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Metropolitan Transportation Authority November Financial Plan 2013 - 2016 November 28, 2012.

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Presentation on theme: "Metropolitan Transportation Authority November Financial Plan 2013 - 2016 November 28, 2012."— Presentation transcript:

1 Metropolitan Transportation Authority November Financial Plan 2013 - 2016 November 28, 2012

2 Since July 2010, our Plans have been consistent, disciplined, and totally transparent Continuous, significant annually recurring cost cutting No budget-driven service reductions Three years of net zero union wage growth (already achieved four years of non-union zero wage growth) Continue biennial fare and toll increases as planned –We have not used the fare/toll option as a plug to address unfavorable financial developments Increase liquidity while addressing long-term healthcare, pension and debt service vulnerabilities 2

3 July Plan was balanced through 2013 with manageable out-year deficits ($ millions) 3

4 Favorable changes -Lower debt service expenses -Additional paratransit savings -Lower Agency spending (real and timing)/higher revenues -Higher net subsidies Unfavorable changes -Higher health and welfare costs - Higher overtime expenses - Increase in electric power costs - Payroll cash flow adjustment in 2014 And then came Sandy... What has changed since the July Plan? 4

5 Financial Impact of Sandy Calculation and estimation of Sandy-related losses is ongoing; too early to have more than highly provisional estimates Early estimates of losses are $5 billion –Infrastructure damage : $4.75 billion –Operating losses (lost revenue and increased operating costs): $268 million Losses covered by combination of insurance, federal programs (including FEMA) and MTA resources –Infrastructure damage: After insurance ($1.075 billion maximum coverage) and standard FEMA (75%) recoveries, an estimated $950 million of infrastructure damage may need to be covered by MTA –Operating losses: anticipate substantial recoveries from business interruption/extra expense insurance coverage and FEMA While we expect to receive advances from insurers and the Federal Government, final settlement could take 2 to 3 years –Operating losses will hit 2012 budget –Multi-year infrastructure expenditures will begin immediately and bridge loan financing will be necessary until reimbursement is received 5

6 Impact on Financial Plan spans multiple years: 2012 2012 expected to be closed on a self-sustaining basis July projected Y/E cash balance$ 47 2012 Sandy loss(268) Agency underspending (real and timing)/higher revenues51 Debt service savings36 Net subsidy increase18 Other 4 ($112) Release remaining General Reserve63 Internal OPEB Loan (to be repaid in 2015) 75 November projected Y/E cash balance$26 Reimbursement expected 2013 to 2015 –FEMA to cover 100% of Sandy-related expenses incurred through November 14 –Business interruption/extra expense insurance anticipated to cover substantial portion of remaining losses 6

7 Impact on Financial Plan spans multiple years: 2013 and beyond Infrastructure losses will require external borrowing, increasing annual debt service –Assuming $2.9 billion of anticipation notes issued in 2013 and $1.9 billion issued in 2014 $29 million in 2013 and $48 million in 2014 and 2015 until notes are repaid from insurance or federal reimbursements or proceeds of bonds –Assuming $950 million of 30 year bonds issued in 2016 to take out $950 million of anticipation notes not repaid from insurance or federal reimbursements $62 million annually Additional cost cutting will be required to offset this in the Financial Plan: annual recurring MTA efficiency targets raised by $25 million in 2013 increasing to $75 million in 2015; unidentified at this time 7

8 Significant elements of the November Plan Funds the operating and financing costs associated with Sandy through additional unidentified cost reductions Retains the MTA service investments announced in July that improve coverage to existing markets and deliver service to new markets Includes $250 million annually beginning in 2015 in support of the 2015- 2019 Capital Program –Funded with debt service savings from the 2012 refundings and re-estimates of interest rates and cash flows from re-baselining of ESA Increases General Reserve and OPEB deposits Increases annual recurring savings targets, achieving $1.2 billion in 2016 Continues three years of net-zero wage growth for represented employees 2013/2015 Fare/toll increases are consistent with the July Plan 8

9 9 November Plan relies on same key elements as the July 2010 Plan Deficits totaling $333 million remain ($ millions)

10 Compounded Annual Growth Rate (CAGR) Non-discretionary expenses are increasing faster than inflation and discretionary spending 2011 Actual to 2016 Forecast 2011 Actual to 2012 Final Forecast 1 Personnel Service / Other Than Personnel Service. This reflects adjustments to remove Service Investments, New Needs, Regulatory Increases, Mega Projects and CPI Increases at the conclusion of 3 Net-Zeros. Without these adjustments, the increases are 0.3% from 2011 to 2012 and 2.1% from 2011 to 2016. 7.2% 6.7% 7.6% 5.3% 9.1% 1.7% 0.5% Debt Service Paratransit Energy Employee and Retiree Healthcare Pensions PS/OTPS 1 CPI Non-Discretionary Discretionary 10

11 11 Revenue from 2013/2015 Fare/Toll Increases $1,745 Non- Discretionary Expenses $4,570 1,203 2015 Revenue from 2013/2015 Fare/Toll Increases $898 2015 $1,722 2014 Revenue from 2013 Fare/Toll Increase $465 2014 $1,340 2013 Revenue from 2013 Fare/Toll Increase $382 2013 $985 2012 $523 Proposed Fare & toll increases cover only 38% of non-discretionary expense growth |-------Cumulative-------| Increase Over 2011 Debt Service Paratransit Energy Healthcare Pensions ( $ millions) $ increase in non-discretionary cost over 2011

12 Increase in unidentified savings targets offset the impact of Sandy ($ in millions) 12 July Plan Surplus Deficit November Plan Surplus Deficit

13 The MTA is continuing to follow its Plan, but risks remain Federal support at expected levels –Disaster relief –On-going capital support in light of fiscal cliff Economic uncertainty –Local economy as affected by Sandy –National economy remains weak Continued receipt of PMT or comparable revenue Successful execution of Financial Plan strategy –Achieve net-zero labor settlements –Continued cost reductions –Projected fare/toll increases in 2013 and 2015 Long-term vulnerabilities –Casualty risks to the system; ability to fund mitigation investments –Employee and retiree healthcare costs –Pensions –Building and protecting critical financial reserves 13

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