Home MTA Economics Numbers Update: City budget shows misplaced transportation priorities; MTA sits on the brink of fiscal collapse

Numbers Update: City budget shows misplaced transportation priorities; MTA sits on the brink of fiscal collapse

by Benjamin Kabak

I’m a few days late with this post, and you’ll have to forgive me for the delay. I suffered a bad wrist fracture 2.5 weeks ago in a bike crash in Bay Ridge and had surgery 12 days ago. I haven’t been able to type too well since then. So right now I’m dictating this post and making corrections as I go (and there may be typos ahead). Anyway, we have a lot of news to catch up on, and none of it is very good.

Amidst a budget crisis brought on by the pandemic, it’s easy for me to say that my pet causes should always be funded. After all, we each have a tendency to think that what we know and what we believe in is what’s best for New York. But everyone has their own ideas on how to improve the city, and when money isn’t plentiful, these ideas will compete with each other for the few dollars that are available.

That said, during lean times, the goal of any budget and the goal of the mayor and the goal of the City Council should be to create a more livable city, one that is welcoming to everyone and accommodates its residents first and foremost as we all attempt to do the work to bring back the vibrant city we know and love. That effort should involve investing in ways to get around that accommodate more people and faster travel. That means supporting bus lanes, investing in safer infrastructure for people, and not sinking money into low-capacity, high-subsidy modes of travel. Unfortunately, that’s not what New York City’s new budget does by any means.

When the dust settled on the NYC budget negotiations last month, most of the good programs were cut or slimmed down considerably while the mayor continued to pour tens of millions of dollars into his ferry system. It is a budget whose burden falls heavily on those who can least afford it and one that betrays Bill de Blasio’s original campaign slogan of “A Tale of Two Cities.” Instead of bridging the gap between the two cities that embody New York, this budget widens it.

Fair Fares funding slashed by $65 million

The most notable cut was to the popular Fair Fares program — a half-fare transit subsidy for low-income New Yorkers. The budget eliminated $65 million in city funding for the program, reducing the program by about one-third. While politicians called this a right-sizing due to decreased transit usage during the ongoing pandemic, advocacy groups were dismayed. They had fought long and hard for the subsidy and felt betrayed by the administration.

“It was an effective, important program,” de Blasio, defending the cut, said last week at a press conference. “I think the whole underlying concept of the program got just disrupted profoundly by the coronavirus and we’re not going to see that turnaround in the short term.”

The Riders Alliance and the Community Service Society, two advocacy groups instrumental in pushing for this program in the first place, issued a strongly worded statement condemning the cuts:

“Community Service Society and the Riders Alliance are deeply outraged that funding for Fair Fares was slashed by $65 million in the FY21 budget agreement announced by Mayor Bill de Blasio today. This happened without so much as a word of warning or debate.

At a time of unprecedented, widespread unemployment, especially among black and brown New Yorkers and younger people trying to enter the workforce, Fair Fares provides a transit lifeline to job search, medical care and other necessities of life. Especially now, as the economy starts to reopen, half-price subway and bus fares will be even more important to both essential and returning workers.

Fair Fares was just being fully rolled out to all New Yorkers at or below poverty with the launch of a robust ad campaign in late January before the pandemic hit. Yet, Fair Fares is already helping 192,801 city residents who have enrolled. With so many of our fellow New Yorkers newly experiencing severe hardships, struggling to pay the rent, feed their families and find work, we expect the need for Fair Fares to grow, not shrink in the months ahead. We will need public transit ridership to return for our city to function, and New Yorkers who have lost jobs and depleted any savings will need to be able to afford the fare.

The mayor has appointed advisory groups to offer suggestions on forging a more equitable recovery. Here’s one: on behalf of our coalition of more than 70 organizations, we urge you to ensure adequate funding for the continued expansion of Fair Fares.”

For what it’s worth, the advisory groups mentioned in the statement were supposed to issue recommendations pre-reopening for the city to implement as it moves through the reopening phases, but as we are now firmly ensconced in Phase 3 and have seen no reports from any of these groups, it’s safe to assume the administration is keeping any recommendations to themselves. But I digress.

