New York MTA Postpones Fare Hikes as Biden Takes Office
(Bloomberg) -- New York’s Metropolitan Transportation Authority will delay planned fare increases for several months as the subway and bus operator anticipates that President-elect Joe Biden and a Democratic-led Congress will deliver additional federal aid.
The MTA, the largest mass-transit provider in the nation, was set to discuss and possibly vote on a potential 4% fare boost Thursday during its monthly board meeting. The agency implements such fee hikes every two years.
With residents struggling during the coronavirus pandemic, the MTA will postpone such a step “for several months,” Patrick Foye, the agency’s chief executive officer, said in a statement late Monday.
The postponement comes just as Biden, a longtime Amtrak commuter, takes office on Wednesday and as Brooklyn-native Chuck Schumer becomes Senate Majority Leader. The MTA is also poised to get another advocate: Biden on Monday nominated Polly Trottenberg, a former New York City Transportation Commissioner who previously sat on MTA’s board, as Deputy Secretary of Transportation.
“The stars have aligned for them pretty well,” said Howard Cure, director of municipal bond research at Evercore Wealth Management, which has $9.5 billion of assets under management, include MTA debt. “In the short-term there’s an increased reliance and hope of getting additional federal aid monetarily as well as cooperation.”
Biden announced last week an economic rescue plan that would give U.S. public transportation systems $20 billion. The MTA avoided drastic service cuts and layoffs when Congress approved in December $4 billion for the agency.
Along with additional federal grants and aid, a Biden administration may help unlock new revenue sources for the MTA, Cure said. The agency has been waiting for federal guidance to implement a new congestion-pricing program originally planned to back $15 billion of debt for infrastructure needs, but could also cover operating expenses.
Delaying the fare increases avoids putting an added burden on workers in a city where the unemployment rate in November was 12.1%, more than triple what it was a year earlier, according to New York’s Department of Labor.
“The Covid-19 pandemic has wreaked economic havoc -- devastating the MTA’s ridership and revenues and bringing them to levels far worse than the Great Depression,” Foye said in the statement. “It has also hit people of color and low income communities hardest, many of whom are the very same essential workers that have been on the frontlines of this crisis and who are also most dependent on mass transit.”
Some MTA board members have been pushing back against boosting fares this year. Skipping a 4% fare hike in 2021 means the agency wouldn’t get an estimated $48 million in new revenue. While that’s a small gap in a $17 billion budget, the MTA already must fix an estimated $500 million deficit this year, even after the $4 billion of federal aid.
“They have big operating costs, expensive labor contracts and a big infrastructure project just for maintaining the system,” Cure said.
The MTA also faces an $8 billion deficit from 2022 through 2024, even after factoring in the expected fare and toll increases in 2021 and 2023. Foye and his colleagues will be looking to Washington for more help.
“Buoyed by President-elect Biden, incoming Senate Majority Leader Chuck Schumer and Speaker Nancy Pelosi, the MTA also has hope for $8 billion in additional pandemic relief and continued federal investment in mass transit in 2021 and beyond,” Foye said.
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