Two key New York State lawmakers on Monday suggested bonding out the $4.2 billion revenue shortfall projected in the Metropolitan Transportation Authority's $10.6 billion, five-year capital plan.

They also suggested using alternative funding and taxes to finance the bonds, rather than fare and toll increases.

Assemblyman Jerrold Nadler, D-Manhattan, said "bond out" the gap because "there is no other way to do it."

And Senator Frank Padavan, R-Queens, agreed, saying bonding appears to be the only solution to the MTA's funding problem in light of the state's current fiscal straits. Both lawmakers said they do not support fare or toll increases to finance the proposed capital plan.

Rep. Nadler is on the New York State Assembly Standing Committee on Corporations, Authorities, and Commissions. Sen. Padavan is a member of the New York State Senate Standing Committee on Transportation.

One possible revenue source could be the state's petroleum business tax, expected to generate about $650 million annually, Rep. Nadler said. The tax was first imposed

MTA Capital Program

Resource Projections

Millions of dollars

Total 1992-1996

capital needs, including

TBTA capital bonding plan: $10,600


Federal funding $2,330

New York City capital funds 1,025

New York State service contracts 765

MTA/CRR capital - 453

operating transfer

Total continuing resources: $4,573


Interstate transfer (Westway) $167

Municipal Assistance Corp. 650


Total one-time resources: $817


TBTA capital need $0

Program income 250

TBTA investment income 120

TBTA capital bonding plan (1) 600

Total bonds and

related resources: $970

Total all resources: $6,360

Total 1992-1996 funding gap: ($4,236)

(1) Financed through TBTA bond sales. Source: MTA

in 1991 and its revenues have been used to plug state budget gaps. But under the legislation creating the tax, lawmakers will be required in 1992 to divide the revenues between transit programs, bridges, and roads. The allocation process is expected to generate heated debate.

Another revenue source could be a large share of the $850 million earmarked for highway development along the West Side Manhattan, Rep. Nadler said. He suggested the project be scaled down and the remaining money go to the MTA.

Rep. Nadler and Sen. Padavan made their remarks at a forum on the authority's capital program, sponsored by Empire State Report, a monthly magazine that covers New York State politics and finance. Three panels -- one made up of representatives of the MTA and its affiliates, one of the interest groups, and one of state lawmakers -- discussed the authority's capital program and its prospects for finding funding.

But the lawmakers said while they support the MTA capital program, the plan must be carefully studied before passed. Rep. Nadler and Sen. Padavan said the funding portion of the plan could be dealt with in a special session of the state Legislature, if such a session is called soon. The allocation details of the plan could be worked out later, they noted.

If the capital plan is not dealt with in a special session, both lawmakers said it will definitely be on the top of the list in the new legislative session in January.

Authority officials said that if the plan is not approved soon, fallout will begin to hit the system in mid-1992. They argue that the proposed plan focuses on "nuts and bolts" projects and maintenance.

In September, the MTA presented its $10.6 capital plan for 1992 through 1996 to the state Legislature, but noted it had a $4.2 billion funding hole. Since then, the New York city Transit Authority, a subsidiary of the authority, has said it may need to raise subway and bus fares to $1.40 from the current $1.15 to fill a projected gap in its share of the capital program. About $7.7 billion of the MTA program is earmarked for the transit authority.

But citizens groups, commuters, and politicians have responded angrily to the proposal for a fare increase. The groups have argued that the authority should cut spending, reduce its management, pare back some of the capital program, or seek subsidies and funding from other revenue sources.

Mortimer L. Downey, the authority's executive director and chief financial officer, said, "The items in the MTA [capital plan] are really not discretionary investment." He noted that the size of the this program is equivalent to the programs in the past.

The MTA's first capital program, covering 1982 through 1986, totaled $7.7 billion and the second program, which covers 1987 through 1991, totals about $8.2 billion, said Tito Davila, a spokesman for the authority.

Bonding played a significant role in both programs. The Triborough Bridge and Tunnel Authority provided $1 billion of bonding for each program, Mr. Davila said. About $512 in mortgage recording tax bonds were sold in the second program, while the state's service contract bonds totaled $1 billion in the first program and $859 million in the second program, he said. MTA revenue bond sales totaled $1.9 billion in first program, but none were sold in the second, he said.

Also, the Triborough Bridge and Tunnel Authority sold about $40 million of bonds for a mini-capital program covering 1987 to 1991 and totaling about $180 million, he said. The bridge authority is expected to fund its $600 million share of the proposed MTA capital program with bonding.

"Can we do it? Our past plans have worked," Mr. Downey said. The three main funding sources for the two previous programs were the federal government, the state, and New York City, which accounted for 50% of the money, he said.

About 15% of the revenues were garnered from one-shot revenue gainers, including using capital commitments from the Municipal Assistance Corporation for the City of New York, refundings, and the sale of assets, he noted. And about $4.7 billion of the program was funded with bonds, Mr. Downey

MTA 1992-1996

Capital Program Proposal

Millions of dollars

Triborough Bridge $600

New York City 7,717

Transit Authority

Long Island Railroad 1,260

Metro-North Commuter 979


Unassigned 40

TOTAL $10,600

Source: MTA

said, adding that represents about $450 million a year in debt service over the next 30 years.

For the third capital plan, the funding sources are not as evident, Mr. Downey acknowledged. While federal funding may increase, commitments from the state and city are still unclear. The city has been contributing about $205 million a year, but its fiscal crisis may force a cut back, Mr. Downey said.

The state contribution is about $150 million a year, and "we believe the state is committed," Mr. Downey observed, but added that the state may be looking for alternative financing, rather then a general fund appropriation.

There is not much left in the oneshot area, he said. "We do have $650 million from MAC and we will make some money on investments, but in total the money from this category would be about 12%" of the proposed capital plan.

Roughly 40% of the funds needed for the proposed capital program have not been found, Mr. Downey said.

"Can we do it with debt? I don't think so," he said. "I don't think we can load up our operations with that much additional borrowing."

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