2008 Annual Report Comprehensive Annual Financial Report for the Year Ended December 31, 2008 Despite hard economic times, we remain committed to three goals: service, preservation of core assets, and network expansion. A component unit of the State of New York MTA 40th Anniversary For 40 years, the Metropolitan Transportation Authority has 2004 – MTA Bus formed to take over the operations of seven guided mass transit planning and operations in the down- privately owned franchise bus lines in New York City. state region, with responsibility for New York City subways The process of combining the operations began in and buses, Long Island and northern suburbs commuter rail early 2005 and was completed just over a year later. service, Nassau County buses, and a bridge and tunnel net- work that links the boroughs of New York City. In its short history it has demonstrated that no challenge is too great. 2008 – MTA integrates the management of its three bus operations to create a more seamless and efficient regional bus operation. 1968 – MTA formed; with responsibility for MTA New York City Transit, MTA Long Island Rail Road, and the Triborough Bridge and Tunnel Authority, now MTA To celebrate its 40th anniversary, the MTA sponsored a Bridges and Tunnels. series of lectures dealing with key mass transit issues, including the State of the MTA, a review of current operations and future plans by Executive Director and Chief Executive 1973 – With the bankruptcy of 10 local bus companies in Officer Elliot G. Sander. Nassau County, they are merged into the Today the MTA Network operates in 14 counties in New Metropolitan Suburban Bus Authority, now MTA Long York State and Connecticut, covering more than 5,000 Island Bus. square miles and a population base of 14.9 million. It pro- vides more than 8.7 million rides per day, more than 2.7 bil- 1982 – Recognizing that years of disinvestment had led to lion annually, and nearly 300 million vehicles use its bridge the near collapse of the MTA system, New York State’s and tunnel crossings each year, making it, by far, the largest Governor and Legislature began the first of a series public transportation network in North America. of Capital Programs to repair and restore the system. 1983 – MTA acquires the commuter rail operations of Penn Central in New York State and Connecticut to form Metro-North Commuter Railroad, now MTA Metro- North Railroad. 2003 – With an ambitious program of expansion project underway, MTA forms MTA Capital Construction to provide construction management and oversight on expansion and downtown mobility improvement projects. 2 2008 Annual Report Contents The MTA Message from the Chairman 2 Message from the Executive Director and Chief Executive Officer 4 MTA Leadership 6 2008 Consolidated Financial Highlights 8 Capital Program Progress 9 MTA Operations Performance 10 Workforce Development 14 Institutional Transformation 18 Customer Service 22 Projects and Planning 30 Finance 36 Safety and Security 40 Sustainability 44 The MTA Agencies MTA New York City Transit 49 MTA Long Island Rail Road 50 MTA Long Island Bus 51 MTA Metro-North Railroad 52 MTA Bridges and Tunnels 53 MTA Capital Construction 54 MTA Bus Company 55 Comprehensive Annual Financial Report Follows page 56 Message from the Chairman May 6, 2009 Throughout 2008, the MTA Board struggled with mounting challenges presented by national and regional economic downturns, nonetheless continuing to provide reliable service to record numbers of subway, bus, and commuter rail riders as well as bridge and tunnel users. Twenty-seven years ago the MTA was in a similar predicament. A tough economy, on top of decades of deferred funding and capital starvation had brought our region’s public transportation to the brink of collapse, fur- ther threatening the health of New York and potentially sending the regional economy into an endless tailspin. Bad things became routine: track fires, derailments every 18 days, over 300 subway runs abandoned each day, graffiti, crime – and that was just what the public saw. Behind the scenes much more was at risk: the fans, pumps, signals, and infrastructure that keep the system alive. Our buses, subways, and railroads became a symbol of urban decay, and riders, workers, school children, and 2 the elderly became the victims. Born and bred New is a critically important first step in avoiding a recurrence Yorkers packed up and left the Empire State. of the massive system-wide decline and disrepair we In 1982 some very dedicated New Yorkers, at the MTA experienced in the 70s and 80s. and in the political and business communities – recogniz- As is the case with governmental entities across the ing how important MTA services were to the region – country, we are still not out of the financial woods. made tough decisions at the MTA, at City Hall, and in Keeping fares relatively stable over the long term and Albany that made the MTA, for all