Metropolitan Transportation Authority November Financial Plan 2017 – 2020 Presentation to the Board November 16, 2016
The July Plan projected breakeven cash balances through 2019 with a deficit of $371 million in 2020 ($ in millions) $300 200 $200 $100 68 28 7 $0 ($100) ($200) ($300) (371) ($400) 2016 2017 2018 2019 2020 1
The July Plan was based on the three key, inter ‐ related elements in all of our Financial Plans • Biennial fare and toll revenue yield increases of 4% in 2017 and 2019 (2% annual increases) • Increased annually recurring savings targets (increasing from $1.6 billion in 2016 to approximately $2 billion in 2020) • Increased funding for the Capital Program — $566 million in debt service savings to provide additional funding — $200 million in acceleration of Committed to Capital Contribution by three years saving $39 million in debt service over the plan period • The plan also provided for $464 million of additional investments over the plan period — Improved Customer Experience ($195 million) — Maintenance and Operations ($145 million) — Service and Service Support ($78 million) — Safety and Security Initiatives ($46 million) 2
What has changed since the July Plan? Changes and re ‐ estimates improving financial results during the plan period: • Lower debt service expenses ($294 million) — Timing of bond issuances/lower than projected rates ($128 million) o Refunding savings ($116 million) o Assumed favorable borrowing rates ($26 million) o Variable rate savings ($24 million) o Lower electricity forecasts ($122 million) — Higher passenger and toll revenue forecasts ($64 million) — Higher Payroll Mobility Tax and MTA Aid ($61 million) — Lower health & welfare forecasts ($46 million) — Changes and re ‐ estimates worsening financial results during the plan period: • Lower Real Estate Transaction tax receipt estimates ($83 million) ― In total, re ‐ estimates and other changes are $507 million favorable through 2020 3
Highlights of the 2017 ‐ 2020 November Plan • Fare and toll increases of 4% in 2017 and 2019. The 2017 increase is being changed from a 4% yield to a 4% price increase, saving customers $94 million over the plan period • $229 million of the $756 million unspecified expense reduction target in the July Plan have been identified • Retains $566 million in debt service savings to support the capital program • Accelerating an additional $80 million in Committed to Capital Contribution by four years, saving $20 million in debt service over the plan period • 2016 General Reserve of $145 million will be used to reduce the unfunded liability of the LIRR Additional Pension Plan, saving $16 million per year starting in 2018 • This plan provides for an additional $395 million investments over the plan period: – Maintenance and Operations ($163 million) – Customer Experience ($160 million, mainly $149 million for Open Road Tolling) – Service and Service Support ($72 million) • Financial Plan is balanced through 2019 with a 2020 deficit reduced to $319 million 4
The Plan funds important investments and continues to address out year deficit ($ in millions) $400 $300 260 200 $200 76 $100 68 32 28 23 7 $0 ($100) July Plan Proposed November Plan ($200) ($300) (319) Note: Cash balances are carried forward to ($400) (371) fund expenses in the following year ($500) 2016 2017 2018 2019 2020 5
The November Plan includes service and customer experience investments from prior plans Expansion Projects Second Avenue Subway operating costs (in service date December 2016) • #7 Extension (in service date September 2015) • Fulton Street Transit Center (in service date November 2014) • East Side Access (projected in service date December 2022) • Operating support for capital and other projects NYCT station enhancement program (31 Stations) • Installation and maintenance of real ‐ time information display signs and USB ports • Maintenance of B Division Countdown Clocks (year ‐ end 2018) • Automated Passenger Counters on buses • Wi ‐ Fi access in all NYCT underground stations (year ‐ end 2016) and MTA buses • Upgrade MNR retail facilities • Lease 10 electric buses (Zero Emission Initiative pilot) • Expand MNR homeless outreach at outlying stations and MTA PD at City terminals • 6
