatic guideway system to JFK. 16 At our Jamaica station, we, of course, have 17 train station -- train station and train service 18 that goes to Jamaica, Brooklyn, and, of course, 19 Jamaica Penn, but we also have a subway station 20 right in our building. 21 SENATOR PERKINS: [Unintelligible.] 22 HELENA E. WILLIAMS: Well, we've done counts 23 with approximately 9,000 a day coming off Air Train, 24 or going to Air Train, either from the subway, to 25 the subway, or from the train service. 1 So that's just one example of, you know, one 2 location with the volume of tourists. 3 SENATOR PERKINS: Certain neighborhoods, 4 I know, for instance, 125th Street, has seen an 5 extraordinary number of folks come in as tourists, 6 from the subway system, from the bus system. 7 So I was just kind of get an idea, what is 8 the value of that, particularly in terms of the 9 whole system? 10 THOMAS PRENDERGAST: I don't know if the 11 Metro Card system would enable us to differentiate 12 between that: who is the tourist versus not. 13 Anecdotally, I can just tell you when 14 there -- as the amount of tourism and the hotel 15 occupancy rate of New York City has reached the 16 levels it is, which is very high, because this is 17 one of the most popular tourist destinations, you 18 see more tourists on the subway. 19 But that's an anecdotal observation, Senator. 20 It's not anything scientific. 21 SENATOR PERKINS: All right, thank you very 22 much. 23 I look forward to that MWBE report as soon as 24 possible. 25 SENATOR FUSCHILLO: Thank you, 1 Senator Perkins. 2 And I'm not gonna ask you, Tom, what a 3 Senator Bill Perkins Memorial Station would cost us, 4 so I won't even get into that. 5 SENATOR PERKINS: Well, listen, you wouldn't 6 have to pay me. 7 [Laughter.] 8 SENATOR PERKINS: Send it to one of our 9 public schools. 10 SENATOR FUSCHILLO: Yeah, some of our members 11 just have a quick question, and I just want to ask 12 some questions, but I have a whole series. 13 Just one of them, Tom, the current debt of 14 the MTA is over $30 billion, expected to rise to 15 $37 billion. That doesn't include the 2015 capital 16 program, '19 program. 17 I think that your debt service is a little 18 over 2 billion a year. 19 Are we in a debt crisis? 20 THOMAS PRENDERGAST: I'll let Bob answer 21 that. He's spent most of his time in the finance 22 industry. 23 There's always a healthy-tension dialogue 24 with respect to what size the debt should be carried 25 by the MTA. 1 And, you know, part of it is the issue of, if 2 you didn't have a capital program in the size of the 3 need for that, it would be a totally different 4 discussion. 5 But there is that discussion, and there's 6 only so much other revenue sources can make up on 7 it. 8 Certainly, you're moving toward a point 9 where, at some point in time, there's probably a 10 break point. 11 Whether we're at it or not now, I can't say, 12 but maybe Bob can. 13 ROBERT FORAN: When I look at debt 14 affordability, I look at a couple of things. 15 I look to, what is the burden of debt service 16 to the operating budget? 17 And then I also look at, what is the amount 18 of debt that we have outstanding relative to the 19 fixed assets that we're investing in? 20 You know, because, we're -- in a sense, we're 21 much like an investor-owned utility. We have to 22 have fixed assets to generate the service for our 23 customers. 24 SENATOR FUSCHILLO: So let's look at the 25 first part: debt service to operating budget. 1 ROBERT FORAN: Right now we're in the 2 16 to 17 percent, when you look at, you know, debt 3 service to total operating revenue. 4 SENATOR FUSCHILLO: And how do the financial 5 markets view that? 6 ROBERT FORAN: Right now they're comfortable 7 with it. 8 SENATOR FUSCHILLO: Okay. 9 ROBERT FORAN: We've talked, and, you know, 10 we present this affordability -- 11 SENATOR FUSCHILLO: "Comfortable" in the 12 sense that, when you refinance, you're refinancing 13 at a lower interest rate if available? 14 ROBERT FORAN: Yes. 15 THOMAS PRENDERGAST: And if you compare that 16 with other transit systems, that's exceptionally 17 low. 18 ROBERT FORAN: Yeah. 19 THOMAS PRENDERGAST: There's other transit 20 systems much higher than us. 21 Not that we would necessarily go to that 22 level. 23 SENATOR FUSCHILLO: No, but that was going to 24 be my next question: How does it compare to other 25 systems if there are compatible -- 1 ROBERT FORAN: There are other systems with 2 significantly higher. 3 SENATOR FUSCHILLO: [Unintelligible.] 4 ROBERT FORAN: MBTA in Boston, yes, has a 5 higher percentage. 6 Again, what we're really always looking at, 7 is trying to come up with the mixture of funding 8 sources that spread the burden. 9 So, the fare box has to pay for a certain 10 amount. 11 The dedicated taxes should pay for a certain. 12 Federal grants should pay for another amount. 13 Support from the City of New York should pay. 14 We have funding partners, and we're always in 15 the issue, with your support and your help, and 16 often your leadership, on trying to figure out what 17 the proper balance. 18 And I've worked with the capital program from 19 an -- as an outsider, as a banker, since 1984. 