New York MTA Seeks New Revenue to Replace Lost Riders
(Bloomberg) -- New York’s Metropolitan Transportation Authority warned it will need to borrow $1.4 billion and find new revenue sources to balance its budget in 2025 as the largest mass-transit system in the U.S. struggles to restore ridership.
The state agency on Wednesday approved a $18.6 billion operating budget for 2022, bouyed by federal pandemic aid. Long-term structural imbalances loom as subway usage may only reach 86% of pre-Covid levels in 2024, according to McKinsey & Co. analysis. That means a $1 billion shortfall every year in fare revenue, according to the MTA.
The MTA will exhaust federal aid in 2025, and its spending plan for 2026 will be significantly out of balance, according to Bob Foran, the MTA’s chief financial officer, who is set to retire this month after 11 years overseeing the agency’s budgets and debt sales.
During the pandemic, the MTA’s subway usage fell by as much as 90%. As of last week, ridership remained about 57% of 2019 levels. MTA officials have said the agency needs additional recurring revenue sources to help it fix budget gaps after the U.S. aid runs out.
“It’s time for reconsideration of long-term recurring revenue to treat the MTA a little bit more like an essential service so all of the burden of the adjusted ridership scenario doesn’t fall on the riders,” Janno Lieber, the MTA’s chief executive officer, told reporters following the agency’s board meeting Wednesday.
To close 2025’s projected budget gap, the agency will use the last of its federal aid, $1.08 billion, and $1.4 billion of borrowed funds. Those options won’t be available in 2026, Foran warned Monday during the agency’s finance committee meeting
“With federal funding exhausted in 2025 and only $1.5 billion remaining in deficit borrowing proceeds, 2026 will likely be significantly out of balance without actions to address the structural imbalance,” Foran said.
The MTA plans to implement on March 1 a temporary program to help attract more riders to the system by capping subway and bus fares and lowering commuter-rail fees.
Under the pilot program, subway and bus riders who use the OMNY “tap and go” payment system will get free rides after their 12th trip of the week. Each week, riders would pay the current $2.75 single-ride fare for their first 12 trips starting every Monday and any additional rides during that week would be free. No subway or bus OMNY user will pay more than $33 per week, the current charge for a 7-day unlimited MetroCard.
Starting March 1, the MTA will temporarily offer Metro North riders and Long Island Railroad customers a new 20-ticket pack, which will be 20% off the same number of peak one-way fares. The MTA will cut monthly tickets by 10% and will offer a flat $5 fare on weekday off-peak trains for trips made within New York City.
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