MTA 2006 Preliminary Budget

Transcription

1 MTA 2006 Preliminary Budget July Financial Plan DJC July 2005 Metropolitan Transportation Authority

2 TABLE OF CONTENTS l. Introduction Letter from Executive Director... l-1 ll. MTA Consolidated Financial Plan 2006: Where the Dollars come From and Where the Dollars Go ll-1 Statement of Operations. ll-2 Reconciliation to February Plan. ll-7 Debt Service Allocation by Agency... ll-9 Farebox Operating and Recovery Ratios.. ll-11 lll. Major Assumptions Projections Utilization (Ridership,Traffic and Revenue).. lll-1 Subsidies. lll-9 Debt Service lll-35 Debt Service Affordability Statement.. lll-39 Agency Baseline Assumptions lll-43 Positions (Headcount)... lll-63 IV. Agency Gap Closing Programs 2006 Agency PEGs. lv-1 Post 2006 Closing Actions. lv-7

3 V. Other MTA Consolidated Materials Consolidated Statements of Operations by Category (Accrued (Non-Reimbursable and Reimbursable), Cash)... V-1 Year-to-Year Changes by Category... V-5 Non-Recurring Revenues and Savings, and MTA Reserves.. V MTA Financial Plan Detail (alternate format)... V-9 Vl. MTA Capital Program Information 2005 Program Funding by Elements, 2005 Project Commitments and Total Costs by Agency... Vl-1 Forecast of Project Completions Vl-13 Project Completions with Operating Impacts Exceeding $1 Million.. Vl-20 Vll. Agency Financial Plans Vlll. Appendix Bridges and Tunnels Vll-1 Capital Construction Company.. Vll-37 Long Island Bus. Vll-49 Long Island Rail Road.. Vll-71 Metro-North Railroad Vll-103 MTA Headquarters, Inspector General, and First Mutual Transportation Assurance Company Vll-145 New York City Transit.. Vll-189 Staten Island Railway.. Vll-263 MTA Bus Company.. Vll-291 Executive Director Certification. Vlll-1

4 l. Introduction

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6 Debt Service savings are expected to generate an additional $128 million in Favorable interest rates are driving $84 million of this improvement, most of which stems from our variable rate bond performance. Like the real estate trends, the July Plan forecast expects that interest rates will increase, thus evaporating almost all of this improvement after The only recurring aspect of the low rates will be savings associated with recent fixed-rate bond refundings, which will produce $10 million of annualized savings. In addition to the real savings resulting from favorable interest rates, the current forecast also includes short-term deferrals of $18 million in 2005, $49 million in both 2006 and 2007, and $19 million in 2008, that result from adjustments made to our borrowing schedule in order to meet cash needs as various projects progress through construction. This is particularly true for Second Avenue Subway and East Access projects. The remaining debt service improvement reflects a one-time savings in bond issuance cost fees. The approval of the Capital Program by Albany enables us to move forward with essential capital investments. As part of the funding package enacted by the Legislature last April, new resources were added for the benefit of MTA. These include a one-eighth percent increase to the regional sales tax, a nickel increase in the Mortgage Recording Tax (MRT) and increased Department of Motor Vehicle (DMV) fees. Both the sales and MRT increases were effective on June 1, 2005, while the DMV fees are effective January 1, These additional revenues, as well as net increases in base taxes stemming from a healthier regional economy, total $170 million in 2005 and over $400 million annually thereafter. These funds will support debt service associated with $5 billion in new borrowing for the capital program. The early inception of these taxes enables MTA to use these additional revenues prior to their use for capital program funding. Another positive result of the healthy real estate market is that the $200 million real estate stabilization reserve funded by the 2004 surplus and approved by the Board is now available. This, in conjunction with the other positive revenues I have already discussed enabled us to avoid the 2006 cost reduction proposals included in previous financial plans. One of the downsides of the current economic climate is that inflation is higher than the assumptions contained in the 2005 Adopted Budget and corresponding four-year financial plan. The key variable driving up inflation, as measured by the consumer price index, is the price of energy, which affects all aspects of the costs of manufacturing and delivery of goods to the market place. Inflation is estimated to increase costs in the July Plan by another $15 million in 2005, $74 million in 2006, $121 million in 2007, $155 million in 2008 and $209 million in Since 65% of our expenses are associated with the cost of labor, the largest area of increase affected by inflation is our labor cost forecast. ii

7 The Plan also contains additional agency spending for maintenance, adding costs of $26 million in 2005 and $71 million in Examples of this include: increased costs for scheduled maintenance programs for buses and subways, subway signal improvements and concrete tie replacements at both commuter railroads. Since a portion of the debt service savings is recurring, about $10 million annually, I propose that service improvements be implemented. For NYCT subways, $6.4 million annually would be allotted to fund intensive cleaning initiatives affecting track, infrastructure and stations, with an additional $2 million to be spent in 2005; for NYCT Bus and SIR, $0.3 million would be allotted for additional service to match increased Staten Island Ferry service; and $3 million would be earmarked for the two commuter railroads to increase AM peak service and early afternoon service from Penn Station (LIRR) and expanded Late-Night service from Grand Central Terminal (MNR). In view of the heightened security stemming from the recent London transit attacks, we have estimated that additional spending of $10 million will be required in These funds will be added to the $18 million already set aside in 2005 and used primarily to enhance police visibility by the NYPD, MTA Police and Bridge and Tunnel Officers. A portion of the funds will be used to assign over 150 additional subway station personnel, trained in evacuation procedures, to platforms in prime locations during peak periods. In addition, the funds will also support expanding various public outreach campaigns such as See Something, Say Something and Eyes and Ears. The needs of these security initiatives will be reevaluated as events dictate. In the next few months, we will be developing a detailed plan to identify ongoing security-related initiatives which will be funded out of our operating budget for 2006 and beyond and those anticipated needs will be reflected in the upcoming November Plan. While the positive short-term benefits of the 2005 windfalls will assist in reducing future year gaps, it by no means eliminates them. MTA must do its part to ensure that it responsibly contains costs through efficiencies and productivity. To that end, I instructed Agency Presidents last spring to produce MTA-wide cost reduction savings of $50 million in 2006 and annualizing to $100 million in This represents about 2% of Agency expense budgets, excluding depreciation, pension, health & welfare and energy costs. Agencies were instructed that their budgets were not to include service curtailments and that they were to ensure that maintenance standards, employee and customer safety/security would be maintained. I am pleased to present Agency budgets that reflect savings of $82 million in 2006 increasing to $108 million in 2007, well above the goal. In meeting their targets, Agencies were permitted to count net savings stemming from reestimates of items contained in the February Plan. Examples include lower costs iii