20 And I just, four years ago, came over to 21 serve as chief financial officer, so I've seen what 22 the market thinks of the MTA's debt. 23 And, I've seen times when it's been heavier 24 on debt, lighter on federal, lighter on city, 25 heavier on city; so it's kind of been a moving mix, 1 and I think that's just the way -- the nature of the 2 partnership arrangement and agreement with all of 3 our funders. 4 SENATOR FUSCHILLO: Is there a level, Bob, 5 where, you're at 16 percent of operating, is there a 6 level, a ceiling, that raises an alarm for you to go 7 to the Chairman and say, you know, We're at a point 8 right now where we're too high? 9 ROBERT FORAN: Yeah, I wouldn't say that 10 anything in the foreseeable future is putting me at 11 a level too high. 12 In one sense, the amount of debt that we have 13 is no more of a burden than, perhaps, our pension 14 costs, or our health-care costs. 15 It's -- the thing about debt, is it's 16 constant for a long period of time. 17 The thing about health-care costs and retiree 18 health, it's a long time. 19 So -- 20 SENATOR FUSCHILLO: Well, let me ask you a 21 question on that, on the health, because it's always 22 been testified, uncontrollable costs: health, and 23 pension. 24 Union employees, they pay a percentage of the 25 health insurance? 1 ROBERT FORAN: Some do. 2 SENATOR FUSCHILLO: Okay. 3 ROBERT FORAN: Some don't. 4 SENATOR FUSCHILLO: And some pay zero. 5 ROBERT FORAN: Yes. 6 SENATOR FUSCHILLO: Non-union employees? 7 ROBERT FORAN: Non-union all pay. 8 SENATOR FUSCHILLO: All pay a percentage? 9 ROBERT FORAN: They all contribute, yes. 10 SENATOR FUSCHILLO: Okay. 11 All right, Senator Dilan. 12 SENATOR DILAN: Thank you. 13 I have a -- 14 SENATOR FUSCHILLO: Thank you. 15 ROBERT FORAN: You're welcome. 16 SENATOR DILAN: I have very quick question, a 17 parochial question, with respect to the 18 Greenpoint Tunnel that services the G line. 19 I know that some stations were closed for 20 12 weekends, and, we expect that it will happen at 21 least 5 more weekends. 22 Can you just give me a quick progress report 23 with respect to that? 24 CARMEN BIANCO: Sure. 25 We -- you know, again, as we looked at the 1 amount of work that had to be done in that tunnel, 2 it was always looked at with an eye towards, how do 3 we do the work and create the least amount of 4 inconvenience to our customers in terms of 5 delivering the service? 6 In the Greenpoint tube, I believe there were 7 12 weekend outages over the course of this year. 8 And I think, at this point, we're up to about 9 nine of those outages, so there's a few more to go. 10 But also, next year, I believe it's in July, 11 that we will actually take that tube out for 12 five consecutive weeks, to pull in new cables, new 13 signaling, and, hopefully, that will solve the 14 "Sandy"-related defect work and resiliency work that 15 has to go on in that tunnel. 16 SENATOR DILAN: So the riders can expect at 17 least just those five, and whatever is remaining on 18 the twelve, and, no more than that? 19 CARMEN BIANCO: There's always another 20 possibility why we would have to take it out. 21 But as far as the work that we planned to do 22 down there, it was 12 weekends -- 23 SENATOR DILAN: If there are any changes, 24 I would appreciate that you let us know. 25 CARMEN BIANCO: Absolutely, absolutely. 1 THOMAS PRENDERGAST: What we're trying to do 2 from this as well, Senator, this is the first time, 3 ever, that we've had to take a tube out of service 4 like the Montague, and then five weeks next year for 5 Greenpoint. 6 Learn as much as we can: How can we do it 7 faster and more efficient? 8 Because we have 14 [unintelligible] tubes, 9 and at some point in time, we're gonna have to 10 replace them -- replace them in kind in place. 11 SENATOR DILAN: Thank you very much. 12 And really want to thank all of you for 13 testifying today, and, I believe that you guys are 14 moving in the right direction. 15 SENATOR FUSCHILLO: Tom, the Comptroller -- 16 before I go to Senator Golden -- in his report 17 stated that, and I think you may have disagreed, Bob 18 had questioned the words: 1.9 billion in new 19 resources, and that none of that was allocated to 20 moderate any future fare or toll increases. 21 Is that accurate? 22 ROBERT FORAN: Yes. 23 Again, the future resources, I just wanted to 24 point out, is not new revenues. It's a portion of 25 incremental revenues, but it's also reduced 1 expenditures. 2 So that's it. 3 One thing we've done, is we said we're going 4 to pick a target, and, again, it's a projection of 5 fare and tolls, and that 7 1/2 has not changed from 6 2 years ago. 7 We said a 15 would be 7 1/2. 8 Not committing to it, not locking it in, but 9 at least for projection and forecast purposes, the 10 7 1/2. So, we left that in. 11 And I think the key is, when we get closer to 12 where we need to be, in terms of holding public 13 hearings and having the public debate, and making 14 sure that everybody is comfortable that whatever the 15 fare and toll level is, it's the appropriate level, 16 that's gonna reflect where we are financially: where 17 our costs are, and where our subsidies are. 18 SENATOR FUSCHILLO: Is the 1.9 billion actual 19 surplus dollars? 20 ROBERT FORAN: No, it's not surplus dollars. 21 SENATOR FUSCHILLO: Okay. 22 Senator Golden. 23 SENATOR GOLDEN: Thank you, I'll be brief. 24 Thank you again, Mr. Chairman, and thank 25 you, ladies and gentlemen, for today. 1 I know it's been a long morning so far, and 2 afternoon. 