Third of A Series: New York MTA OK—For Now

Times look bleak for many transit providers at this writing. Reports both for the trade and in popular media have spread the word that transit is in trouble. The federal operating support for transit that Congress authorized at the height of the COVID-19 pandemic will soon run out. Many transit providers are scrambling to raise the money to keep going in the wake of reduced ridership, especially compared to the times when the trains and local transit were filled with commuters as recently as a few years ago. One transit agency seems to be prepared to keep balancing its budget despite the otherwise-universal emergency: The New York Metropolitan Transportation Authority.

It appears that state-level officials in New York know that New York City depends on its transit, that non-motorists outnumber motorists in the City, and that millions of City residents have to get around. Without the subways and buses, that would be impossible. While there are not as many five-day commuters today as there were before the virus hit, the remaining ones still need to get to their offices. So those officials have worked out a plan to keep the agency funded.

The MTA is the biggest transit agency in the country, and its jurisdiction goes beyond transit, to bridges and tunnels (the Triborough Bridge & Tunnel Authority, which is slated to collect the Congestion Pricing toll if it wins court approval and is ever implemented, given that Gov. Kathy Hochul killed it for political reasons) to an in-house Capital Construction arm. Regarding transit, it operates the MTA New York City Transit (NYCT), the Staten Island Railway (SIR), the Long Island Rail Road (LIRR), and Metro-North, the railroad connecting Grand Central Terminal with suburbs north of the City and towns further away.

A Grim Outlook

The COVID-19 pandemic hit New York’s transit hard, even forcing overnight closure of the subway system, which is famous for having run all night since it opened in 1904, except for the “COVID year.” Ridership on the system, other transit and the local railroads is climbing back, but slowly. It was apparently recovering too slowly, because the MTA issued a grim forecast in the summer of 2022.

An MTA press release dated July 27, 2022 had a grim and ominous tone to it. It predicted a $2.5 billion deficit for the agency by “two years from now” and that it would rise to $2.75 billion in 2028. The agency presented a preliminary 2023 budget and a report from consulting firm McKinsey & Co. that included ridership forecasts. At one time, ridership was lower than McKinsey’s “worst-case” scenario. The MTA said: “The documents project the MTA fiscal cliff presented in February 2022 will occur in 2025, one year earlier than previously forecasted, with federal COVID-19 relief aid largely exhausted by 2024.”

The picture the MTA painted in July 2022 was worse than the previous one. The agency also said: “A slower-than-expected return to the office for many employers, fewer non-work trips and customer sentiment on issues including safety have seen transit and railroad ridership lag the 2020 forecast. The updated McKinsey forecast for NYCT and commuter railroads has been revised, with ridership projected to reach 80% of pre-pandemic levels by 2026. This revision represents a $500 million decline in anticipated annual farebox revenues in 2026 compared to the prior forecast and a $1.8 billion decline compared to pre-pandemic forecasts.”

MTA Chair and CEO Janno Lieber was quoted as saying: “Identifying new, dedicated revenues to fund mass transit is imperative as we seek to address our fiscal cliff,” and CFO Kevin Willens said the agency had “a new higher and earlier fiscal cliff for the MTA … While there is sufficient Federal Aid to cover structural deficits through 2024, State and City action by 2023 to create new, dedicated revenue streams to the MTA can lower the fiscal cliff to $1.6 billion and save billions in costly debt service expense.”

A report by Dave Colón in Streetsblog from July 26 showed the McKinsey chart to which the release referred. Colón also reported on Willen’s concerns: “Willens laid out a scenario in which the MTA might avoid such deficit strategies, but it requires state legislators to play along. If the MTA spent less of its federal pandemic aid beginning next year, it could stretch out the rescue money until 2028 and lower the remaining deficits to $1.6 billion a year from 2024 to 2028. Doing so, however, also would require Albany to find a new revenue stream for the agency that could cover a $795 million deficit in 2023 and $1.6 billion deficits for each of the following five years.”

Albany Comes Through, the City Helps, Too

What a difference a year made! On July 17, 2023, the MTA announced a preliminary five-year financial plan that would fund a balanced budget through 2027. The plan, the agency said, “reflects updates since the MTA warned of a fiscal cliff heading into 2023, with a projected $600 million deficit. With the increase of the PMT (Payroll Mobility Tax), increased City funding for paratransit and other dedicated taxes in the FY 2024 New York State Budget, the MTA projects a balanced budget through 2027, the first time in more than 20 years the Authority has projected a balanced budget for five consecutive years.”

The five-year plan included a 4% fare increase in 2023, with 4% hikes in 2025 and 2027. MTA Chair and CEO Janno Lieber gave credit to state officials in Albany for the needed funds: “Governor Hochul and the State Legislature delivered for riders in this year’s budget, providing stability with long-term funding sources at a time when we have seen strong progress in bringing more and more people back to mass transit …” The biggest contribution would be $1.1 billion from increasing the top rate of the PMT for the largest businesses in the City, along with other State and City contributions and operating efficiencies to save money.

Andrew Albert, head of the NYC Transit Riders Council and a rider-representative on the MTA Board, told Railway Age: “The State Legislature and the governor are finally treating the MTA as the essential service it is, similar to police, fire and sanitation. They have given us a balanced budget or the next five years. I have been on the Board since 2002 and never remember anything like that.”

It is sincerely to be hoped that Albert’s statement is borne out by events to come. Many transit providers use capital funds to keep operations going, even though the FTA disapproves of the practice. The COVID-19 relief legislation might have abated some of the need for such transfers of funds for a while, but that particular benefit to transit agencies might be temporary, too. With Gov. Hochul’s announcement that the Congestion Pricing plan that was scheduled to bring $1 billion per year—which would have been bonded to bring $15 billion into the capital fund for the city’s transit and suburban railroads—has been put on hold, there is one unanswerable question that seems to be on everybody’s mind: When will the program be implemented? One possible answer is “Never!”

On June 12, Albert told Railway Age: “With the indefinite delay in Congestion Pricing, many major capital improvements are now on hold. Nothing gets cheaper the longer you wait. But new subway cars, new commuter railcars for Metro-North and the LIRR, new electric buses, Second Avenue Subway Phase 2, CBTC (Communication Based Train Control) installation on the Fulton Street and Sixth Avenue lines, which would have enabled trains to run more closely together safely along Fulton Street in Brooklyn and Sixth Avenue in Manhattan, are all on hold, and there is no indication of when they will resume. In the case of the Second Avenue Subway, there is a $6 billion federal grant to extend the subway to 125th Street if the MTA could come up with its matching contribution of another $6 billion. Chair Lieber said he is going to focus on keeping service going in a safe and efficient manner, without service cuts.” Despite the Congestion Pricing situation, Albert added that service is expected to increase on several lines in July.

So at least for the next three years, New Yorkers will not have to worry about how to keep transit going. New Jersey Transit serves New Jerseyans, including those coming into New York City. We will look at how the transit agency on the other side of the Hudson is doing in the final article in this series.

David Peter Alan is one of North America’s most experienced transit users and advocates, having ridden every rail transit line in the U.S., and most Canadian systems. He has also ridden the entire Amtrak and VIA Rail network. His advocacy on the national scene focuses on the Rail Users’ Network (RUN), where he has been a Board member since 2005. Locally in New Jersey, he served as Chair of the Lackawanna Coalition for 21 years and remains a member. He is also a member of NJ Transit’s Senior Citizens and Disabled Residents Transportation Advisory Committee (SCDRTAC). When not writing or traveling, he practices law in the fields of Intellectual Property (Patents, Trademarks and Copyright) and business law. Opinions expressed here are his own.