8 for credit card fees, insurance premiums, fringe benefit rates and data center charges. The proposed agency budgets reflect $39 million of these baseline savings in 2006, annualizing to $62 million in In addition, Agencies developed new proposals for reducing costs, which are shown under 2006 Agency PEGs. Examples of agency proposals include Central Electronics Shop Productivity savings at NYCT; efficiencies at both railroads stemming from reductions in on-board ticket sales and increased use of ticket vending machines; revaluation of right-of-way leased line fees at LIRR; process review to achieve productivity at Metro-North; and administrative position savings MTA-wide. The Agency PEG proposals total $42 million in 2006, increasing to $73 million in As was the case in previous financial plans, the July Plan continues to assume modest bi-annual fare and toll increases. The Plan incorporates proposed 5% revenue increases in 2007 and As I noted at the beginning, $493 million of the 2005 improvement is attributable to the real estate and debt service windfalls. The proposed plan for 2005 earmarks $10 million for heightened security and $2 million to quickly start NYCT s intensive cleaning initiatives. Since the remaining $481 million is not a recurring revenue source, the preliminary budget sets these funds aside in an MTA Reinvestment Fund in anticipation of a one-time investment, which will generate long-term operating benefits. I am proposing two options for the Board s consideration. The first recommended use would be to commit these funds to the construction of a platform over the LIRR yards on the West Side of Manhattan. Working in conjunction with the City and the local community, the MTA would devise an appropriate development plan for the site which would complement the recently approved rezoning plans for the adjoining area. Once that plan is completed, the MTA would issue a Request for Proposals from interested real estate developers. This is a unique opportunity for the MTA to maximize the value of this critical asset. With the expansion of the Javits Center, redevelopment of the Moynihan Station and the extension of the #7 line, this area of Manhattan is poised for dramatic renewal. Like Rockefeller Center in the 1930 s and Lincoln Center in the 1950 s, now is an ideal time for a catalytic change in this neighborhood. An integral part of the plan would be the construction of a new MTA headquarters building, consolidating our uses at 341, 345, and 347 Madison Avenue. This strategy would generate two sources of capital funding for the MTA; first, funds generated by sale of development rights over the rail yards would be applied toward the MTA Capital Plan that was recently approved by the State. That plan s funding structure anticipates $1 billion from the MTA s sale iv

9 of excess real estate assets. Secondly, once the current headquarters site is vacated, and accommodations are made for Metro-North personnel which need to remain in the vicinity of Grand Central Terminal, this property would become available for redevelopment. Those funds would then be available to be applied to the MTA s next Five -Year Capital Plan for The attractiveness of this plan is multifold; (1) it uses unpredictable non-recurring revenues generated by the extraordinary boom in the region s real estate market as well as savings from our variable rate debt for a capital purpose, which will generate an extraordinary source of our revenue for our current capital plan; and (2) it allows for another source of significant revenue (i.e. Sale of current MTA Madison Avenue buildings) to be applied to the MTA s next capital plan. The second possible use of the Reinvestment Funds would be to apply those monies to pay down the accrued unfunded liabilities in our pension plans which currently total $2.2 billion. By applying the $481 million fund monies to the liabilities, we would recognize a savings of approximately $38 million annually in our contributions to these pension funds. The attractiveness of this proposal is the benefit accrues to the benefit of the pension plan and the associated ongoing savings to our operating budgets in the out years. Clearly, the capital security needs of the MTA network is of paramount concern to all New Yorkers, particularly in the wake of the Madrid and London bombings. As such, the allocation of the Reinvestment Fund to those needs was considered but ultimately determined not to be a prudent strategy for the reasons which follow. As the Board is aware, in 2003 the State approved the MTA Board s amendment to our Capital Plan to increase our bonding capacity up to $591M in order to progress priority capital projects designed to harden our system in the event of a terrorist attack. While the amendment was pending approval, the Federal government agreed to provide $143 in FEMA funds to help offset the costs of six of those priority projects. Virtually all of those projects have completed design and are nearing construction in fact, within the next six months, $500M of the $591M will be committed and the projects underway. The currently approved Capital Plan anticipates the receipt of $500M in Federal monies to advance the next category of security projects. If we were to apply the Reinvestment Fund monies to that need, we would be allowing the Federal government to avoid its recognized responsibility to fund mass transit security -- a position which Senators Schumer and Clinton have been forcefully reinforcing with the Department of Homeland Security. In addition, such a course of action would require the MTA to forego a phenomenal opportunity to generate potentially well over an additional $1 billion through the sale of our most unique real estate asset revenue which, as the Board is aware, is currently anticipated in our recently approved capital plan to support the core infrastructure needs of v