3 We touched on the 20-year needs assessment; 4 We touched on the 5-year plan on possible 5 revenues, to fund; 6 We touched on the changing patterns and 7 habits in transportation; 8 We touched on the debt; 9 And we brought up New York City. 10 Does New York City have -- is its 11 contribution sufficient? And, should they increase 12 the MTA funding? 13 THOMAS PRENDERGAST: The contribution has 14 varied over the years. 15 It's been waxed and waned in terms of 16 increase. It's probably lower than today that it 17 has been other times. 18 But, they've funded other things; like, 19 they've been a very strong supporter of SBS service. 20 But maybe Bob's got details in terms of how 21 much? 22 ROBERT FORAN: Yeah, in the -- we're, right 23 now, at about $150 million a year of support, and 24 that's for our current capital program. 25 I would say, that they did fund the Number 7 1 extension, so that is not in our capital program, 2 but that is something the City has done. 3 Through the years, sometimes it's been 4 higher, sometimes it's been lower. 5 There are initiatives that the City is doing 6 with us, to take transit-used properties that are no 7 longer necessary for transit, and to sell those in 8 the marketplace, and then use those moneys for 9 transit capital-program purposes. 10 So, they've provided that type of support, in 11 addition to the annual support. 12 And then, as you're well aware, there's other 13 initiatives where additional funds might come from 14 real-estate developers to the MTA properties. 15 SENATOR GOLDEN: So you think they should add 16 more, you're saying? 17 THOMAS PRENDERGAST: I'm sure we're gonna 18 have a dialogue with the new administration when it 19 gets seated, Senator. 20 I'm sure there will be a dialogue. 21 SENATOR GOLDEN: The -- we said we'd 22 "Buy American." 23 We have six -- what did you say, 6 points? 24 Or 6 percent? Or -- 25 JAMES FERRARA: That was a resolution in 1983 1 by the board. They adopted a 6 percent differential 2 in the cost of the steel. 3 THOMAS PRENDERGAST: And that came as a 4 result of a gubernatorial directive, I believe. 5 JAMES FERRARA: Yes, that was a result of an 6 executive -- 7 SENATOR GOLDEN: [Unintelligible] 8 "Buy New York" preference, do we? 9 THOMAS PRENDERGAST: No, I'll go back and 10 explain that. 11 You can't have "Buy New York" if you use 12 federal dollars. 13 That, we do use "Buy New York," and we have 14 incentive for local dollars, and we have maximized 15 the purchase of vehicles with local dollars. 16 So, that's why we're able to buy buses with 17 New York State content, and railcars. 18 And we have two very large rail-production 19 plants: one in Yonkers by Kawasaki, and one in 20 Plattsburgh by Bombardier. 21 SENATOR GOLDEN: You gave us the preference 22 on that? On the ones where you say you can do with 23 New York? 24 THOMAS PRENDERGAST: It's part of the 25 criteria. We'll show you how we do it, and how we 1 evaluate it. 2 SENATOR GOLDEN: Appreciate that, because 3 we're looking at legislation, statewide, on other 4 procurements, and we'd like to see how you do it. 5 Moynihan Station, we didn't hear anything 6 about that. 7 What's going on with Moynihan? 8 THOMAS PRENDERGAST: Moynihan Station is a 9 federal project. 10 Helena may be able to provide more details; 11 I'll just give the general overview. 12 Longstanding project. 13 New York State -- it's the Penn Station 14 Redevelopment Corporation; right? 15 HELENA E. WILLIAMS: Yes, yes. 16 THOMAS PRENDERGAST: And, we're supportive of 17 it in the sense that it will provide a new station, 18 provide some real-estate potential, but the 19 underlying issue that we've always had is, it does 20 nothing to provide additional track capacity for the 21 three railroads that use the terminal right now. 22 So, you know, it's something we support, but 23 we're not managing it. 24 Do you want to go further? 25 HELENA E. WILLIAMS: I will say that there's 1 an ongoing project right now by the Moynihan 2 Development Corporation, which is under ESDC. 3 They received a TIGER grant from the federal 4 government, over $300 million, that is allowing them 5 to build connections to Penn Station underneath 6 Eighth Avenue, and to improve the ventilation. 7 We will have escalators and elevators that 8 will connect platform access to the west-end 9 concourse. The west-end concourse will be widened. 10 And, there will be direct access to the 11 Moynihan Building, the Farley Post Office. 12 They've identified the funding necessary -- 13 I mean, they've identified the cost for Phase 2, 14 which is to actually build a train-waiting hall that 15 would be used by Amtrak, under a proposed, you know, 16 tentative agreement between Amtrak and 17 Moynihan Development Corporation. 18 Unfortunately, though, they've not identified 19 the funding to build the train hall. 20 So, all of the Phase 1 work is going on. It 21 does involve track outages on weekends. We're 22 coordinating that, as part of a major effort of 23 coordination on development, including the 24 East Side Access, total track replacement in the 25 tunnels, Brookfield Development-related development, 1 but they need the funding for Phase 2. 2 SENATOR GOLDEN: Thank you very much. 3 SENATOR FUSCHILLO: Thank you, 4 Senator Golden. 5 Tom, just a few questions. 