By Stephanie Kelly
NEW YORK (Reuters) - New funding sources for New York's Metropolitan Transportation Authority will need to be identified for the authority to avoid unplanned fare and toll hikes, according to a report released on Thursday by State Comptroller Thomas DiNapoli.
In addition to needed funding, the report highlights the "deteriorated" performance of the nation's largest mass transit agency, citing the Long Island Rail Road's on-time operation is on track for its worst performance in 17 years.
The MTA is a state authority that operates the subway, buses, two commuter railroads and bridges and tunnels. It provides services to nearly one-third of U.S. mass transit commuters, the report said, noting also that nearly one-third of the authority's subway fleet is more than 30 years old.
"In the absence of adequate funding, the system could fall into further disrepair and riders could face unplanned fare hikes," DiNapoli said in a statement detailing the report.
"The state and city need to find solutions to prevent these possibilities from becoming reality, and the MTA must make the best use of its resources," he added.
In response, Joseph Lhota, chairman of the MTA, said in a statement that the MTA rejects "the idea of any unplanned fare increases."
"Funding subway repairs will not come on the backs of riders and the comptroller is fear-mongering by injecting unplanned fare increases into the public discourse," he said.
In July the MTA announced a two-phase plan to address the system's worsening state, with the first phase costing an estimated $836 million and the second phase costing about $8 billion, the report said.
The MTA has asked the state and city to split costs for the first phase, although an agreement has not yet been decided and the MTA has drawn from its own reserves to begin the first phase, the report said.
"How they [the state and city] come up with those monies remains to be seen, but it certainly could impact the budget, we don't know yet," the state comptroller's office told Reuters. "There really are no answers yet, and that’s what we’re pointing out."
MTA's debt service has grown over the years because the authority is funding a large share of its capital program, DiNapoli's office said.
According to the report, to fund the program, the MTA's debt service and other operating resources are expected to increase over the next five years by 22 percent to $3.5 billion.
In addition, the authority's debt service is projected to total about $2.6 billion in 2017, almost a threefold increase since 2003, and is projected to reach $3.4 billion by 2022.
(Reporting by Stephanie Kelly; Editing by Daniel Bases and Diane Craft)