Home MTA Economics MTA Budget Woes Headed Off the Rails as Subways and Buses Gear up for Phase 2

MTA Budget Woes Headed Off the Rails as Subways and Buses Gear up for Phase 2

by Jose Martinez, THE CITY

This story was originally published on June 21, 2020 by THE CITY. Sign up here to get the latest stories from THE CITY delivered to you each morning. Jose Martinez and THE CITY have since published a follow-up after MTA officials warned of “financial calamity” as federal bailout money is set to dry up in July and ridership remains just 20% of normal.

The MTA’s financial troubles run far deeper than the dramatic coronavirus-driven drop in revenue from fares and tolls, new documents show.

The transit agency has fallen short by hundreds of millions of dollars in projected income from the dedicated taxes and subsidies that account for almost half of its nearly $17 billion annual operating budget, according to MTA records reviewed by THE CITY. But even as up to 300,000 people return to work Monday for the second phase of the city’s “reopening” — likely pushing daily ridership past the one-million mark for the first time since March 20 —  MTA officials this week are expected to declare the agency is nearing financial ruin and in need of a bailout.

“The MTA has gone broke literally saving New York and it needs federal funds,” said Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the MTA. “The economy can only come back when transit comes back.”

The funding through May 2020 has come up short from a variety of sources, records show. Those include:

  • $94.4 million less than projected because of weaker-than-expected real estate activity in the city from the so-called “urban taxes” on property transfers and mortgage recording taxes
  • $37.5 million less than expected from MTA Aid, which includes fees for licenses, motor vehicle registration and auto rentals
  • $30.3 million less than anticipated from the for-hire vehicle surcharge applied on taxi and ride-hailing app for trips south of 96th Street in Manhattan
  •  $19.4 million less than projected from the Petroleum Business Tax on petroleum businesses operating in New York State. 

Ridership, Toll Revenues Down

Those grim figures are on top of farebox revenue that, according to preliminary figures, last month generated just $53 million — or 86% less than the $343 million that had been projected at the beginning of the year by the MTA, which pinned the shortfall on state travel restrictions put in place to combat the COVID-19 pandemic.

On June 17, the last day for which MTA ridership figures are available, there were nearly 945,000 passengers in the subways and close to 975,000 on the buses. Prior to the pandemic, there were typically more than 7 million riders on weekdays.

Riders walk past a “how to wear a mask” MTA sign at the Times Square station on June 10, 2020. (Hiram Alejandro Durán/THE CITY)

Bridge and tunnel revenues at the nine crossings controlled by the agency have also taken a hit, with the revenue for April coming in at $73.5 million dollars — $104 million less than what had been forecast by the MTA. “It’s a serious cash-flow problem — everybody knows they’re not getting the money from the ridership,” said Rachael Fauss, a research analyst with Reinvent Albany, a watchdog group.

The numbers became public as MTA officials prepared to issue a bleak financial forecast at the agency’s Wednesday board meeting, where they will again make the case for another $3.9 billion in emergency federal funding. In March, as the pandemic began to clobber its finances, the MTA secured a $3.9 billion dollar commitment in emergency federal funding. That money arrived last month, but advocates say it will only go so far.

Huge Fare Hike Floated

The Regional Plan Association has raised the possibility of a $9 base subway and bus fare to fill an enormous budget gap. MTA board members warned that the return of riders to the transit system could be short-circuited if more drastic measures are needed to stem the financial losses. “If the MTA starts to talk about service cuts, they will lose the trust of New Yorkers forever,” said John Samuelsen, an MTA board member and international president of the Transport Workers Union.

The transit agency must also contend with how to pay for cleaning costs that have surged during the pandemic and the indefinite nightly shutdown of the subway from 1 a.m. to 5 a.m. “I would rather see additional funding such as a gasoline tax of two, three cents, instead of service cuts,”  said Andrew Albert, an MTA board member who represents the New York City Transit Riders Council. “It wouldn’t even be felt, but it would bring in much-needed money into the coffers.”

THE CITY is an independent, nonprofit news outlet dedicated to hard-hitting reporting that serves the people of New York.

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Larry Penner June 23, 2020 - 3:19 pm

The Metropolitan Transportation Authority claim that they will run out of $3.8 CARE COVID-19 emergency money by July and need a second $3.9 billion infusion overlooks other options already available. There is no indication that the MTA has ever taken advantage of the Federal Transit Administration expanded eligibility of federal assistance available under FTA’s Emergency Relief Program to help transit agencies respond to COVID-19. This includes allowing transit providers such as the MTA to use previous federal formula funds for emergency-related capital and operating expenses. It also raises the federal share of those expenses from 80% to 100%. How much available funding within $12 billion in existing FTA grants could be used under this option? Has the MTA taken advantage of this funding opportunity? There is also $1.4 billion in federal fiscal year 2020 funds that could be programmed to cover unanticipated COVID-19 costs

(Larry Penner — transportation advocate, historian and writer 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, NYC Transit bus and subway, Staten Island Rail Road, Long Island and Metro North Rail Roads, MTA Bus, New Jersey Transit along with 30 other transit agencies in NY & NJ)..

Larry Penner June 23, 2020 - 3:22 pm

During a recent transportation webinar sponsored by Schneps Media & Am New York, in response to a question about plans for any fare increase as a result of COVID-19, MTA Chairman Pat Foye said in no uncertain terms there is no consideration toward imposing a fare hike in the worst-case scenario due to the COVID-19 ridership loss. What he failed to mention is the previous plan agreed upon by both Governor Andrew Cuomo and Mayor Bill de Blasio. It included both congestion pricing and fare increases as part of a funding package to support the $51 billion MTA 2020 – 2024 Five Year Capital Plan. This plan includes fare increases no greater than 2 percent per year. The MTA and State Legislature committed to fare increases occurring every two years. With a fare increase in 2019, the next would be in 2021. The MTA currently faces financial shortfalls in the billions for both capital and operating expenses. Any fare increase for NYC Transit local, express and select bus service, subway, Staten Island Railway, MTA Bus along with Long Island and Metro North Rail Roads could be up to 4%. There is still no guarantee that Congestion Pricing will begin in 2021. Due to the economic recession as a result of COVID-19, billions anticipated from congestion pricing, real estate transfer, internet sales, along with other city and state taxes, will be lost. The result could be a larger fare increase in 2021. The alternative could be reductions in the level of service, frequency of maintenance along with delays to capital projects and programs to minimize any fare increases.

(Larry Penner is a transportation advocate, historian and writer 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, NYC Transit, Long Island Rail Road, Metro North Rail Road MTA Bus, NYC DOT, New Jersey Transit along with 30 other transit agencies in NY & NJ)

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MTA officials are anticipated to announce this week that the organization is in danger of going bankrupt and needs a bailout.

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