6 The -- obviously, to all of us, and even to 7 yourself, and the other heads have, and past chairs 8 and CEOs, know the fare and toll increases have been 9 problematic for us, for the MTA as well, for the -- 10 for those that use the bridges and tunnels, and 11 those that use the trains as well, and subways. 12 New York State instituted a 2 percent 13 property-tax cap that school districts are living 14 with. 15 We've had budgets under Governor Cuomo that 16 have been less than 2 percent growth. 17 Could the MTA live within a 2 percent cap? 18 THOMAS PRENDERGAST: I would have to look at 19 it and provide a detailed answer. 20 What we're trying to do right now, Senator, 21 is to be as transparent as possible to show you 22 where revenues are and where expenses are. 23 And, I'd have to apply that metric to see 24 what impact it would have on all of our revenue 25 streams. 1 But the four ones that I want to make sure 2 that are getting clear in people's mind, that, you 3 know, any change to the PMT, on the 1.4 billion in 4 revenue that comes our way, we'd have to make up 5 someplace else. 6 The issue of, to what degree the resolve we 7 have at the bargaining table to say we need to get 8 three net zeros, because, that -- for every 9 1 percent, that's $50 million of additional costs. 10 30 for the [unintelligible], but 50 for all 11 of the agencies. 12 For every reduction of 1 percent in a fare 13 increase, it's $65 million in revenue. 14 And the last issue is the capital program, 15 because a certain amount of the pay-as-you-go 16 capital offloads the need for us coming to the State 17 to say "we need to have it." 18 So -- 19 SENATOR FUSCHILLO: So if the capital was 20 outside of a cap, you know, and I'm talking about a 21 cap, could be on your operating, a cap; could be on 22 the fares and tolls; and if capital was out, that 23 could maybe make a reevaluation at the time, if the 24 State had gone in that direction. 25 With "Superstorm Sandy," and you and I have 1 had many discussions, and I've seen your reports, 2 now that you're receiving funding, has -- has -- and 3 the money is enormous, obviously, for what you need 4 to do to repair the damage to your system, 5 metro-wide, have estimates changed, up or down? 6 THOMAS PRENDERGAST: In some cases they have. 7 In some cases they've gone down, and in other 8 cases they've gone up. 9 One of the concerns we have, Senator, is 10 that, at the front end, where there is a lot of 11 contractors out there and they're aggressively 12 bidding for the work, you generally tend to get good 13 bids. 14 As the work starts to saturate the market in 15 terms of available contractors who can do the work, 16 you start to see an increase in bids. 17 It's something we're gonna watch very 18 carefully. 19 The size of the dollars are very large, so 20 people will say, wow, that's a lot of work that has 21 to be done. 22 That's true. 23 It's done on a 24-hour, 7-day-a-week 24 operation, so you pay a premium for it. 25 And it's something we're gonna watch very 1 carefully, because we want to make sure that we 2 effectively spend all of that money, and we get the 3 work done that absolutely needs to get done. 4 SENATOR FUSCHILLO: At any point, do you 5 project you'll go back to the federal government or 6 the Governor and say there's not enough? 7 THOMAS PRENDERGAST: If we find that point, 8 as soon as we'd see it, we would say that, but 9 there's been a pretty clear indication that this may 10 be all that's there, which underscores the 11 importance for us making sure that the priority 12 needs are being met, especially for ones that fall 13 outside of the state of good repair that we would 14 normally program for. 15 SENATOR FUSCHILLO: Can I get an update on 16 the second track? 17 THOMAS PRENDERGAST: Yes, the second track? 18 Main line? 19 HELENA E. WILLIAMS: Yes. 20 THOMAS PRENDERGAST: Absolutely, sir. 21 HELENA E. WILLIAMS: I would love to talk 22 about our double-track. 23 We have received bids; we're evaluating those 24 now. It is our goal to be able to award by the end 25 of the year. 1 We would be moving forward on Ronkonkoma to 2 Central Islip. 3 We've completed our EA, and will be 4 distributing that to the agencies that have 5 expressed interest. 6 We'll send it to your office as well. 7 We think that we're in a very competitive 8 position with the number of bids that we've 9 received. 10 We've continued all of our community outreach 11 and community meetings. 12 And I think it's going very well. 13 SENATOR FUSCHILLO: On the -- we've discussed 14 this many times, publicly and privately, in our 15 meetings, the sale of real estate has been budgeted 16 for many, many years. 17 I think over a decade now, not you, but, they 18 were selling the MTA headquarters for a while. 19 Any progress? 20 THOMAS PRENDERGAST: Oh, yeah. 21 I mean, through my entire career, was 22 Columbus Circle. We generated a lot of money. Took 23 two passes, I think, to get it. 24 West Side Yards has taken two passes to get 25 money. 1 The whole issue of selling 341, 345, and 2 347 Madison, especially in light of the potential of 3 midtown east rezoning. 4 We are focusing on any and all ways for us to 5 be able to gain additional revenue for capital 6 sources through the selling or leasing of real 7 estate. 8 SENATOR FUSCHILLO: Are we close? 9 ROBERT FORAN: Yeah, we have an RFP that's 10 out on the street for the disposition of 341, 345, 11 and 347. 