10 the MTA network. In the absence of that source of funds, the MTA Board would be faced with two equally difficult choices, namely: (1) reduce the approved Capital Plan by $1 billion; or (2) authorize the issuance of $1 billion in MTA debt and increase the debt service burden on the MTA operating budget. Therefore, I recommend that the MTA continue to press the Federal government to meet its responsibility to provide the next $500M to our capital security program instead of placing that burden on our customers and our State and local governmental partners. After earmarking the $481 million for the Reinvestment Fund, the Plan assumes a balanced budget for The proposed closing cash balance in 2006 of $239 million includes the now-freed-up $200 million real estate reserve from This, together with the early inception of the new State revenues and the recurring agency efficiencies, should enable us to hold the assumed yield for the 2007 fare and toll increase to 5%, but would still leave a gap in that year of $128 million down from $689 million in February. While lower than our February Plan, gaps for 2008 and 2009 remain high, $771 million and $880 million, respectively. This is primarily the result of Debt Service cost increases reflecting the acceleration of construction for the Capital Program and the evaporation of prior year savings. This plan is a significant improvement from where we were when I presented the four-year plan in However, there are challenges to be addressed, particularly the long-term challenge of closing the out-year gaps. I believe that the conservative use of cash surpluses, such as the reinvestment options that I have proposed, is the type of prudent fiscal policy required to address that need. I look forward to public and Board input on this plan over the coming months, culminating with the adoption of the 2006 Budget by the Board in December. vi

11 II. MTA Consolidated Financial Plan

12 MTA 2006 Preliminary Budget Baseline Before Gap Closing Actions Where the Dollars Come From State & Local Subsidies 7% Farebox Revenue 43% By Revenue Source (in millions) Farebox Revenue $3,694 Toll Revenue 1,244 Other Revenue 425 Dedicated Taxes 30% Other Revenue 5% Toll Revenue 15% Dedicated Taxes State & Local Subsidies Total 2, $8,515 Non-Labor Expenses 22% Other Expenses 2% By Expense Category Where the Dollars Go Payroll 39% NYCT/SIR 56% By MTA Agency LIRR 11% MTAHQ/ FMTAC 3% MNR 9% Debt Service 15% Pension 8% Health & Welfare 10% Overtime 4% Debt Service 15% B&T 5% MTA Reserve 0% LIB 1% By Expense Category (in millions) Payroll $3,481 Overtime 349 Health & Welfare 883 Pension 637 Debt Service 1,342 Non-Labor Expenses 1,990 Other Expenses 174 Total $8,955 By MTA Agency (in millions) NYCT/SIR $5,010 MTAHQ/FMTAC 235 LIRR 1,001 MNR 799 B&T 417 LIB 111 Debt Service 1,342 MTA Reserve 40 Total $8,955 The net difference between revenues and expenses is offset through the use of prior year cash balances and cash flow timing adjustments ($2,491 million) and depreciation ($1,590 million). This results in a baseline year-end cash surplus of $461 million.

13 Line Number 8 Non-Reimbursable Mid-Year Preliminary 10 Actual Forecast Budget Operating Revenue 12 Farebox Revenue $3,425 $3,623 $3,694 $3,742 $3,781 $3, Toll Revenue 1,097 1,207 1,244 1,247 1,255 1, Other Revenue (Excludes B&T Investment Income for Capital) Capital and Other Reimbursements Total Operating Revenue $4,881 $5,240 $5,363 $5,427 $5,487 $5, Operating Expense 19 Labor Expenses: 20 Payroll $3,303 $3,375 $3,481 $3,568 $3,682 $3, Overtime Health & Welfare ,060 1, Pensions Other-Fringe Benefits Reimbursable Overhead (233) (240) (239) (242) (247) (250) 26 Sub-total Labor Expenses $5,016 $5,304 $5,589 $5,798 $6,030 $6, Non-Labor Expenses: 29 Traction and Propulsion Power Fuel for Buses and Trains Insurance Claims Paratransit Service Contracts Maintenance and Other Operating Contracts Professional Service Contracts Materials & Supplies Other Business Expenses Sub-total Non-Labor Expenses $1,679 $1,917 $1,990 $2,060 $2,158 $2, Other Expense Adjustments: 41 Other ($1) ($6) ($6) ($7) ($7) ($8) 42 General Reserve Sub-total Other Expense Adjustments ($1) $34 $34 $33 $33 $ Total Operating Expense Before Depreciation $6,693 $7,255 $7,613 $7,891 $8,221 $8, Depreciation $1,344 $1,497 $1,640 $1,758 $1,852 $1, Total Operating Expense (Excluding B&T Depreciation) $7,991 $8,704 $9,203 $9,593 $10,012 $10, Net Operating Deficit Before Subsidies and Debt Service ($3,111) ($3,464) ($3,840) ($4,166) ($4,525) ($4,920) Dedicated Taxes and State/Local Subsidies $2,822 $3,226 $3,152 $3,252 $3,272 $3, Debt Service (excludes Service Contract Bonds) (848) (1,080) (1,342) (1,468) (1,603) (1,754) Net Deficit After Subsidies and Debt Service ($1,137) ($1,318) ($2,030) ($2,382) ($2,856) ($3,343) Conversion to Cash Basis: Depreciation $1,344 $1,497 $1,640 $1,758 $1,852 $1, Conversion to Cash Basis: All Other (30) (73) (73) 61 Net Cash Balance from Previous Year Baseline Net Cash Balance $507 $833 $461 ($194) ($1,077) ($1,453) GAP CLOSING and OTHER ACTIONS: Reinvestment Fund 0 (481) Real Estate Tax Stabilization Account Agency Program to Eliminate the Gap (PEGs) Increased Fare and Toll Yields Increased Fare and Toll Yields Net Cash Balance from Previous Year (Gap Actions only) 0 0 (463) (221) METROPOLITAN TRANSPORTATION AUTHORITY July Financial Plan MTA Consolidated Statement Of Operations By Category ($ in millions) 75 Net Cash Surplus/(Deficit) $507 $370 $239 ($128) ($771) ($880)

