Metropolitan Transportation Authority November Financial Plan 2017 - - PowerPoint PPT Presentation

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)

1

200 28 68 7 (371)

($400) ($300) ($200) ($100) $0 $100 $200 $300

2016 2017 2018 2019 2020

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

• 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)
• Refunding savings ($116 million)
• Assumed favorable borrowing rates ($26 million)
• Variable rate savings ($24 million)

—

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

What has changed since the July Plan?

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

200 28 68 7 (371) 260 23 76 32 (319)

($500) ($400) ($300) ($200) ($100) $0 $100 $200 $300 $400

2016 2017 2018 2019 2020

The Plan funds important investments and continues to address out year deficit

5

($ in millions)

Note: Cash balances are carried forward to fund expenses in the following year July Plan Proposed November Plan

The November Plan includes service and customer experience investments from prior plans

6

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

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

8

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.

The MTA invests an additional $72 million in Service and Service Support over the plan period

9

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.

40 113 167 207 41 55 65 68

$0 $50 $100 $150 $200 $250 $300 $350

2017 2018 2019 2020

$81 M Unidentified in July Plan $168 M Unidentified in July Plan $232 M Unidentified in July Plan $275 M Unidentified in July Plan

Prior Targets ‐ Identified Savings ($229 million) Prior Targets ‐ Unidentified Savings ($527 million) Total Savings

Initiatives have been identified to address $229 million

• f prior savings targets

10

($ in millions)

$1,701 $1,840 $1,916 $1,945

$200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2016 November Plan 2015 November Plan 2014 November Plan 2013 November Plan 2012 November Plan Achieved Savings

Annually recurring savings targets

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)

11 Note: Solid lines reflect achieved savings Dashed lines reflect projected savings. Avoids a potential 20% fare/toll increase

The Plan funds important investments and continues to address out year deficit

12

($ in millions)

Note: Cash balances are carried forward to fund expenses in the following year July Plan Proposed November Plan

200 28 68 7 (371) 260 23 76 32 (319)

($500) ($400) ($300) ($200) ($100) $0 $100 $200 $300 $400

2016 2017 2018 2019 2020

260 260 (18) (60) (210) (559)

($800) ($600) ($400) ($200) $0 $200 $400

2016 2017 2018 2019 2020 23 32 76

November Plan November Plan – Adjusted for unachieved savings

If savings targets are not achieved, deficits will occur earlier and be larger

13

($ in millions)

(319)

Note: Cash balances are carried forward to fund expenses in the following year

260 260 (251) (336) (755) (1,155) ($1,400) ($1,200) ($1,000) ($800) ($600) ($400) ($200) $0 $200 $400

2016 2017 2018 2019 2020

November Plan November Plan – Adjusted for unachieved savings and fare/toll increases

If savings targets are not achieved and projected fare/toll increases are not implemented, our financial situation becomes untenable

14

($ in millions)

32 76 23

Note: Cash balances are carried forward to fund expenses in the following year

(319)

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