its imperfections, funding our multi-year Capital Program to keep pace with arguably the governmental success story of the last gen- and support the region’s economic growth still must be eration. addressed, and we are optimistic that they will be later As a result, service is now better, safer, and more reli- this year. able. People have come back to ride our trains and buses For that to happen, however, the MTA will need the in numbers not seen in half a century. New York – left for continued backing of all of our partners in the business dead in 1972 – has actually experienced population community, among our riders, and in Albany, Washington, growth annually for more than a decade, largely because and local governments across the region. We will need the MTA works and works well. champions like those in the early 1980s to continue to Mindful of that history, we, too, worked very hard step up to protect the health of the MTA system. throughout 2008 to ensure that even in tough times we The region deserves no less and on behalf of the MTA could ensure the stability and reliability of MTA services, Board, I recommit our Board and the MTA leadership team while trying to maintain the momentum of projects that to continue our efforts to forge creative ways both inter- are critical to the future economic growth of the city, nally and externally to ensure that health going forward. state, and region. To accomplish this goal, we had to confront head-on potentially painful choices as economically sensitive sub- sidy revenues continued to shrink. Despite taking tens of millions of dollars of internal actions to increase adminis- H. Dale Hemmerdinger trative and operating efficiency, we had to consider the last resort left within our purview – raising fares and tolls and cutting service. While potentially disastrous scenarios were seriously contemplated, we are relieved that once again, the politi- cal and business communities came together so that as of this writing it appears that the worst of those scenarios will not have to be advanced. We are particularly grateful to Governor Paterson and State Legislative leaders who have come up with a funding plan that will allow us to avoid the draconian and counterproductive fare increases and service cuts that might have been. While not perfect, the plan addresses the immediate problem at hand, acknowledges our need for stable, adequate funding, and 3 and is committed to workforce development and a culture that values, engages, and supports employees and fos- ters career growth. Institutional transformation has become a powerful tool in putting the operations of our three bus companies and their paratransit services under the direction of a sin- gle executive. This has resulted in more efficient, consis- tent operations and procedures and shared services as well as cost savings. Consolidating the back office opera- tions of our seven agencies into a single Business Service Center is well under way and on track; the center will save the MTA $30 to $40 million a year when it is fully opera- tional in 2012. For the subways, a new initiative making Line General Managers fully responsible for each subway line, running it directly, streamlining reporting relation- Message from the ships, breaking down artificial barriers, and improving service, has shown tremendous promise. Executive Director and Our focus on customer service brought a host of Chief Executive Officer enhancements to the transit experience across all agen- cies: powerful on-line trip planning tools; added service, May 6, 2009 schedule and route adjustments to meet customer needs; better signage and communications, including near real- time text message and email notices of service disrup- MTA ridership was up last year despite the effects of a tions; and more payment flexibility with ExpressPay national recession and all MTA agencies continued to MetroCard and simplified E-ZPass forms. receive positive ratings for service and safety from cus- With completion of more than $3.3 billion in Capital tomers. And although the economic crisis steadily deep- Program projects, and new commitments of $3.9 billion, ened as the year progressed, our skilled and dedicated significant progress on excavation for East Side Access, employees made important advances in helping to Second Avenue Subway, and 7 line extension, we maintain achieve our seven strategic priorities: workforce develop- our strong commitment to projects and planning that not ment, institutional transformation, customer service, proj- only keep the system in a state of good repair but extend ects and planning, security, sustainability, and finance. it to meet the needs of the region’s population growth for MTA New York City Transit – our largest agency – pro- the next 25 years. vided over a million classroom hours of technical instruc- Though the details of our aggressive initiatives in tion to employees last year.