14 Total Operating Revenue METROPOLITAN TRANSPORTATION AUTHORITY July Financial Plan MTA Consolidated Accrued Statement of Operations By Agency ($ in millions) Non-Reimbursable Mid-Year Preliminary Actual Forecast Budget Bridges and Tunnels (Excludes Investment Income) $1,130 $1,246 $1,293 $1,297 $1,304 $1,308 Capital Construction Company Long Island Bus Long Island Rail Road Metro-North Railroad MTA Headquarters New York City Transit 2,814 2,959 3,012 3,054 3,092 3,105 Staten Island Railway First Mutual Transportation Assurance Company Total $4,881 $5,240 $5,363 $5,427 $5,487 $5,520 Total Operating Expenses before Depreciation 1 Bridges and Tunnels $319 $350 $391 $400 $408 $424 Capital Construction Company Long Island Bus Long Island Rail Road ,001 1,036 1,109 1,148 Metro-North Railroad MTA Headquarters New York City Transit 4,391 4,748 4,983 5,177 5,375 5,581 Staten Island Railway First Mutual Transportation Assurance Company (2) (6) (10) (14) (18) (22) Other (1) Total $6,693 $7,255 $7,613 $7,891 $8,221 $8,544 Depreciation Bridges and Tunnels $46 $48 $50 $57 $61 $67 Capital Construction Company Long Island Bus Long Island Rail Road Metro-North Railroad MTA Headquarters New York City Transit ,087 1,191 1,293 1,396 Staten Island Railway First Mutual Transportation Assurance Company Total $1,344 $1,497 $1,640 $1,758 $1,852 $1,963 Net Operating Income/(Deficit) Bridges and Tunnels (Excludes Depreciation) $811 $896 $902 $897 $896 $884 Capital Construction Company Long Island Bus (60) (65) (69) (72) (76) (81) Long Island Rail Road (674) (745) (802) (830) (880) (907) Metro-North Railroad (453) (482) (515) (545) (587) (640) MTA Headquarters (249) (245) (250) (257) (261) (268) New York City Transit (2,469) (2,770) (3,057) (3,314) (3,576) (3,872) Staten Island Railway (29) (31) (32) (33) (34) (35) First Mutual Transportation Assurance Company Other 1 (34) (34) (33) (33) (32) Total ($3,111) ($3,464) ($3,840) ($4,166) ($4,525) ($4,920) Note: 1 Excludes Debt Service

15 METROPOLITAN TRANSPORTATION AUTHORITY July Financial Plan MTA Consolidated Cash Receipts and Expenditures ($ in millions) Line Number CASH RECEIPTS AND EXPENDITURES Mid-Year Preliminary 10 Actual Forecast Budget Receipts 12 Farebox Revenue $3,466 $3,668 $3,739 $3,801 $3,828 $3, Other Operating Revenue Capital and Other Reimbursements 1,107 1,151 1,156 1,166 1,187 1, Total Receipts $5,043 $5,229 $5,289 $5,372 $5,435 $5, Expenditures 18 Labor: 19 Payroll $3,581 $3,697 $3,778 $3,869 $3,993 $4, Overtime Health and Welfare ,079 1, Pensions Other Fringe Benefits Reimbursable Overhead Total Labor Expenditures $5,528 $5,868 $6,268 $6,521 $6,779 $7, Non-Labor: 28 Traction and Propulsion Power $203 $246 $259 $264 $269 $ Fuel for Buses and Trains Insurance Claims Paratransit Service Contracts Maintenance and Other Operating Contracts Professional Service Contracts Materials & Supplies Other Business Expenditures Total Non-Labor Expenditures $1,692 $1,998 $1,998 $2,074 $2,176 $2, Other Expenditure Adjustments: 40 Other $39 $81 $75 $79 $86 $91 41 General Reserve Total Other Expenditure Adjustments $39 $121 $115 $119 $126 $ Total Expenditures $7,259 $7,988 $8,381 $8,713 $9,082 $9, Net Cash Deficit Before Subsidies and Debt Service ($2,217) ($2,759) ($3,091) ($3,341) ($3,646) ($3,920) Dedicated Taxes and State/Local Subsidies $3,008 $3,745 $3,595 $3,675 $3,679 $3, Debt Service (excludes Service Contract Bonds) (435) (661) (876) (989) (1,109) (1,246) Net Cash Balance from Previous Year Baseline Net Cash Surplus/(Deficit) $507 $833 $461 ($194) ($1,077) ($1,453) GAP CLOSING and OTHER ACTIONS: Reinvestment Fund 0 (481) Real Estate Tax Stabilization Account Agency Program to Eliminate the Gap (PEGs) Increased Fare and Toll Yields Increased Fare and Toll Yields Net Cash Balance from Previous Year (Gap Actions only) 0 0 (463) (221) Net Cash Surplus/(Deficit) $507 $370 $239 ($128) ($771) ($880)