12 We just sent out an addendum relating to 13 east midtown, to say, now with that being proposed, 14 give us, you know, any changes that you might wish 15 to put into your proposal. 16 But, this is an RFP that is out there; we are 17 moving forward. 18 THOMAS PRENDERGAST: Metro-North is gonna 19 move from its building and its location into the 20 Graybar Building. 21 The other MTA functions that are housed there 22 will move to Two Broadway. 23 SENATOR FUSCHILLO: That's planned now? 24 THOMAS PRENDERGAST: Oh, yeah, that's -- 25 that's gonna happen next year. 1 SENATOR FUSCHILLO: And have you gotten 2 interest with the RFP? 3 ROBERT FORAN: We're waiting for the 4 responses. 5 SENATOR FUSCHILLO: Okay. 6 Thank you very much. 7 The RRIF loan, it's been out there for a 8 while. 9 Status of it, projection, if you can, with 10 the federal government? 11 I know it's hard to predict anything that 12 they do down in Washington. 13 THOMAS PRENDERGAST: Well, it's a loan. 14 Okay? 15 So it's much like, you know, if you go to a 16 bank and looking for a loan, you got to negotiate. 17 You have to discuss, first, the terms of the 18 loan -- terms and conditions, et cetera. 19 We were underway with intense negotiations 20 when the shutdown occurred, so it's in a suspended 21 hiatus right now. 22 But we expect, when they come back into 23 session, we continue those, and we're still looking 24 to complete that transaction. 25 SENATOR FUSCHILLO: You know, I've spent a 1 lot of time down in your tunnels, Michael. 2 Are we finally on track, on time, on budget, 3 for the dates, 2019, and other dates that are 4 projected? 5 MICHAEL HORODNICEANU: We are actually -- 6 we're currently, basically, assessing the validity 7 of our estimates for both budget and scheduling. 8 By the way, we need to do it as part of the 9 RRIF loan application. 10 SENATOR FUSCHILLO: Okay. 11 MICHAEL HORODNICEANU: And we will -- 12 basically, are in the process or -- reaffirming or 13 revising that, as appropriate, when we're done. 14 So, we are not at that point yet. I cannot 15 tell you. 16 Right now, it is, whatever we have put forth 17 for this project. 18 But, we are, right now, reassessing that. 19 SENATOR FUSCHILLO: Okay. 20 Just a few more questions, Tom. 21 The issue of overtime came up in every agency 22 here. 23 I think only one had said there was a 24 decrease from the prior year. 25 Basic question: Would it make sense just to 1 hire more employees? 2 THOMAS PRENDERGAST: Uhm, that's a decision 3 that we look at each and every time. 4 If it can be demonstrated that the need for 5 the resources are going to be over an extended 6 period of time, and it's got to be more than a year, 7 because it makes sense, then, to go through the 8 whole process of hiring somebody, training them, and 9 adding that overhead cost associated with it, versus 10 a one-off. 11 The majority of what we're seeing right now, 12 are either the direct result of "Sandy" or the 13 storms, or, as you're doing that work, you're 14 knocking out regular inspection and maintenance work 15 that then has to be made up with overtime. 16 It's something we watch constantly. 17 There's a certain percentage of our budget 18 that is programmed to overtime, because it makes 19 sense to add an hour to the day if it's somebody 20 delivering service, rather than a new employee. 21 But, it's something that we watch all the 22 time. 23 SENATOR FUSCHILLO: What percentage of full 24 capacity of employees throughout everything are you 25 at? 1 THOMAS PRENDERGAST: In terms of filled 2 vacancies? 3 I'd have to get you the numbers. 4 But we manage that very closely to make sure 5 that we're taking savings in those areas, because 6 there's always a difference between what the budget 7 headcount is and what the actual headcount is. 8 But, I'd have to give you the numbers. 9 HELENA E. WILLIAMS: Tom, I -- while I don't 10 have the numbers, I would say that 11 Long Island Railroad has experienced some challenge 12 with open positions. 13 You know, with the freeze in hiring in 2010, 14 based on the fiscal crisis that the MTA was in, we 15 didn't hire under the regular schedule. 16 And, you know, many of our titles require, 17 you know, one to two years of training. 18 So, you know, we got behind in that training 19 program, as we hired, filled those, get them through 20 training, make sure they're qualified, and get them 21 into the position. 22 So, Long Island Railroad has had a very 23 aggressive hiring schedule this year, to try to play 24 catch-up in some of those open positions. 25 THOMAS PRENDERGAST: We've had some unusual 1 conditions. 2 I mean, there's the high turnover rate at 3 Metro-North, because of the 30 years, and 30 years 4 from their inception. 5 The other thing that's difficult is the 6 attrition rates, or the retirement rate, for 7 critical jobs, like, train operator, conductor, 8 construction flagman, and things like that. 9 And, we're not exactly sure, it's a 10 combination of an art and the sciences as to how you 11 predict that, because it has to do with the ability 12 of somebody to -- you know, do they need to be able 13 to sustain their revenue -- or their income? Or, 14 can they cash out and then go work for a contractor. 15 And some of the acute problems that 16 New York City Transit has right now are related to a 17 greater-than-anticipated attrition rate, in the form 18 of train operators and conductors. And, you've got 19 a backfill those jobs even on overtime; otherwise 20 you cut service. And you don't want to cut service. 