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COVID-19 Deals Massive Financial Blow to the Metropolitan Transportation Authority

The Metropolitan Transportation Authority (MTA) has released its preliminary 2021 budget and four-year financial plan, detailing a deficit of $16.2 billion by 2024. The MTA is projecting deficits of $3.2 billion for 2020 and $5.8 billion for 2021. As the pandemic subsides and riders return, the MTA projects that the deficit for 2022 will fall to $3.5 billion for 2022 before settling into a range of $1.8 billion to $2 billion for the following two years.

To help solve the enormous coronavirus deficit, the MTA is undertaking the largest cost cutting program in its history. The MTA has initially identified $1 billion in savings in 2021 with a focus on dramatically reducing overtime, consultant contracts and non-labor expenses. Through 2024, the MTA has identified $5.13 billion in-house savings through aggressive budget reduction efforts. This effort is ongoing.

As the U.S. Senate considers the next coronavirus relief package in Washington, the MTA is urgently requesting $3.9 billion to get the agency through the end of the year and a total of $10.3 billion through 2021. The MTA will exhaust all federal funding previously secured in the CARES Act this month. The budget crisis marks the most challenging in the agency’s 52-year history as the COVID-19 pandemic has decimated revenue across all services and generated increased costs for cleaning and disinfecting.

“To say that these challenges are existential in scope isn’t an exaggeration,” said MTA Chairman and CEO Patrick J. Foye. “Without further substantial assistance from the federal government, anything and everything must be on the table with respect to responding to financial damage from the pandemic. We are the lifeblood of the region’s economy and the fallout from Washington’s failure to act would have national consequences.”

“The fiscal reality of what we’re facing is very clear and very dire,” said MTA Chief Financial Officer Bob Foran. “Without an infusion of billions of dollars in desperately needed federal funds, the MTA simply cannot provide customers with existing levels of service at the current fare cost. Not getting Federal support is not an option for the long-term health of the regional and national economy.”

As recently as February, just prior to the onset of the pandemic, the MTA had been projecting modest surpluses for 2020 through 2022. This came at a time the MTA was making sustained progress with on-time performance reaching six-year highs of 80.3% on the subway and 94.4% on Metro-North and a three-year high of 92.4% on the LIRR, ridership on subways, LIRR and Metro-North at or near historic highs, and the passage of a historic $51.5 billion capital program.

The MTA has been devastated by the pandemic. Its 2020 revenue losses are greater than that of more than 30 states, according to a recent survey, and greater than 35 states in 2021. That figure amounts to more than 40% of fare, toll and other revenues over those two years, which makes up approximately half of the Authority’s operating budget. By comparison, the MTA lost roughly 9% of its operating budget during the 2008-2009 peak of the Great Recession.

The MTA is currently losing $200 million a week in revenue from fares, tolls, subsidies and COVID-related expenses. This year alone the MTA projects $4.2 billion in fare losses, $2.1 billion in reduced subsidies, $880 million in toll losses and $500 million in increased expenses. Through 2024, the MTA projects fare revenue losses of $8.5 billion, tax subsidy losses of $6.9 billion, COVID-related expenses of $2.5 billion and toll losses of $1.8 billion through 2024.

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