New York MTA May Cut Workers, Service Absent Federal Aid
(Bloomberg) -- New York’s Metropolitan Transportation Authority may consider cutting its workforce, reducing service, and deficit borrowing if the federal government fails to allocate billions more in aid as the largest U.S. transit agency faces a potential $10.3 billion deficit through 2021.
MTA ridership has dropped dramatically during the coronavirus pandemic, with revenue plummeting 40%. That has put the MTA’s $51.5 billion five-year capital program on hold, placing the aging system at risk of additional service breakdowns and decaying infrastructure.
The MTA, which had $46 billion of debt as of June 9, is seeking an additional $3.9 billion of federal funds to help cover lost revenue through the end of 2020 as the agency’s options are limited, Pat Foye, the MTA’s chief executive officer, told board members Wednesday during the agency’s monthly meeting.
“This is a four-alarm fire,” Foye said during the board meeting. “We are facing the most acute financial crisis in the history of the MTA.”
The transit agency, which oversees New York City’s vast subway network, buses and commuter rail lines, estimates a $3.75 billion deficit this year and another $6.55 billion in 2021, Bob Foran, MTA’s chief financial officer, said during the meeting.
Without additional federal help, the MTA board in July may need to consider a combination of spending cuts, including wage freezes, layoffs, taking money from the capital budget and reducing that spending plan, Foran said. It may also need to institute fare and toll increases and take on long-term deficit financing, he said. Fare and toll revenue is down nearly $1.4 billion, or 40%, this year through May, according to board documents.
“All options have to be on the table,” Foran said.
Still, the agency needs to outline which services are essential in order to find savings, Larry Schwartz, a board member who chairs the MTA’s finance committee, said during the meeting.
“I clearly believe there is still significant waste in the agency as a whole,” Schwartz said. “And I would ask and task each of our four agency presidents to come up with an efficiency plan or a waste-reduction plan on how to come up with additional savings. And we need to get started on this now.”
The MTA was planning on spending $13.5 billion this year for infrastructure upgrades, but because of the coronavirus the agency has awarded only $2.3 billion, Janno Lieber, MTA’s chief development officer, said during the meeting. The 2020-2024 capital budget, as well as a great deal of remaining projects from the MTA’s prior capital plan essentially are on hold, Lieber said.
“The simple fact is that the capital program of the MTA is frozen because of uncertainty about how much money is going to be available,” Lieber said.
While the $3.9 billion the MTA is seeking from the federal government would help the system through 2020, the agency will be looking for continued assistance next year, Foye said.
“We will be going back to the federal government for additional money,” Foye said about financial help for 2021. “I suspect we will not be alone in making those requests.”
The MTA received $3.8 billion of federal aid in the CARES Act, but the agency estimates it will run out of those funds in July.
“We urgently need federal aid to keep service running and protect our historic capital program, which will put New Yorkers back to work and deliver the upgrades needed to bring the MTA into the 21st century,” Foye said during the meeting. “There is no time to waste. We need help and we need it now.”
As New York City businesses slowly reopen, MTA ridership has increased. Nearly 4.9 million people entered the subway system during the work week that ended Friday, a 11% boost from the previous period. Still, that’s 78% lower than the average for the past year.
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