21 SENATOR FUSCHILLO: Switching gears, Bob, 22 I'll direct this to you, if -- Tom, if that's fine: 23 Years ago, and then-Senator Schneiderman, now 24 Attorney General, had exposed the issue of 25 double-books that was being conducted and carried on 1 by the MTA. And I would say greater than, there was 2 a heightened issue of fraud, waste, and abuse. 3 What measures do we have, Senator Dilan and 4 myself who are left here, and the general public, 5 that, you know, there is greater transparency, and 6 this wouldn't happen again? 7 ROBERT FORAN: Well, first of all, I would 8 say that I think there was a great deal of 9 misunderstanding that went into the representations 10 made by a former Comptroller about two sets of 11 books. 12 SENATOR FUSCHILLO: Okay? 13 ROBERT FORAN: I think what was really being 14 done is the recognition that, we raised fares and 15 tolls, and those fares and tolls have to carry us 16 through a number of years of, perhaps, deficits. 17 And that was merely kind of the way it was 18 being portrayed. 19 We now have a system where we are required to 20 report twice a year, as the Chairman said, with the 21 July plan and the November plan. 22 And we make a great deal of -- give a great 23 deal of effort to make sure that what we lay out is 24 consistent. 25 And I'd have to say, even since I've gotten 1 here, we've tried to make our public presentations 2 very consistent, so that we're not presenting it one 3 way last year, presenting it in another way this 4 year, and trying to present it. 5 We want people to be able to follow us, twice 6 a year, to see what we're doing. 7 We always go back, where were we at the 8 previous report? 9 Where are we now? 10 What has changed? 11 And I think it's good for everybody, because 12 the MTA's credibility is one of the things that 13 drives your willingness to provide us resources. 14 And, so, our credibility largely hinges upon 15 us providing information that people can follow, 16 that people can see, and that they can evaluate. 17 So I really do think, right now, we are in a 18 position where the transparency is extremely high. 19 We're still pushing in areas to make the 20 transparency even greater. 21 We're not -- there is nothing being hidden. 22 And, we're trying to also lay out that 23 sometimes decisions are being made by the MTA, that 24 an outside party, whether it's the Comptroller or 25 members of the legislative oversight groups, or 1 anywhere else, might have a different decision, but 2 what we're saying is, these are policy decisions 3 that need to be made, and there will always be 4 tradeoffs. 5 And, so, if we can lay out all the 6 alternatives as policy decisions, then the 7 collective body can come up and say, this is the 8 right thing to do, based on all the factors. 9 So, policy decisions can be made when all the 10 facts are on the table. 11 We really try to put the facts on the table. 12 If someone has a different opinion on where 13 we should go, that input is critical, and let's get 14 that into the dialogue and the debate. 15 THOMAS PRENDERGAST: And I'd like to add, 16 Senator, that it's a 4-year look ahead, so it's not 17 just, you know, 18 months. 18 I'm in a new role. 19 I mean, yes, I'm CEO. I've been CEO of an 20 agency. 21 But as Chairman, I'm a board member. 22 And one of first things you do after you walk 23 out of the Senate confirmation, is you're handed a 24 book about, you have sign, and what your fiduciary 25 responsibility is. 1 And I can tell you that the dialogue we now 2 have, where the elected officials, the public at 3 large, the stakeholders, are weighing in on how some 4 of those policy decisions are being made, will have 5 an effect, and does have an effect, on how the board 6 decides, ultimately, to approve a budget, and how to 7 apportion it. 8 The very painful exercise in 2010, where we 9 were left with these public hearings, because we 10 were short, because we had to cut service, were 11 painful. 12 But, there was some tough decisions taken. 13 And if you were to talk to the majority of 14 board members today, hopefully, we won't find 15 ourselves in that position again, but if we were, 16 what people would say is, there will be times where 17 we'll take a tough fare increase versus cutting 18 service. 19 But that's not arbitrary or capricious, nor 20 is it across the board. 21 It will be an informed decision, and the 22 dialogue needs to help inform that decision. 23 SENATOR FUSCHILLO: And I appreciate that 24 dialogue, and the cooperation between my office and 25 other committees with you has been commendable, and 1 I thank you for that. 2 Helena, I took the Long Island Railroad here 3 today. 4 It was on time. The train was clean, the 5 conductor was courteous. 6 Carmen, I saw no rats in the subway. 7 [Laughter.] 8 SENATOR FUSCHILLO: I have to tell you, 9 I looked, knowing Bill Perkins may show up today. 10 [Laughter.] 11 SENATOR FUSCHILLO: It was clean. 12 CARMEN BIANCO: Thank you, sir. 13 SENATOR FUSCHILLO: And the transportation 14 system was working today. 15 Helena, I don't know if you knew I was taking 16 the Merrick train station today, but it was on time, 17 and it was maybe even a minute early. 