Home MTA Economics Podcast, Episode 11: Inside the MTA’s COVID-19 financial crisis with Nicole Gelinas

Podcast, Episode 11: Inside the MTA’s COVID-19 financial crisis with Nicole Gelinas

by Benjamin Kabak

The MTA, along with the rest of the world, is in crisis. As social distancing has become the norm in New York City and the service industry has disappeared within the span of a few weeks, the bottom has dropped out of the MTA’s once-rosy ridership projections. After the city witnessed sustained subway ridership growth for the first time in a few years, no one is riding as ridership has plummeted by about 60% earlier this week, and the numbers should look worse in a few days.

Along with this ridership drop comes a huge loss in potential revenue. Already, the MTA is incurring massive extra costs in its attempt to clean subways, buses, commuter rail cars and stations to combat the spread of the coronavirus, and without riders, the revenues are gone. The agency is warning its bondholders of significant material events (a financial term for “very bad news”), and Pat Foye has asked the federal government for a direct $4 billion bailout.

As MTA Chairman Pat Foye said on Wednesday when announcing the MTA’s plans to draw down its credit line, the agency has “encounter[ed] a fiscal cliff.” I’ll have more on the grim details once the situation stabilizes, but today, I have an emergency podcast. Joining me to discuss what this current pandemic means for the MTA’s budget is Nicole Gelinas of the Manhattan Institute. We spoke for about 25 minutes, and Nicole talked us through the dire fiscal straits the MTA is in.

You can listen below or at any of the usual suspects: iTunes, Google Play, Spotify or Pocket Casts.

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18 comments

Nicholas Christy March 19, 2020 - 12:36 pm

So why don’t they put a Sunday schedule in effect first before running to the Federal government with palms extended?

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Adirondacker12800 March 19, 2020 - 1:52 pm

Because you want people to practice social distancing and crowding them onto the infrequent service of a Sunday schedule doesn’t achieve that end. Or how many dead people does it take before we spend some money?

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HANDwasher March 19, 2020 - 12:50 pm

Link to the MTA bond disclosure statement Ben refers to in the podcast: http://web.mta.info/mta/invest.....031820.pdf

Link to press release where Pat Foye requests “robust federal aid” of $4B: http://www.mta.info/press-rele.....ing-robust

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Older and Wiser March 19, 2020 - 2:49 pm

My impression is that the provenance of confirmed infections is traced rather thoroughly, and that at least 90% of confirmed infections are found to have been transmitted by a person whose name is known to the patient, e.g. friends, extended family(often overseas), close co-workers, etc.

One would think that if even a single confirmed infection had ever been shown to have been acquired by riding the subway, it would have made the tabloid headlines and breaking news chyrons by now.

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HandWasher March 19, 2020 - 3:44 pm

OLDER AND “WISER” is back with a case of “if you can’t beat em, join em”. Only two posts ago he was whining in the comments section that Ben was unqualified to discuss the current pandemic. But now he eagerly jumps to his keyboard to comment as soon as he sees the post, with an ironically unqualified and speculative statement. No worries, glad to have you aboard my friend. Welcome to the movement!

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Older and Wiser March 19, 2020 - 4:37 pm

My writing skill must have deteriorated with age. That obviously too-brief recent comment regarding Ben was not at all intended to communicate any lack of qualifications on his part for anything, but rather, the exact opposite: namely that after a decade of reading his posts, I’ve become convinced that he has the qualities of mind, perspective and public service that would serve the city well if he were ever to actually become mayor.

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Handwasher March 19, 2020 - 5:09 pm

I appreciate the clarification. If you go back and look, I think it’s easy to read your comment as being extremely sarcastic. But maybe that speaks to the cynicism of our times. I apologize for the uncharitable interpretation. Stay safe out there!

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Older and Wiser March 19, 2020 - 6:18 pm

I went back and re-read the comment, and you are absolutely right about how it came off. Apologies to all.

But as far as coronavirus is concerned, I still believe intuitively that while hand washing is a good start, the real game changer won’t come until everyone bites the bullet and reluctantly eliminates all face to face conversation with everyone else, most especially with friends, family, cousins from the EU, office confidants and the like.

SEAN April 6, 2020 - 9:51 am

That’s no longer the case as cases are popping up with unconnected origins.

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Larry Littlefield March 19, 2020 - 3:06 pm

Just pointing out that almost all that MTA debt was issued for maintenance (ongoing normal replacement) and operations (“reimbursable expenditures). To make up for the fact that MTA workers have gotten richer and richer relative to other workers, in part due to the 2000 retroactive pension increases, and to cut taxes, fares and tolls from about 1995 to 2004.

Those under the age of 62 have only a limited moral obligation to those debts, and to pension costs in excess of those those being earned by those working right now. Those under the age of 40 have ZERO moral obligations to those debts. This is just a burden shifted to them by the Foyle generation, which is still in charge and still shifting more.