The MTA took the rare step of issuing a statement as well, echoing the advocates’ concerns. “The Mayor’s decision to slash the Fair Fares program will make it more difficult for tens of thousands of customers who rely on mass transit to afford to get to jobs, school and work as New York continues to reopen,” NYC Transit Interim President Sarah Feinberg said. “At a time when the MTA is hemorrhaging money at record levels due to the COVID-19 crisis, this cut sets us back and will further hurt our ability to provide critical services to New Yorkers.”

But the cuts to Fair Fares weren’t the only transit-related budget reductions. The de Blasio Administration went forward with its plan to cut around $6 million from its Better Buses program, and we learned this week that Corey Johnson’s Streets Master Plan, an aggressive proposal to rethink New York City streets, may also be delayed. Yet, as Johnson noted to The New York Post, cutting or slow-walking these plans at this moment during the pandemic shows a lack of clear thinking and a lack of proper response from the administration, a topic I explored in a post last month.

“The benchmarks laid out by the streets master plan were passed into law for a reason and they should not be delayed, especially now,” the City Council Speaker said. “We can’t let a painful budget slow down our city’s reimagining of what public space and mass transit look like.”

And so what wasn’t cut, at least not to the same degree? Well, the ferries, of course. Despite plummeting ridership, a subsidy that has long gone toward those who can most afford to pay a higher fare, and a general lack of vision on true city-wide transportation, de Blasio cut only $10 million from the ferry subsidy, and the administration still plans to spend over $63 million on the boats at a time when other investments would deliver far more transit bang for the buck. So over the last few weeks and months, the mayor has resisted a real open streets plan, failed to expand the bike network at a time of skyrocketing demand, allowed for only 20 miles of bus lanes when the MTA had requested 60, and cut Fair Fares by a third for maintaining his own ferry program. These are misplaced transportation priorities if ever we’ve seen them, and they do not show a mayor willing to make New York easier to travel around, better for the people who are here, or more attractive to people who may want to come here.

The MTA’s dire fiscal picture

Let’s shift gears and look at the MTA’s own fiscal crisis. I would be remiss if I didn’t discuss the MTA’s looming economic disaster. Following an initial infusion of cash from the feds to the tune of nearly $4 billion, the MTA is yet again facing a fiscal cliff, and there is no indication the Senate is willing to act. Ridership is only been about 20% of normal, and the agency expects to need between $7.5-$10 billion over the next 18 months to stay afloat. The feds have shown no signs that another bail out is coming, and the US government is slow walking approvals for congestion pricing as well, so the MTA and the state cannot yet generate its own money through a traffic fee.

During its June board meetings, MTA officials said they have no choice but to request federal funding. They cannot cut their ways out of a hole this large. Even with cost savings and cost reforms, the loss of so much revenue has created a deficit that’s simply too deep to close without government funding. The agency has said pandemic-related fare hikes are not on the table, but budget cuts are and service cuts may be. The giant $51 billion capital plan, including all of the accessibility upgrades that advocates and Andy Byford had fought so hard to secure, are on hold, and the MTA could use some of that money, if it materializes, to close the operating budget gap. Agency leaders have repeatedly gone on TV to request more federal aid, and Nicole Gelinas recently penned a piece in The Times sounding the alarm warning that absent federal funding, cities could be mired in fiscal and transportation crises for years. She makes the case for significant operating assistance from the federal government, and I strongly urge you to read her piece.

So where does that leave us right now? We have a mayor who doesn’t understand the urgency of a mobility crisis he could address, let alone the way to address it, and we have an MTA bleeding money as it continues to run full service despite low ridership. We have a federal government that’s unwilling to step in and do it it must to save its cities, its economy, and its citizens. We are, in effect, playing the worst game of chicken as the money is set to run out at the end of this month, and no one at the federal level wants to take the reins and lead.

