MTA Sees Deficits Again With $3.5 Billion Gap in 2024, 2025
(Bloomberg) -- New York’s Metropolitan Transportation Authority is projecting that it will face a combined deficit of $3.5 billion in 2024 and 2025, anticipating that its long-running fiscal strains will return after an influx of federal aid runs out.
The New York City subway, bus and commuter train operator is struggling to bring users back after subway ridership fell by as much as 90% during the pandemic and crime spiked on sparsely-filled platforms and train cars. The subway still carries less than half the number of people it did before the coronavirus outbreak.
The financial toll on the agency has been eased by $14.5 billion of federal aid it is set to receive to cover lost revenue. But those funds will run out in 2024 and the transit agency will need ridership to increase to help address the estimated budget shortfalls because fares and tolls have historically accounted for 50% of the MTA’s revenue.
“After we’ve exhausted the exceptional aid the MTA has received, the MTA will again face significant deficits,” Pat Foye, the agency’s outgoing chief executive officer, said during a board meeting Wednesday, where the projections were discussed. “We will need new additional recurring revenues in significant amounts, collectively totaling billions of dollars annually to sustain today’s service and staffing levels.”
The MTA, which had $48.6 billion of outstanding debt as of July 7, borrowed $2.9 billion last year through the Federal Reserve’s emergency lending program and may use those proceeds to help close the gaps, Bob Foran, the MTA’s chief financial officer, said during the meeting.
The $3.5 billion deficit projection includes the impact of not raising fares in 2021, ending a two-year wage freeze and not implementing service reductions to reflect changes in ridership. The MTA expects to push this year’s delayed fare increase into next year to help encourage ridership.
The agency is also under pressure to complete an environmental assessment of a new program, called congestion pricing, which will toll motorists driving into Manhattan’s central business district. The MTA anticipates it will bring in $1 billion a year, a revenue stream that could back debt to finance the agency’s capital program.
It is Foye’s final meeting as the head of the agency. Janno Lieber, who oversees the MTA’s capital plan, is set to become its next chief executive officer.
©2021 Bloomberg L.P.