Reported in today's Wall Street Journal, the MTA faces financial disaster unless it receives $3.9 billion in bailout funds, having now almost exhausted the $4 billion it received in May. Unsurprisingly, the Republican-controlled Senate has so far rejected the bill which provides the funding. The "two commuter railroads" which the MTA runs are, of course, the Long Island Railroad and the Metro-North Railroad which are both quite substantial and with which many people on this forum are familiar - I myself have used the Poughkeepsie line many times during my IBM career between about 1990 and 2010.
I don't think anything in this report will be a surprise, it's just interesting to see the status spelled out and the options currently under consideration discussed.
I don't think anything in this report will be a surprise, it's just interesting to see the status spelled out and the options currently under consideration discussed.
Transit System Faces Financial Disaster
‘None of the choices are good, which is why federal funding is essential.’
Without U.S. bailout, chairman says riders could see diminishing services for years
BY PAUL BERGER
The nation’s largest transit system teeters on the edge of a financial crisis as it emerges from the new coronavirus pandemic, leaving it with few options other than imposing major spending cuts and borrowing billions of dollars, officials say.
Patrick Foye, chairman of the Metropolitan Transportation Authority, said in a July 8 interview that the only way to stave off bleak measures is for the agency to secure $3.9 billion in federal coronavirus bailout funds in the coming weeks. Without the money, subway, bus and rail commuters could be consigned to diminishing services for years. “None of the choices are good, which is why the federal funding is essential,” he said. The state-controlled authority, which runs New York City’s subway and bus systems as well as two commuter railroads, has almost exhausted $4 billion it received as part of the first federal coronavirus bailout in May.
The Democratic-controlled U.S. House of Representatives included a further $3.9 billion for the MTA in a new $3.5 trillion relief package passed the same month. Mr. Foye said he remains cautiously optimistic about receiving the money soon, even though the bill has languished in the Republicancontrolled U.S. Senate.
Senate Republicans, who return from recess July 20, have rejected the bill and remain divided on how much to spend and what to spend it on. Standard & Poor’s on July 7 downgraded the MTA’s credit rating to BBB+ from A-. It said the first round of bailout funds will be exhausted by August and described the authority’s hopes of receiving a next round of federal funding as fading.
Even if the authority receives the money, it would last only through the end of this year.
The last time the MTA found itself in a dire situation, following the 2008 financial crisis, it instituted a series of fare and toll increases, cut two subway lines and eliminated or reduced dozens of bus routes. At the time, the MTA faced projected shortfalls of between $400 million and $1.2 billion.
Currently, the MTA projects a shortfall of more than $10 billion through the end of 2021.
The MTA spends about $17 billion annually running buses and trains. It relies for more than two-thirds of its revenue on fares, tolls and dedicated payroll and other taxes that have been decimated by the pandemic.
By April, mass transit ridership had fallen more than 90%. At its lowest point, weekday subway ridership fell to 400,000 riders from a prepandemic average of 5.5 million.
Today, as New York City reopens, bus ridership is down about 50% and subway ridership is down about 80% compared with usual levels. Yet the authority runs an almost full schedule of trains and buses to reduce crowding. It also expects to spend an additional $500 million this year on disinfecting trains, buses and stations.
In May, authority officials took the previously unthinkable step of beginning nightly shutdowns of the subway system to remove homeless people and clean trains.
State officials say that overnight service will return when the pandemic ends. Mr. Foye said current daytime schedules could be reduced in the long term, based on demand. But he added that service cuts as well as reductions in the MTA workforce will be among the last measures contemplated to save money.
The MTA faced a fiscal crisis even before the pandemic, planning to cut as many as 2,700 of 74,000 positions this year. Labor accounts for about two-thirds of the MTA’s running costs. Fitch Ratings said in a July 7 report that the authority has failed to achieve meaningful overhauls of its union contracts that would be needed to balance its budget. An MTA spokesman said the authority’s recent agreement with its largest union secured work and benefits savings that offset four-year, average annual pay increases of a little over 2%.
Betsy Plum, executive director of transit advocacy group Riders Alliance, said people have grown so used to the authority lurching between fiscal crises that they take for granted that the agency’s financial problems will work themselves out.
“We may truly be in a moment where it cannot work itself out without dramatic injury to the people who most rely on transit,” she said.
Since the pandemic began officials have frozen plans to spend tens of billions of dollars to install elevators and upgrade outdated signal systems across the subway.