The MTA is investing an additional $163 million in Maintenance and Operations in the November Plan Major Investments and highlights include: Scheduled Maintenance Systems Reforecast ($30 million): 288 additional NYCT • subway cars are scheduled for a 14 ‐ year overhaul. Lifecycle Asset Maintenance Plan ($30 million in 2020 to kick off program): The • LIRR will assess current M7 fleet systems and maintenance plans, and establish funding for components critical to safeguarding the reliability of fleet. Upgrade to All ‐ Weather Tires ($27 million): NYCT and MTA Bus will replace rear • tires on revenue fleet buses with all ‐ weather tires, decreasing mileage on front and middle tires and use of chains. Bus Shop Engine Rebuild ($15 million): Replace diesel engines reaching seven to • eight year bus life at NYCT. System ‐ Wide Right ‐ of ‐ Way Clean ‐ Up Efforts ($10 million): MNR will dedicate • maintenance gangs to handle waste in a prioritized fashion and establish a cyclical clean ‐ up program. 7
This Plan captures further Customer Experience programs Additional investments proposed for the November Plan include: Open Road Tolling ($149 million): Augment existing and adopt next generation • tolling system technology, collecting tolls solely through E ‐ ZPass and by mail. 24/7 Social Media ($9 million): Significantly enhance ability to inform and • interact with customers in timelier and comprehensive fashion. 8
The MTA invests an additional $72 million in Service and Service Support over the plan period Proposed investments include: Platform Budget Service Adjustments ($71 million): • NYCT and MTA Bus will improve the reliability and frequency of service in response to – ridership trends, operating conditions and maintenance requirements, including schedule changes that will improve service on nine of MTA Bus’ underperforming routes. Permanently reopen the New South Ferry station in mid ‐ year 2017. – Rockland County Bus Service ($1 million): MNR will enhance Saturday and • commence Sunday Tappan Zee express bus service between Rockland County and the Hudson and Harlem lines in Westchester County. 9
Initiatives have been identified to address $229 million of prior savings targets ($ in millions) $350 $300 $250 68 $200 65 $275 M $150 Unidentified 55 in July $232 M Unidentified Plan in July Plan 207 $100 $168 M Unidentified 167 in July Plan 41 113 $50 $81 M Unidentified in July Plan 40 $0 2017 2018 2019 2020 $1,701 $1,840 $1,916 $1,945 Prior Targets ‐ Identified Savings ($229 million) Prior Targets ‐ Unidentified Savings ($527 million) Total Savings 10
Annually recurring savings are expected to reach $1.6 billion by end of 2016; absent these savings, an additional 20% fare/toll increase would have been required ($ in millions) $2,000 $1,800 Avoids a potential 20% fare/toll increase $1,600 Annually recurring savings targets $1,400 2016 November Plan $1,200 2015 November Plan 2014 November Plan $1,000 2013 November Plan $800 2012 November Plan Achieved Savings Note: Solid lines reflect achieved savings $600 Dashed lines reflect projected savings. $400 $200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 11
The Plan funds important investments and continues to address out year deficit ($ in millions) $400 $300 260 200 $200 76 $100 68 32 28 23 7 $0 ($100) July Plan Proposed November Plan ($200) ($300) (319) Note: Cash balances are carried forward to ($400) (371) fund expenses in the following year ($500) 2016 2017 2018 2019 2020 12
If savings targets are not achieved, deficits will occur earlier and be larger ($ in millions) $400 260 260 $200 76 32 23 (319) $0 (18) (60) ($200) (210) November Plan ($400) November Plan – Adjusted for unachieved savings ($600) (559) Note: Cash balances are carried forward to fund expenses in the following year ($800) 2016 2017 2018 2019 2020 13
If savings targets are not achieved and projected fare/toll increases are not implemented, our financial situation becomes untenable ($ in millions) $400 260 260 $200 76 32 23 (319) $0 ($200) (251) (336) ($400) ($600) November Plan November Plan – Adjusted for unachieved savings ($800) (755) and fare/toll increases ($1,000) Note: Cash balances are carried forward to ($1,200) (1,155) fund expenses in the following year ($1,400) 2016 2017 2018 2019 2020 14
Challenges going forward Biennial fare and toll increases of 4% in 2017 and 2019 • (2% annual increases) Efficiencies/consolidations to achieve recurring cost savings • Expiring labor contracts • Chronic / looming costs: • ― Workers’ compensation ― Claims ― Health care (including “Cadillac tax”) General economic conditions • Possibility of interest rates higher than forecast • Discipline to use non ‐ recurring revenues and/or favorable budget variances to • reduce unfunded liabilities ( e.g., OPEB, pensions) or fund capital 15
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