16 Total Receipts METROPOLITAN TRANSPORTATION AUTHORITY July Financial Plan MTA Consolidated Cash Statement of Operations By Agency ($ in millions) Mid-Year Preliminary Actuals Forecast Budget Capital Construction Company $10 $18 $26 $31 $30 $31 Long Island Bus Long Island Rail Road Metro-North Railroad MTA Headquarters New York City Transit 3,694 3,762 3,743 3,792 3,833 3,855 Staten Island Railway First Mutual Transportation Assurance Company Total $5,043 $5,229 $5,289 $5,372 $5,435 $5,477 Total Expenditures Capital Construction Company $10 $18 $26 $31 $30 $31 Long Island Bus Long Island Rail Road 1,097 1,111 1,214 1,255 1,332 1,375 Metro-North Railroad ,030 1,081 1,125 MTA Headquarters New York City Transit 4,938 5,366 5,614 5,851 6,076 6,284 Staten Island Railway First Mutual Transportation Assurance Company Other (46) Total $7,259 $7,988 $8,381 $8,713 $9,082 $9,397 Net Operating Surplus/(Deficit) Capital Construction Company Long Island Bus (52) (67) (68) (72) (76) (83) Long Island Rail Road (457) (467) (518) (547) (614) (644) Metro-North Railroad (277) (301) (329) (348) (390) (431) MTA Headquarters (210) (263) (245) (253) (260) (269) New York City Transit (1,244) (1,603) (1,870) (2,059) (2,243) (2,429) Staten Island Railway (22) (21) (22) (22) (23) (25) First Mutual Transportation Assurance Company (0) 0 (0) Other 46 (36) (39) (39) (40) (40) Total ($2,217) ($2,759) ($3,091) ($3,341) ($3,646) ($3,920)

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18 Metropolitan Transportation Authority July Financial Plan MTA Consolidated February Financial Plan Compared with July Financial Plan Cash Reconciliation ($ in millions) Favorable/(Unfavorable) February Plan Baseline Net Cash Surplus/(Deficit) 1 $76 ($737) ($1,105) ($1,398) ($1,751) Changes to the July Plan Effect of 2004 Results $85 $0 $0 $0 $0 Real Estate Tax Yields Debt Service (24) Refunding Savings Variable Rate Interest Savings Capital Expense Timing (34) Cost of Issuance Savings New State Actions New Sales Tax Increase Increase in MRT New Motor Vehicle Fees Base Taxes and Other (3) Service & Cleaning Enhancements (2) (10) (10) (10) (10) 2005 Security Measures (MTA, B&T, NYPD) (10) Agency Baseline Changes (28) (109) (92) (172) (191) Inflation (7) (66) (111) (143) (195) Energy (7) (8) (10) (12) (14) New Needs/Investments: Maintenance (26) (71) (42) (85) (75) Other New Needs (11) (9) (8) (10) (10) 2005 PEG Program Re-Forecast (3) (20) (11) (12) (11) Toll/Farebox Revenue Baseline Re-Estimates Other Net Cash Balance from Previous Year Total Changes $757 $1,198 $911 $321 $297 July Plan Baseline Net Cash Surplus/(Deficit) $833 $461 ($194) ($1,077) ($1,453) GAP CLOSING and OTHER ACTIONS: Reinvestment Fund (481) Real Estate Tax Stabilization Account Agency Program to Eliminate the Gap (PEGs) Increased Fare and Toll Yields Increased Fare and Toll Yields Net Cash Balance from Previous Year (Gap Actions only) 0 (463) (221) 0 0 July Net Cash Surplus/(Deficit) $370 $239 ($128) ($771) ($880) Note: 1 The 2005 baseline cash balance contained a $20 million MTA-wide PEG implementation provision, which reduced the cash balance to $56 million.

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20 Metropolitan Transportation Authority July Financial Plan Summary of Total Budgeted Debt Service ($ in millions) Line ACTUAL FORECAST Number New York City Transit: Budgeted Gross Debt Service for Existing Transportation Revenue Bonds $ $ $ $ $ $ Debt Service on Additional Transportation Revenue Bonds Supporting Approved Capital Programs Broadway Certificates of Participation - NYCT Lease Portion Broadway Certificates of Participation - Additional NYCT Share of MTA Lease Portion Transportation Resolution Commercial Paper Budgeted Gross Debt Service for Existing Dedicated Tax Fund Bonds Debt Service on Additional Dedicated Tax Fund Bonds Supporting Existing Capital Programs Sub-Total MTA Paid Debt Service $ $ $ $ $ $ Budgeted Gross Debt Service for Existing TBTA (B&T) General Revenue Bonds $ $ $ $ $ $ Budgeted Gross Debt Service for Existing TBTA (B&T) Subordinate Revenue Bonds Sub-Total B&T Paid Debt Service $ $ $ $ $ $ Total NYCT Debt Service $ $ $ $ $ $1, Commuter Railroads: Budgeted Gross Debt Service for Existing Transportation Revenue Bonds $ $ $ $ $ $ Debt Service on Additional Transportation Revenue Bonds Supporting Approved Capital Programs Transportation Resolution Commercial Paper Budgeted Gross Debt Service for Existing Dedicated Tax Fund Bonds Debt Service on Additional Dedicated Tax Fund Bonds Supporting Existing Capital Programs Sub-Total MTA Paid Debt Service $ $ $ $ $ $ Budgeted Gross Debt Service for Existing TBTA (B&T) General Revenue Bonds $ $ $ $ $ $ Budgeted Gross Debt Service for Existing TBTA (B&T) Subordinate Revenue Bonds Sub-Total B&T Paid Debt Service $ $ $ $ $ $ Total CRR Debt Service $ $ $ $ $ $ Bridges and Tunnels: Budgeted Gross Debt Service for Existing TBTA (B&T) General Revenue Bonds $ $ $ $ $ $ Budgeted Gross Debt Service for Existing TBTA (B&T) Subordinate Revenue Bonds Debt Service on Additional TBTA (B&T) General Revenue Bonds Supporting Approved Capital Programs Broadway Certificates of Participation - TBTA Lease Portion Broadway Certificates of Participation - Additional TBTA Share of MTA Lease Portion Total Debt Service $ $ $ $ $ $ MTA Total: Budgeted Gross Debt Service for Existing Bonds $ $1, $1, $1, $1, $1, Broadway Certificates of Participation Transportation Resolution Commercial Paper Debt Service on Additional Transportation Revenue Bonds Supporting Existing Capital Programs Debt Service on Additional Dedicated Tax Fund Bonds Supporting Existing Capital Programs Debt Service on Additional TBTA (B&T) General Revenue Bonds Supporting Existing Capital Programs Total Debt Service $ $1, $1, $1, $1, $1, REVISED 7/27/05