18 But I want to thank all of you. 19 THOMAS PRENDERGAST: There may have been a 20 Senator sighting, you know. 21 SENATOR FUSCHILLO: I'm sure. 22 Keep him in the waiting room. 23 [Laughter.] 24 SENATOR FUSCHILLO: I want to thank all of 25 you for the time here, and the testimony. 1 This is -- we felt this is critically 2 important for us, as we go into the 2014-2015 budget 3 season, starting the end of this year, and next 4 year. 5 And the testimony that all of you gave to us 6 is very important to all the members of the 7 Transportation Committee. 8 So, thank you very much. 9 Thank you. 10 We have one final speaker. 11 I thank him for his patience. 12 Ken Bleiwas from the -- deputy controller 13 from the office of -- Tom DiNapoli's Office; the 14 New York State Comptroller's Office. 15 Thank you very much for your patience, and 16 waiting. I appreciate that. 17 And, just state your name and your 18 affiliation for the record. 19 KENNETH B. BLEIWAS: My name is Ken Bleiwas, 20 I'm deputy state comptroller. 21 Thank you, Chairman Fuschillo, and all the 22 members of the Standing Committee on Transportation, 23 for this opportunity to testify today on behalf of 24 State Comptroller Thomas B. DiNapoli, regarding the 25 MTA finances. 1 I'm Deputy Comptroller Ken Bleiwas, and my 2 responsibilities include monitoring the MTA. 3 As you know, the financial outlook for the 4 MTA is an issue that's important to all New Yorkers, 5 not just those who live in the New York City 6 metropolitan region. 7 The MTA is, of course, an integral part of 8 the regional economy. 9 Comptroller DiNapoli, whose responsibilities 10 include overseeing the state's public authorities, 11 is committed to providing the public and its elected 12 officials with timely information regarding the MTA. 13 Two weeks ago, the Comptroller issued his 14 annual report on the condition of the MTA's 15 finances. 16 The copy of that report was provided earlier 17 to you. 18 The report finds that the MTA's financial 19 outlook continues to improve, and that the agency 20 has largely recovered from the effects of the 21 recession. 22 For example, the MTA now expects the use of 23 mass-transit services to return to its pre-recession 24 levels. 25 In addition, the MTA has identified a total 1 of $1.9 billion in resources over the course of the 2 5-year financial-plan period that had not been 3 anticipated at the time that its February 2013 4 financial plan was prepared. 5 These resources result mostly from 6 improvements in the economy, and smaller increases 7 in the cost for employee fringe benefits, debt 8 service, and energy that had been previously 9 forecast. 10 The MTA plans to use some of these new 11 resources to eliminate the 2014 budget gap, and to 12 reduce the out-year budget gaps to an annual average 13 of about $80 million. 14 It plans to use the remaining funds to 15 improve services and maintenance, pay down some of 16 its long-term liabilities, and help fund its capital 17 program on a pay-as-you-go basis. 18 Although the MTA could have eliminated the 19 budget gaps entirely and reduced the size of the 20 next fare and toll increase, it chose instead to set 21 aside additional funding -- operating funds for 22 capital projects, because of the uncertainties 23 involved in funding the next 5-year capital program. 24 As you know, maintaining and modernizing the 25 regional mass-transit system is critically 1 important. 2 The MTA estimates it will need $26.6 billion, 3 from 2015 through 2019, just to maintain and 4 modernize the existing transportation system. 5 Additional resources would be needed to 6 finish the East Side Access project, and to begin 7 other expansion projects, such as the next phase of 8 the Second Avenue Subway. 9 In the past, the MTA has relied heavily on 10 borrowing to fund its capital program. As a result, 11 debt service is projected to reach $3 billion by 12 2018, which is 45 percent higher than in 2012, and 13 nearly double the amount from 10 years earlier. 14 These estimates exclude the potential impact 15 of the next 5-year capital program. 16 In an effort to reduce the impact of 17 borrowing on the operating budget, the MTA has been 18 taking steps to partly fund the capital needs with 19 non-bond proceeds. 20 The MTA currently plans to allocate 21 $2.7 billion in operating budget resources through 22 2020, to fund its capital needs on a pay-as-you-go 23 basis, which is $675 million more than 7 months ago. 24 Historically, the federal government has 25 played a large role in funding mass-transit capital 1 improvements. 2 The concerns over the size of the federal 3 deficit could affect the amount of funding available 4 in the future from Washington. 5 Given the size of the MTA's capital needs and 6 its limited funding, it is likely the MTA will look 7 to New York State and New York City for new sources 8 of funding. 9 Now that the MTA's financial outlook has 10 improved, the Comptroller believes that the MTA 11 should consider reducing the size of the fare and 12 toll increase planned for 2015. 13 Since 2007, fares and tolls have risen by 14 29 percent, more than twice the inflation rate, 15 placing a heavy burden on commuters. 16 These increases occur when riders are least 17 able to afford them, as the recession took a heavy 18 toll on family finances. 