Passenger distrust of returning to public transit hits New York MTA in fare box

Passengers aren’t returning to New York’s public transportation system as quickly as expected, which could put the Metropolitan Transportation Authority in financial trouble as federal funds dry up, according to a report.

Even though declining ridership has left revenue well below pre-2019 pandemic levels, the MTA has restored subway and bus service to encourage ridership and economic recovery, said the report released Thursday by New York State Comptroller Thomas DiNapoli.

But because passenger revenues at the checkout have not recovered as well as the MTA had expected, significant budget gaps exist without the availability of federal funds.

“The MTA will have more say in its finances when the draft 2023 budget and four-year financial plan are presented to the MTA Board of Directors at its July meetings,” said John McCarthy of the MTA.

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The report noted that in 2019 fares covered 51.1% of MTA’s overall operating costs, with NYC Transit 52.8%. Fares in May covered only 31.9% of those costs, below the 40% the MTA had budgeted.

“The MTA’s large budget variances are increasingly in evidence as ridership remains well below pre-pandemic levels and federal aid runs out,” DiNapoli said. “Unless there is an additional influx of city, state or federal aid, the MTA faces difficult options to fill its budget gaps that will impact cyclists.”

And the MTA will face growing budget deficits in just three years, according to the report.

In 2025, the authority plans to borrow to fill a projected $500 million shortfall in its operating costs. Although the loan only covers one or two years of expenses, it will increase the MTA’s debt burden and will not be repaid until 2053. If goodwill does not return, this $500 million gap could increase and even double, warns the report.

After 2025, federal funds will have been exhausted, resulting in structural deficits of $2 billion or more.

“The Comptroller’s report is consistent with what the MTA has said since the start of the pandemic: Public transit is an essential service for New Yorkers, and the MTA has begun working with policymakers to develop a plan that ensures strong and continued transit in the post-COVID era,” MTA Chief External Relations Officer John McCarthy said in a statement sent to The Bond Buyer.

“The MTA will have more say in its finances when the draft 2023 budget and four-year financial plan are presented to the MTA Board of Directors at its July meetings,” he said.

The MTA is a state agency, which Albany took over from the city during the fiscal crises of the 1970s. Since 2011, the MTA has sold approximately $42 billion in municipal bonds.

How the MTA chooses to fill these gaps in the years to come will impact commuters on the city’s subways and buses as well as the Metro-North and Long Island Railroad.

DiNapoli said the MTA should explain what it plans to do to close those gaps and how it can adapt to low ridership levels.

The possibility of service cuts, higher than expected rate increases, reduced staffing or maintenance, and reduced capital expenditures is possible without additional funding or a significant increase in ridership.

Additionally, MTA needs to prioritize its capital plan and determine which projects are most critical and increase its budget flexibility, DiNapoli said.

According to a July 11 report From New York City Comptroller Brad Lander, weekday ridership on MTA subways, buses and commuter trains gradually improved in June.

Subway ridership reached 58% of pre-pandemic levels, while ridership on the Long Island Rail Road reached 63% and Metro-North Railroad reached 61%.

Still, private vehicle traffic on MTA bridges and tunnels remained at nearly 100% of pre-pandemic volume throughout the spring.

DiNapoli’s report noted that other cities have changed the service to focus on riders who rely on public transportation the most. He said the MTA has taken some steps to meet changing demand by considering increasing bus rapid transit service to outer boroughs.

New York faces an unclear future when it comes to the rise of hybrid work systems. The city is grappling with shifts in work patterns as working from home has moved from a temporary measure to the norm and a three-a-day hybrid work schedule has become standard policy procedure.

These changing traffic patterns may present the MTA with opportunities to improve service even as it seeks cost savings, according to the report.

For example, weekend subway ridership in June was higher than weekday ridership, while bus ridership was higher weekdays than weekends. Commuter rail ridership was at or near pre-pandemic levels on weekends in June, but weekday ridership was lower.

“If sustained shifts to office travel and increased demand for off-peak services continue, the MTA may be able to identify opportunities to provide service better aligned with new demand, while potentially generating cost savings. costs and creating savings,” the report said.

Earnest L. Veasey