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22 METROPOLITAN TRANSPORTATION AUTHORITY JULY FINANCIAL PLAN FAREBOX RECOVERY AND FAREBOX OPERATING RATIOS ANNUAL BUDGET and FORECASTS BEFORE GAP CLOSING and OTHER ACTIONS FAREBOX RECOVERY RATIOS July Plan Forecast Forecast Forecast Forecast New York City Transit 45.1% 43.0% 41.3% 39.7% 38.3% Staten Island Railway 12.4% 12.5% 13.0% 12.7% 12.4% Long Island Rail Road 33.5% 31.7% 31.4% 30.6% 30.1% Metro-North Railroad 42.9% 41.2% 40.3% 38.9% 36.9% Long Island Bus 34.6% 33.6% 32.8% 32.0% 31.1% MTA Total Agency Average 42.8% 40.8% 39.5% 38.0% 36.7% FAREBOX OPERATING RATIOS July Plan Forecast Forecast Forecast Forecast New York City Transit 59.2% 57.5% 56.0% 54.4% 52.4% Staten Island Railway 17.9% 17.8% 18.3% 17.7% 17.0% Long Island Rail Road 45.5% 44.5% 43.7% 41.5% 40.8% Metro-North Railroad 56.4% 55.4% 54.7% 52.5% 50.0% Long Island Bus 35.7% 34.6% 33.9% 33.0% 32.0% MTA Total Agency Average 56.4% 54.8% 53.6% 51.8% 50.0% Note: Does not include 2006 PEGs or 2007 and 2009 fare/toll increase. Farebox recovery ratio has a long-term focus. It includes costs that are not funded in the current year, except in an accounting-ledger sense, but are, in effect, passed on to future years. Those costs include depreciation and interest on longterm debt. Approximately 10% (and sometimes more) of MTA costs are not recovered in the current year from farebox revenues, other operating revenues or subsidies. That is why MTA operating statements generally show deficits. In addition, the recovery ratio allocates centralized MTA services to the Agencies, such as Security, the costs of the Inspector General, Civil Rights, Audit, Risk Management and Legal. Farebox operating ratio focuses on Agency operating financial performance. It reflects the way MTA meets its statutory and bond-covenant budget-balancing requirements, and it excludes certain cost that are not subject to Agency control, but are provided centrally by MTA.

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24 Ill. Major Assumptions Projections

25 Utilization (Ridership, Traffic and Revenue)

26 UTILIZATION 2005 Ridership, Traffic and Revenue The 2005 Mid-Year Forecast for MTA consolidated ridership is projected to total 2,378.7 million passengers, while crossings at Bridges and Tunnels (B&T) facilities are projected to total million vehicular crossings. New York City Transit (NYCT) combined subway and bus ridership for the 2005 Mid-Year Forecast is expected to be 2,194.1 million, while Long Island Rail Road (LIRR) is projecting 78.3 million passengers and Metro-North Railroad (MNR) is projecting 72.6 million passengers for its East-of-Hudson operations. Staten Island Railway (SIR) ridership is estimated to be 3.5 million, and Long Island Bus (LIB) fixed route ridership is estimated to be 30.2 million. Farebox revenue for the 2005 Mid-Year Forecast is estimated to be $3,602.2 million, and toll revenue is estimated to be $1,206.9 million. NYCT combined subway and bus farebox revenue for the 2005 Mid-Year Forecast is expected be $2,689.0 million, while LIRR is projecting $436.8 million in farebox revenue and MNR is projecting $435.6 million in farebox revenue for its East-of-Hudson operations. SIR farebox revenue is estimated to be $3.5 million, and LIB fixed route farebox revenue is estimated to be $37.3 million. The 2005 Mid-Year Forecasts are based on actual results through May 2005 for NYCT, SIR and B&T, and through April 2005 for LIRR, MNR and LIB. MTA ridership for the 2005 Mid-Year Forecast is expected to increase on most MTA operations from 2004 ridership levels, the exceptions being estimated ridership declines at LIRR and LIB, while the 2005 Mid-Year Forecast for traffic at B&T facilities is expected to decline from the 2004 traffic level. The 2005 Mid-Year Forecast for fare and toll revenues projects increases for all MTA operations over 2004 fare and toll revenue levels. The 2005 Mid-Year Forecast for MTA consolidated ridership is projected to increase by 28.5 million trips a 1.2% increase over 2004 MTA consolidated ridership. NYCT ridership for the 2005 Mid-Year Forecast is expected to surpass the 2004 ridership level by 27.4 million passengers, a 1.3% increase. The 2005 Mid-Year Forecast for Commuter Rail ridership is also estimated to be greater than 2004 ridership levels, with LIRR projecting a 0.9 million, or -1.2%, ridership decline and MNR projecting a 1.9 million, or 2.6%, ridership improvement. SIR is projecting a 0.2 million, or 5.7%, increase in ridership, while LIB is projecting a ridership decline of 0.1 million, or -0.2%. The 2005 Mid-Year Forecast for B&T traffic is expected to decline by 3.1 million crossings, a 1.0% decrease, over the 2004 traffic level. The ridership, traffic and revenue changes from 2004 to the 2005 Mid-Year Forecast levels are primarily affected by fare and toll increases that went into effect on February

