New York MTA Puts Off Draconian Cuts With Bet on Federal Aid
New York MTA Puts Off Draconian Cuts With Bet on Federal Aid
(Bloomberg) -- New York’s Metropolitan Transportation Authority approved a $17.1 billion budget for 2021 that hinges on a potential $4.5 billion of federal funds to avoid deep service cuts and layoffs.
The MTA held off on voting, for now, on fare and toll hikes, employee reductions of more than 9,300, a 40% cut in subway and bus service and slashing commuter rail service in half. The agency may need to consider those changes as early as January and implement them in May if Congress fails to allocate necessary aid, Pat Foye, the MTA’s chief executive officer, warned the board during a meeting Wednesday.
“Federal funding remains our best shot at survival,” Foye said.
With President-elect Joe Biden, a long-time Amtrak commuter, set to take office on Jan. 20, the MTA, the largest U.S. transit network, and other public transportation systems across the country are optimistic that federal help will be arriving shortly.
The board Wednesday also approved debt sales backed by transportation revenue to finance as much as $2 billion of transit projects and $500 million of debt repaid with toll revenue for bridge and tunnel infrastructure.
The MTA, which had $44.6 billion of outstanding debt as of Nov. 27, has lost revenue as ridership has fallen dramatically during the coronavirus pandemic and McKinsey & Co. has estimated it may not fully rebound until 2024.
The MTA tends to increase fares and tolls by 4% every other year, and is set to boost those fees in 2021, although the budget the panel approved today didn’t include such hikes. Getting the board to authorize raising fares in 2021 will be difficult, as several members stressed their objection to increasing fees with people out of work and struggling during the pandemic.
“We cannot close this gap on the backs of riders,” board member Neal Zuckerman, a senior partner and managing director at Boston Consulting Group, said during the meeting. “They’re the ones that can least afford it.”
While the $4.5 billion of potential federal funds would help balance the MTA’s 2021 budget, the system faces an estimated $16 billion deficit through 2024, according to budget documents. That gap is reduced to $8 billion after the MTA implements planned spending cuts and redirects revenue from the capital plan.
“We do have, going forward, significant deficits to be addressed,” Bob Foran, the MTA’s chief financial officer, said during the meeting.
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