19 Household income remains stagnant; yet the 20 MTA plans to raise fares and tolls by another 21 15 percent over a 3-year period, beginning in 2015, 22 which is more than twice the projected inflation 23 rate. 24 With 18 months before the next scheduled fare 25 and toll hike, there is still plenty of time for the 1 MTA to refocus on reducing waste, which could close 2 the remaining budget gaps and hold down planned 3 increases in fares and tolls. 4 The MTA has had considerable success reducing 5 unnecessary costs, but it's cost reductions' efforts 6 outside of the paratransit program have been modest 7 since 2010. 8 By encouraging the MTA to be more efficient, 9 the Comptroller hopes fare and toll increases can be 10 kept to a minimum. 11 While the MTA's financial outlook has 12 improved, its operating budget still faces risks, 13 including the pace of the economic recovery, and the 14 impact of the next round of collective bargaining. 15 In closing: 16 Comptroller DiNapoli is committed to helping 17 the MTA become more efficient, and to providing the 18 public, and its elected officials, with information 19 that helps them better to understand the operations 20 and finances of the MTA. 21 Thank you for allowing me to testify, and 22 I would be happy to answer any questions that you 23 might have. 24 25 1 SENATOR FUSCHILLO: Thank you very much, 2 Kenneth. 3 Senator Dilan. 4 SENATOR DILAN: I just wanted to thank you 5 and the Comptroller for the report. 6 I did read it, and, it has good information. 7 I don't know if you were here when I asked 8 the panel, with respect to the 1.9 billion, and, is 9 that trend continuing? 10 From your perspective, since you do oversight 11 or monitoring of the MTA, do you feel that that's 12 going on a positive mode? 13 KENNETH B. BLEIWAS: It seems to be heading 14 in a positive direction. 15 I will say, it's only been a few months since 16 the MTA has revised its forecasts, and, these are 17 forecasts. 18 So, February to July, there was a favorable 19 development of $1.9 billion. 20 And, we'll see how that trends continues over 21 time. 22 SENATOR DILAN: And since you mentioned 23 overtime, you heard what they had to say. 24 What is your perspective with respect to how 25 they're handling the overtime situation? 1 KENNETH B. BLEIWAS: Well, you know, from our 2 perspective, you know, we've noted the trends in 3 overtime. 4 It was a concerted effort, back in 2010, to 5 reduce the overtime bill. 6 There has been a number of unfavorable 7 weather developments, "Sandy" and "Irene" and snow 8 storms, that have certainly affected their 9 operations, as the MTA acknowledged. 10 They've had difficulties filling vacant 11 positions, and that, too, has contributed to their 12 overtime. 13 SENATOR DILAN: Thank you. 14 SENATOR FUSCHILLO: Did you find it 15 interesting when I asked, and I don't know if you 16 were here, specifically, Do you identify it as 17 surplus dollars? 18 Because they played a little bit on your -- 19 on your -- the report words of "new resources," 20 where they deny -- actually, almost said it's not 21 new resources, or surplus dollars. 22 KENNETH B. BLEIWAS: Well, I wouldn't 23 identify it as surplus, since they identify 24 $1.9 billion in new resource over the 5-year period, 25 and then they also identified areas where they 1 allocated the those moneys to be spent. 2 SENATOR FUSCHILLO: Right. 3 KENNETH B. BLEIWAS: So there's a net of 4 zero. 5 SENATOR FUSCHILLO: Right. 6 KENNETH B. BLEIWAS: But -- 7 SENATOR FUSCHILLO: But they are, 8 technically, new resources -- 9 KENNETH B. BLEIWAS: They are new -- 10 SENATOR FUSCHILLO: -- moneys to be 11 allocated. 12 KENNETH B. BLEIWAS: We'd characterize them 13 as unanticipated resources. New resources. 14 SENATOR FUSCHILLO: And you noted in the 15 report, that none of the resources were allocated 16 to, potentially, lessen the burden, if so, of fare 17 or toll increases. 18 Would that have been a recommendation on the 19 Comptroller? 20 KENNETH B. BLEIWAS: The -- it certainly -- 21 you know, it's the purview of the MTA to make 22 decisions about how they allocate their resources, 23 and the fare and toll increases. 24 You know, what we have noticed, and we've 25 said this over a good number of years, fares and 1 tolls are rising at a rapid rate. 2 We're encouraging the MTA to be as efficient 3 as possible. 4 Taxpayers and riders should be payers of last 5 resort. 6 SENATOR FUSCHILLO: Which we agree. 7 I have to tell you that, you know, this 8 report, this financial outlook, and we get them 9 periodically, obviously, from your office, the work 10 of the Comptroller and your focus on this is 11 critically important. 12 And I wanted to tell you it's noteworthy. 13 So many times we issue reports or 14 newsletters, and we often wondered how many people 15 read it. 16 Members of the Transportation Committee do 17 read your reports that are put out on the MTA, and 18 I want to thank you for your work. 19 KENNETH B. BLEIWAS: Well, I appreciated 20 that, Senator. 21 SENATOR FUSCHILLO: Thank you very much. 22 Appreciate time. 23 For the record, this concludes our hearing. 24 And I want to thank all the members that were 25 here, and all of those that had testified. 1 Thank you very much. 2 (Whereupon, at approximately 2:07 p.m., 3 the public hearing held before the New York State 4 Senate Standing Committee on Transportation 5 concluded, and adjourned.) 6 ---oOo--- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25