27 27, 2005 for NYCT, SIR and LIB, on March 1, 2005 for LIRR and MNR, and on March 13, 2005 for B&T. At NYCT, the basic two-dollar single-trip fare and the MetroCard pay-per-ride bonus of 20 percent with a $10 minimum purchase (or six trips for the price of five trips) did not change. Also remaining unchanged was the seven-dollar price for the one-day unlimited-ride Fun Pass. The 30-day unlimited-ride MetroCard increased in price from $70 to $76 and the price of the 7-day unlimited-ride MetroCard increased from $21 to $24. The price of a single express bus ride increased from $4 to $5, and the price of the 7-day express bus pass increased from $33 to $41. As a result of the fare increases, the NYCT average non-student fare the average fare excluding revenue and trips made with student passes rose from $1.25 to $1.31, an increase of 4.8%. Fare increases on SIR and LIB were consistent with the fare increases for NYCT. At LIRR, fares increased by 5% across-the-board. Additionally, there were changes to three other fare components: the one-way off-peak discount was reduced from 30% to 27.5% of the one-way peak fare; the 9% discount provided to Mail-N-Ride customers, and applied to the LIRR portion of joint monthly LIRR-MetroCards, was reduced to a 5% discount, and; those purchasing tickets on LIRR trains are now subject to a higher onboard differential, which was increased from three dollars to five dollars per ticket. As with LIRR, the fare increase for the New York State portion of MNR included an acrossthe-board 5% fare increase, an increase in the on-board differential from $3 to $5, and a reduction from 9% to 5% in discount on the MNR portion of the joint MNR-MetroCard pass. The MNR fare change, though, also included a 1% commutation discount reduction in the outer-most fare zones where the commutation discount had been greater than 48 percent; other fare zones at the 48 percent discount level were unchanged by this component of the increase. Finally, reverse commute travel during the morning outbound from 5:30 AM to 9:00 AM became subject to peak period fares. B&T cash and E-ZPass tolls for passenger cars at major facilities Bronx-Whitestone, Triborough and Throgs Neck Bridges and the Brooklyn-Battery and Queens Midtown Tunnels increased by 50 cents, to $4.50 per crossing for cash and to $4 for E-ZPass; at the Verrazano-Narrows Bridge, where tolls are only collected in the westbound direction, the toll increased by one dollar to $9 for cash tolls and to $8 for E-ZPass. At the minor facilities the Henry Hudson, Cross Bay and Marine Parkway Bridges cash and E-ZPass tolls increased 25 cents to $2.25 per crossing for cash transactions, and to $1.75 for E-ZPass transactions at the Henry Hudson Bridge. At the Cross Bay and Marine Parkway Bridges, E-ZPass transactions increased from $1.33 to $1.50 per crossing. The base cash toll for commercial vehicles increased by one dollar at the major facilities and by fifty cents at the minor facilities, and the base E-ZPass toll for commercial vehicles increased by 80 cents at the major facilities and by 40 cents at the minor facilities. Additional charges for both passenger cars and commercial vehicles that are assessed for towed items and for multiple axles also increased.

28 MTA consolidated ridership for the 2005 Mid-Year Forecast is expected to surpass the 2005 Adopted Budget projection by 2 million trips, a 0.1% increase. NYCT ridership for the Mid-Year Forecast is expected to surpass the Adopted Budget ridership level by 1 million passengers, a 0.1% increase. The Mid-Year Forecast for Commuter Rail ridership is also estimated to be greater than the Adopted Budget level, with LIRR projecting a 1 million, or -1.2%, ridership decline and MNR projecting a 1 million, or 1.8%, ridership improvement. SIR is projecting a 0.2 million, or -5.2%, decrease in ridership, while LIB is projecting a ridership increase of 0.2 million, or 0.7%. At B&T facilities, the Mid-Year Forecast projects an increase of 3 million additional vehicular crossings, a 1.1% increase, over the Adopted Budget forecast. MTA consolidated farebox revenue in the Mid-Year Forecast is projected to increase by $4 million from the Adopted Budget, a 0.1% increase. NYCT farebox revenue is projected to increase $1.2 million, a less then 0.1% increase; LIRR farebox revenue is projected to decline $3 million, or -0.7%; MNR farebox revenue is projected to increase $6 million, or 1.4%; LIB farebox revenue is projected to increase less than $0.1 million, or 0.1%, and; SIR farebox revenue is projected to decline $0.2 million, a 6.1% decrease. The Mid-Year Forecast for B&T toll revenue is projected to increase $14 million, or 1.2%, over the Adopted Budget forecast. The downward adjustment in LIRR s Mid-Year Forecast for ridership and farebox revenue relative to the Adopted Budget reflects ridership trends during the first four months of 2005, when ridership was 3.1% below budget and farebox revenue was 0.8% below budget through April. This variance is partially attributed to heavy snowfall during the weekend of January 22 and 23, when over 15 inches of snowfall was recorded in Islip. Additionally, LIRR ridership levels have not increased as expected from the rebound in New York City employment. MNR s Mid-Year Forecast improvement in ridership and farebox revenue is attributed to greater than projected ridership trends, as well as the seven-week strike during March and April 2005 that cancelled all Westchester County bus service. The impact of the strike is estimated to account for about 18% in the ridership improvement and about 9% of the revenue improvement in the Mid-Year Forecast. SIR s reduction in ridership which is calculated from turnstile registrations and farebox revenue from the Adopted Budget to the Mid-Year Forecast is due to the delay in installing a fare collection system at its Tompkinsville train station. This project has been delayed until January LIB ridership is modestly higher in the July Plan, due largely to less drop-off in riders expected from the February 27 fare increase. Also, more riders are taking advantage of MetroCard discounts, thus boosting ridership. Farebox revenue growth is slower due to lower-than-projected average fare, the result of more riders than expected taking advantage of MetroCard discounts.