I wish I had better news, and I wish we were talking instead about the ongoing capital work that was supposed to kick off this year. Instead, we are waiting with bated breath for the dam to break. Will the city, under Bill de Blasio’s poor transportation leadership, find itself in mired in a mobility crisis? Will the MTA have to start paring back service to nothing because its budget is in tatters? The outlook is bleak, bleaker than it’s been for the MTA and New York City in quite some time. We can’t make it through on New York Exceptionalism alone this time around.

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Mister Sterling July 7, 2020 - 9:26 pm

Sorry for the injury. It clearly explains your typos. 🙂 This is dire news. The MTA is days away from running out of cash and no one is acknowledging it. Keep up the great work!

Benjamin Kabak July 7, 2020 - 9:55 pm

I think I caught them on now! Talk-to-text has a long way to go…

AMH July 8, 2020 - 2:40 pm

I personally like the idea of “Fare Fairs”. I’m picturing a large convention (in non-pandemic times) where transit enthusiasts browse and exchange fare media.

Handwasher July 7, 2020 - 10:17 pm

Hope you heal up soon, Ben. The city needs you now more than ever.

I will say though, that the ferries are actually a great transportation option during this Covid crisis. Especially now that we know the biggest dangers come from being indoors with other people. Obviously they’re not a replacement for the subways, but if you’re going somewhere along the east river, it’s a great open-air means of transport.

Andy Gilbert July 8, 2020 - 9:38 am

The average daily ridership in 2019 of the ferries was less than 15,000…which is less than a single medium-traffic subway station or a single higher ridership bus route.

Handwasher July 8, 2020 - 1:40 pm

This is a non sequitur. All I said was that the ferries are a nice pandemic transit open due to the open air (and touchless operation, come to think of it, since you can buy and use tickets entirely from your phone). If anything you’re proving me right by providing data which shows the lack of crowding.

Kristian Laverick July 8, 2020 - 11:22 am

The low ridership notwithstanding, I’ve never understood why Mayor DeBlasio invests so much in ferries as viable mass transit. The very reason there are so many bridges and tunnels connecting Manhattan with the other boroughs is because city governments and politicians of the late 19th/early 20th centuries recognised that ferries were not a feasible means of inter-borough transit for large numbers of people. Yes, ferries are nice to have, but in my opinion they should not be prioritised over subways.

Larry Penner July 8, 2020 - 1:14 pm

The MTA has $12 billion worth of Federal Transit Administration funding for projects and programs in active grants What is the current balance of these grant funds not yet under contract? There is no savings to the MTA when federal dollars are left on the table unspent. The FTA in federal fiscal year 2020 has made available $1.4 billion under various programs to the MTA. Has the MTA submitted grant applications to access these funds to date? MTA Chairman Pat Foye should make it clear that all federally funded capital projects, including those not yet awarded, are exempt from his freeze and will go forward. The alternative is to take advantage of reprogramming these funds toward covering capital improvements and operating deficits as a result of COVID-19. It is difficult for the MTA to make a case for additional discretionary funding from the FTA if you don’t use your previously approved FTA formula along with Super Storm Sandy Recovery and Resiliency funds. Eight years after Super Storm Sandy in 2012, why has the MTA not completed and spent down all the billions provided under the Super Storm Sandy Recovery and Resiliency grant program?

(Larry Penner — transportation advocate, historian and advocate who previously worked 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 along with 30 other transit agencies in NY & NJ)..

SEAN July 10, 2020 - 9:34 am

Hey there Ben, sorry about your wrist. Hope you have a speedy recovery.

Crazy question, is it possible that we’re looking at a “bankruptcy of the MTA? After all in current Washington republican circles, most large cities are viewed as being infested with undesireables. Therefore could the Trump administration effectively just say “drop dead” since he knows that most residents in these areas didn’t vote for them in 16 & won’t in 20.

smotri July 10, 2020 - 2:19 pm

Interesting predicament. Can the MTA declare bankruptcy? What if it did?

Nathanael August 10, 2020 - 1:24 am

It can. It’s covered under Chapter 9 of the Federal bankruptcy laws and essentially requires the approval of the governor or state legislature.


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