The coronavirus just means that what would have happened slowly is happening quickly. In the economy as a whole, mainstream news sources from across the political spectrum have asserted that the economic crisis is an unsustainable, debt driven economy that was only accelerated by this disease. You can read about it at the end of the post linked below, whee I have a round-up of links to such articles. Household debt, business debt, government debt. They aren’t writing about the MTA, but the MTA is a part of this bigger picture. Do we really need to bail out rich asset holders again at the expense of increasingly less well off later born generations?

https://larrylittlefield.wordpress.com/2020/03/17/federal-reserve-z1-data-for-2019-the-debt-driven-party-had-to-end-eventually-coronavirus-or-no-coronavirus/

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Adirondacker12800 March 19, 2020 - 3:41 pm

You want to go down the route of young people don’t owe old people anything the old people want a total for feeding, housing and educating the young people and pay off plan.

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Larry Littlefield March 19, 2020 - 4:19 pm

I can say on good authority that generational inequities run in the other direction. You can find a summary here.

http://www.if.org.uk/2019/01/1.....overnment/

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Adirondacker12800 March 19, 2020 - 4:41 pm

They always have. That is the way it works. Otherwise which little old lady who doesn’t have any family gets to move in with you?

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Larry Littlefield March 19, 2020 - 5:01 pm

I think you miss your point. The generation now in old age is exception in the extent to which it shunned family and social responsibilities, to the detriment of both its parents and its children.

If you don’t want to look at numbers, how many of the candidates for President — including the current President — had two parents who put them first in childhood, but had other priorities in adulthood?

Then there are the debts and other public infirmities later-born generations are inheriting, and the fact that later born generations are paid so much less on average.

Are there people now over 62 who did right by their children? Sure, mine did personally. But they also were in favor of tax cuts and more public benefits for themselves, and not really worried about the consequences, as were their peers.

If you want to know how many in the generation that came of age in the 1950s and 1960s treated their own parents, Google up “Bag Lady.”

Adirondacker12800 March 19, 2020 - 8:14 pm

There are bag ladies because we decided we weren’t going to lock up the eccentrics any more and then the greatest generation didn’t want to pay taxes to support them in the community. Lots of the boomers weren’t old enough to vote when that happened. They don’t want to pay taxes to support the old people the old people want to see the payment plan for their care, feeding and education and their payment proposal. That’s the way it works. or we come up with a pland to have little old ladies living in your den.
We have bigger fish to fry at the moment. Oblivious budget hawks are wondering why the subway hasn’t cut service with the collapse in demand. How many dead people do we need before someone decides to spend some money enabling a bit of social distancing on the trains? Which we have to decide this weekend not in the budget talks of 2021.

Larry Littlefield March 19, 2020 - 3:13 pm

May I say further, again referring to my post, that the unthinkable becomes thinkable give the amount of debt in the U.S. and global economy. Japan? Or Argentina?

How could EVERYONE default on everything? High inflation wiping out the real value of bonds, pensions, and union contracts. That is the only reason NYC survived the 1970s. The generations that built this country were crushed by this, the generations that cashed it in benefitted. Now we have low inflation, but that debt will either be defaulted away, or inflated away, or those generations born after 1980 will face a permanent economic twilight.

As it is, I expect that those under the age of 62 will live, on average, five years less than those older here in the U.S. It was already happening. That is, unless the coronavirus wipes out those older.

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Larry Penner March 19, 2020 - 9:57 pm

There are other financial solutions to MTA looking for a $4 billion bailout from Washington due to unanticipated costs incurred by the Corona Virus. Washington has already accumulated $23 trillion in long term debt. With a $4 trillion plus annual budget, this debt was anticipated to grow by $1 trillion annually for years to come prior to the Corona Virus. The federal government will fund a stimulus package of $850 million. It will be paid for with more borrowed funds increasing our national debt once again. This legislation will deal with the growing Corona Virus. Every lcounty, city and state along with many private sector businesses will look toward Washington for additional financial assistance. Just who is going to bail out Uncle Sam to pay for this? All levels of government and the private sector must also make difficult financial decisions on how to use existing resources. Americans prioritize their own family budgets. They make the difficult choices in how existing resources will be spent. What can wait till later will be postponed. The MTA must make the difficult financial decisions everyone else does. Given the current financial crises faced by all levels of government, the MTA will have to consider reducing the current $51 billion 2020 – 2024 Five Year Capital Plan by billions. You can count on $1.4 billion or more from the Federal Transit Administration each year. Will Cuomo and DeBlasio come up with $3.5 billion each? The anticipated $15 billion from leveraging Congestion Toll Pricing may be far less than anticipated.

(Larry Penner — transportation historian, writer and advocate who previously worked 31 years for the Federal Transit Administration Region 2 New York Office. This included the development, review, approval and oversight for billions in capital projects and programs for the MTA).

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Adirondacker12800 March 19, 2020 - 10:26 pm

How many dead people should there be for all the money you don’t want spent?

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