29 B&T vehicle crossings and toll revenue are higher in the Mid-Year Forecast due to less traffic loss than expected in the Adopted Budget from the March 13 toll increase Ridership, Traffic and Revenue MTA consolidated ridership for 2006 is expected to surpass the February Plan projection by 1.0 million trips, an increase of less than 0.1%. NYCT ridership for 2006 is expected to surpass the February Plan ridership level by 0.1 million passengers, which is less than a 0.1% increase. The 2006 forecast for Commuter Rail ridership is also estimated to be greater than the February Plan level, with LIRR projecting a 0.3 million, or -0.3%, ridership decline and MNR projecting a 1.1 million, or 1.6%, ridership improvement. SIR is projecting a 0.3 million, or -6.7%, decrease in ridership, while LIB is projecting a ridership increase of 0.2 million, or 0.8%. At B&T facilities, 2006 reflects an increase of 4.8 million additional vehicular crossings, a 1.6% increase, over the February Plan forecast. MTA consolidated farebox revenue in 2006 is projected to increase by $2.5 million from the February Plan, a 0.1% increase. NYCT farebox revenue is projected to decline $0.1 million, a less then 0.1% decrease; LIRR farebox revenue is projected to decline $3.2 million, or -0.7%; MNR farebox revenue is projected to increase $6 million, or 1.4%; LIB farebox revenue is projected to increase less than $0.1 million, or 0.1%, and; SIR farebox revenue is projected to decline $0.3 million, a 7.8% decrease. In 2006, B&T toll revenue is projected to increase $19.8 million, or 1.6%, over the February Plan forecast. The downward adjustment in LIRR s 2006 Budget forecast for ridership and farebox revenue relative to the February Plan reflects continued adjustments based on ridership trends during the first four months of 2005, as well as a due to a slight decline in the average yield per passenger. MNR s improvement in ridership and farebox revenue is attributed to a continuation of projected ridership trends. SIR s change in 2006 ridership which is calculated from turnstile registrations and farebox revenue from the February Plan is due to the delay in installing a fare collection system at its Tompkinsville train station until January It was expected that collecting fares at Tompkinsville would increase farebox revenue by $0.3 million and ridership by 0.3 million in LIB ridership and farebox are modestly higher in 2006, the result of continuing trends anticipated for B&T vehicle crossings and toll revenue estimates continue the trends projected for 2005, which are higher in the July Plan than levels expected in the February Plan Ridership, Traffic and Revenue MTA consolidated ridership for the July Plan is expected to surpass the February Plan projection by 4.5 million trips in 2007 and by 4.9 million trips in 2008, increases of 0.2%

30 over the February Plan for each year. MTA consolidated farebox revenue in the July Plan is projected to increase by $7.9 million in 2007 and by $10.1 million in 2008, increases of 0.2% and 0.3% respectively, from the February Plan. NYCT ridership for the July Plan is expected to surpass the February Plan ridership level by 3.0 million passengers each year, or 0.1% per year. NYCT farebox revenue is projected to increase $2.6 million, or 0.1% each year. These increases from the February Plan are the result of a re-estimation of the impact of implementing the offpeak bus service loading guidelines. LIRR ridership is projected to decline by 0.2 million in 2007 and by 0.3 million in 2008 from the February Plan ridership level, a decrease of 0.3% each year. LIRR farebox revenue is estimated to be below the February Plan levels by $2.3 million in 2007, a 0.5% decline, and by $2.1 million in 2008, a decline of 0.4%. MNR ridership is projected to increase by 1.4 million in 2007 and by 1.8 million in 2008 from the February Plan ridership level, an increase of 2.0% in 2007 and 2.4% in MNR farebox revenue is estimated to be above the February Plan levels by $7.6 million in 2007, a 1.7% increase, and by $9.5 million in 2008, an increase of 2.1%. SIR is projecting no changes to ridership and farebox revenue forecasts from the February Plan for 2007 and 2008 as the delayed installation of the Tompkinsville train station fare collection system is expected to be completed and operational in January LIB ridership and farebox are modestly higher in the July Plan ridership is up 0.3 million each year (0.9% and 1.0%, respectively) while farebox revenue is up $0.1 million each year (0.2% and 0.3%), the result of continuing trends anticipated for 2005 relative to the February Plan. At B&T facilities, the July Plan projects an increase over the February Plan forecast of 4.9 million additional vehicular crossings in 2007, a 1.6% increase, and 6.2 million additional vehicular crossings in 2008, a 2.1% increase. Toll revenue is also expected to exceed projections in the February Plan, increasing by $20.1 million, or 1.6%, in 2007 and by $25.5 million, or 2.1%, in B&T vehicle crossings and toll revenue estimates for 2007 and 2008 continue the trends projected for In 2009, year-to-year MTA consolidated ridership, vehicle crossings, farebox revenue and toll revenue are expected to modestly increase over the 2008 levels in the July Plan. Year-to-year consolidated ridership is projected to reach 2,453.2 million passengers, up 0.1%, while year-to-year farebox revenue is estimated to reach $3,772.4 million, an increase of 0.4%. Year-to-year B&T vehicle crossings are projected to be million, a 0.3% annual increase, and toll revenue is estimated to increase to $1,256.8 million, up 0.2%. The smaller year-to-year increases for 2009 are due to the extra Leap Day in 2008, which primarily affects NYCT ridership and B&T vehicular crossings.