The MTA's top financial officer has been sounding the alarm for a while now about the MTA’s bleak financial outlook, but two recent reports paint an even starker picture than the MTA has previously acknowledged.

The consultant group Alix Partners took an 11-week deep dive look at the agency’s structure and finances, and put out a long list of findings, recommendations, and warnings.

Alix Partners finds the agency spends $40 million a day, or roughly $281 million a week on operating expenses. In the past three years the MTA’s expenses have exceeded revenue.

The firm notes that the agency has also been dipping into a pool of funds known as “unrestricted Capital funds” to pay for operating expenses. In 2017 then-Chairman Joe Lhota swore up and down there was no way the MTA could use capital funds to pay for the $800 million Subway Action Plan, which had to come from operating expenses. It appears it can, and it does.

The report cost $3.7 million and was mandated as part of the congestion pricing legislation that passed earlier this year.

The Alix Partners folks also got a sneak peek at the 2020-2024 capital plan, which the MTA board and public haven’t seen yet. The capital plan is expected to exceed $50 billion total to upgrade signals and install elevators at every two subway stops. The report characterizes the MTA’s plan to spend roughly $11 billion in the first year of the capital plan is “highly optimistic.”

The report notes the MTA usually commits to spend $7 billion a year on capital projects. But in 2010, it could only spend $1.5 billion, and in 2015 even less, $700 million in the first year of the plan.

While MTA construction projects are usually over budget and come in later than planned, the agency is also slow to start capital projects it puts in its capital plans. In an effort to get big projects completed more efficiently, the MTA is now required to use design-build for any project that costs over $25 million. That means the same firm that designs a project also builds the project, to prevent costly redesign requests later.

A portion of the report was released earlier this year and suggested the agency could save $530 million annually over three years by reducing its workforce by 2,700 positions, as well as consolidating 40 separate offices. The MTA board hastily approved those recommendations, known as The Transformation Plan, at the July board meeting.

Back in 2018, when the agency passed its $17 billion budget, the agency’s Chief Financial Officer Robert Foran noted that the current budget forecast has the agency facing a $467 million shortfall revenue shortfall by 2020, $814 million by 2021, and $976 million by 2022.

“Without additional recurring revenue in the near-term, options to close these deficits and achieve balanced budgets will be service reductions, reductions in force, and/or additional fare and toll increases,” the agency’s budget documents noted.

While the MTA faces real fiscal problems, the MTA board and its executives have a pattern of diverting public attention from these big ticket problems by holding special meetings over much smaller losses—so small they could be considered rounding errors. Like an alleged $215 million a year loss from subway and bus fare evasion. To save you the trouble, that’s 1.3 percent of the MTA’s overall budget.

But there is hope in the form of large chunks of cash headed the MTA’s way. This year congestion pricing and several other taxes with revenue dedicated to MTA capital projects were approved. But these cash flows won’t make a dent in operating costs, many of which come down to the cost of labor.

Speaking of labor, all of the MTA’s contracts are up and the agency is in the midst of renegotiating contracts.

In another report critical of the MTA’s financial planning, the Citizens Budget Commision (CBC) notes that in addition to labor costs, and the “optimistic” savings from the transformation plan, the agency shouldn’t rely on the economy to continue with another four years of growth.

The CBC estimates another recession, similar to the previous three, would result in a $1.7 billion shortfall for the agency.

"Few things affect New Yorkers and its economy as much as our transportation system," Andrew Rein, President of the CBC told Gothamist. He hopes the MTA will releases its overdue assessment needs report and accelerate its spending on capital projects.

And there’s yet another report to come, an independent forensic audit of the MTA’s finances due January 1st, not to be carried out by Alix Partners.

Lisa Daglian, Executive Director with the Permanent Citizens Advisory Committee to the MTA, says that report could also delay the latest capital plan from being implemented.

“That contrasts with the (Alix Partners) report that shows a delay in the capital plan has severe economic and service consequences,” Daglian said.

The MTA hasn’t responded to calls and emails for comment.

Stephen Nessen is the transportation reporter for WNYC. You can follow him on Twitter @s_nessen.

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