Facing one of the biggest financial crises in the history of the subway, the New York public transit agency is preparing drastic measures to restore its finances that are likely to affect passengers in the coming years.
The measures the agency is drafting include reducing service, reducing the transit workforce, scrapping planned infrastructure improvements, increasing tolls beyond scheduled increases, and increasing its already record debt , according to officials from the Metropolitan Transportation Authority, which manages the city’s metro. , buses and two commuter rails.
With forecasts showing a staggering $ 16.2 billion budget deficit through 2024, transit leaders now say that at least some of these cuts are inevitable as the system faces the devastating impact of the coronavirus pandemic. The agency’s two-year budget for 2020-21 totaled $ 34.5 billion.
“There have been financial crises before, but never one in which deficits were measured in billions in addition to billions of dollars,” Patrick J. Foye, MTA president, said in an interview. “That is why these unpleasant and unacceptable alternatives have to be considered.”
He added: “We are going to have to make tough decisions no matter what happens here.”
Across the country, transit systems have been particularly affected by the pandemic: blockades caused more than a 90 percent drop in passenger numbers, while the cost of service for essential workers increased due to strict protocols disinfection.
In New York, traffic officials said they would only resort to severe cuts if they had no other options.
They noted that additional federal emergency assistance would help prevent some of these reductions, part of a broader political strategy to pressure Washington to provide aid as part of the $ 3 trillion aid package being debated in Congress this week.
Authorities say it is not yet clear how the authority will fare this time. In March, the agency received $ 3.8 billion, almost its initial full application, in the first federal emergency aid package.
But even with more federal aid, cost-saving efforts, and cuts already made, the authority still faces a multi-billion dollar budget hole.
In addition to financial strain, the MTA’s plan to implement the country’s first congestion pricing system, a new revenue stream for public transportation, has stalled.
The plan would charge drivers entering the busiest parts of Manhattan and could generate up to $ 1 billion annually for the transit agency.
But the project requires federal approval, and so far the Trump administration has not provided the necessary guidance on an environmental review process. MTA officials say the project, scheduled to begin in January, faces at least a year of delays.
The agency’s increasingly acute financial emergency marks a sharp reversal of the system’s recent advances toward reliability after years of divestment that brought the metro to a state of emergency in 2017.
Now, the likelihood that the system will shrink risks undermining New York City’s chance for an economic recovery at a time when its unemployment rate has risen to more than 20 percent.
“The MTA is both a source of the region’s economy and a reflection of the region’s economy,” said Mitchell Moss, professor of urban planning and policy at New York University. “This is the most serious crisis the MTA has faced because the state is facing a crisis, the city is facing a crisis.”
The bleak financial forecast, which transit officials are expected to present to the authority’s board on Wednesday, paints a bleaker picture for public transportation than in past crises.
After the great recession in 2008, the MTA eliminated two subway lines and dozens of bus routes to close a major budget gap. And with the city on the brink of bankruptcy in the 1970s, the subway became a global symbol of urban decline with rampant crime, graffiti-covered trains, and constant mechanical failure.
When the pandemic engulfed New York and the city closed, almost all of the system’s operating income, which comes from fees and tolls, taxes and subsidies, disappeared.
Even though New York has slowly begun to reopen, commuter commuters have stagnated at around 20 percent of their usual 5.5 million passengers in recent weeks.
This year, the agency projects that it will face $ 5.1 billion in revenue from lost fees and tolls and $ 2.1 billion in losses from specific taxes and subsidies. In 2021, she estimates those losses at $ 3.9 billion for fees and tolls and $ 1.9 billion for subsidies.
To fill the immediate deficit of the operating budget, Transit officials are pushing for another $ 3.9 billion to be included in the next coronavirus relief package. That additional financing would cover the MTA’s operating deficit until the end of the year.
“Without federal funds, the MTA cannot get out of this by being lean without reducing service in a way that would be devastating to passengers,” said Rachael Fauss, senior research analyst at Reinvent Albany, a watchdog group.
But even if the public transportation system receives additional federal assistance this year, the agency will still have to cut spending due to declining passenger numbers and dedicated tax revenue, which is expected to decline due to weakness in the city economy.
The MTA board is expected to review initial cost-cutting measures on Wednesday that will provide $ 1 billion in savings in 2021 by cutting non-essential services, including reducing overtime and eliminating consulting contracts.
But these steps will only begin to offset the financial consequences of the pandemic. The authority’s board, controlled by Gov. Andrew M. Cuomo, will find deeper budget cuts in the coming months, worrying advocates who warn cyclists will have to bear the burden for years.
“Moving to the old levers of fare increases and service cuts would send the transit system into a death spiral,” said Danny Pearlstein, spokesman for the Riders Alliance, a transit passenger base organization. “When a system becomes less functional due to service outages or less accessible due to rate increases, people abandon it.”
To begin, transit officials say the authority will likely have to take on more long-term debt and transfer funds to cover operating expenses that were set aside for its $ 51 billion plan to modernize the outdated metro system.
The state has already given the MTA permission to divert funds earmarked for capital improvements to operating costs in the next two years and to issue bonds so that it can borrow up to $ 10 billion in long-term debt and also borrow up to $ 3.4 billion as part of a short-term loan program established by the Federal Reserve.
If the financial situation deteriorates further, traffic leaders may have to consider permits or layoffs.
On a modest silver lining for passengers, the sharp drop in passenger numbers means that fares that are not scheduled in the next two years are unlikely to increase as they would not produce significant new revenue.
But as funds earmarked for the agency’s capital program are looted, the system will continue to be hampered by old equipment, making it difficult to improve service and attract passengers to trains.
“Without constantly investing in capital improvements and expansions, they will never rebuild the number of passengers lost and attract new users through growth,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “Five years from now, there is a good chance that they have still paralyzed finances and decreased passenger numbers, but have greatly increased their debt burden.”
Still, transit leaders argue that there are few alternatives, beyond increased federal assistance, to stabilize the system in the face of a catastrophic financial crisis.
“The deficit facing the MTA is not one that we can get out of,” Foye said.
