NEW YORK — New York’s Metropolitan Transportation Authority, the biggest system of its kind in the country, has few options left to avoid complete destitution after the economic fallout from Covid-19.
The MTA is staring down a $10 billion deficit in the short-term and is begging Congress for billions more after it burned through the last $4 billion it got from Washington. It’s now spending $200 million a week.
The agency, controlled by Gov. Andrew Cuomo, could cut service to the bone and hike fares dramatically, but faces the prospect of turning away priced-out riders who feel they can’t depend on the system. It could try to slash labor costs — going after two-thirds of its operating budget — but that would open up a political battle with powerful unions that Cuomo and fellow Democrats rely on in election years. Or it could borrow massive sums of money that would add to an already mountainous debt load.
And while all those options are currently on the table, top transit officials say it still won’t be enough to fill the hole the authority is projecting through 2021 — a deficit caused by a precipitous drop in ridership and revenue from state and local taxes.
Without a federal bailout, MTA Chair and CEO Pat Foye told POLITICO the results could be catastrophic.
“It’s not only the MTA that gets screwed — it’s millions of people who commute here and work in the region,” he said. “It’s the entire New York City regional economy that will be screwed.”
But federal help is looking more unlikely everyday, as Senate Republicans resist calls to provide financial aid to states and cities — particularly blue ones like New York — and the debate about a larger economic relief package remains at a standstill.
As New Yorkers hunkered down at the height of the pandemic, the MTA kept going — providing service to thousands of essential workers even as their own fell to the coronavirus. But the extreme drops in ridership took a toll on farebox revenue, with the authority projecting a $9.2 billion loss in fare and toll revenues through 2021 — which accounts for half of the agency’s operating budget.
The MTA is also contending with a potential $3.2 billion shortfall from dedicated city and state taxes.
The agency has already used up the nearly $4 billion it received in May through the federal CARES Act. It initially had asked for an additional $4 billion to get through the rest of the year, but has increased that request to $12 billion as negotiations have stalled and its fiscal outlook has worsened.
It’s also part of a concerted advocacy effort with other public transit agencies across the nation who are calling for a collective $32 billion in federal relief.
In New York, Sen. Chuck Schumer has become the face of the effort to bail out the MTA, arguing at a recent virtual rally that “the transit system is the blood arteries and veins” of the state. But he acknowledged there’s little impetus among Senate Republicans to give any aid for public transit.
If the authority craters, though, it could be the infrastructure obsessed Cuomo who’s left with the stain on his legacy. Try as he might to distance himself from the authority during times of trouble, the governor appoints six of its 14 board members and picks its chair, budget director and inspector general.
During the “Summer of Hell” — the last time the subway system was in crisis — Cuomo’s name became synonymous with the system’s neglect. In polls, riders blamed him for deteriorating service, and a Twitter hashtag #CuomosMTA catalogued the system’s problems throughout the summer.
“No one has done more to boost the MTA than the Governor,” said Freeman Klopott, spokesperson for Cuomo’s budget office, in a statement. He cited pandemic revenue losses of $62 billion over four years in New York.
“If we have no Federal funding to offset this loss, the State will have to reduce spending by 20%” Klopott wrote. “And with our funding supporting transit, schools, hospitals, and services for our most vulnerable neighbors, any area where we don’t reduce spending will simply mean deeper cuts in another.”
With no fiscal fix in sight for the MTA, Standards & Poor’s Global Ratings lowered its credit rating for the MTA and delivered a negative outlook.
“We feel there’s a lot of uncertainty on whether they’ll get additional federal funding and if they don’t whether they’ll be able to make the tough decisions to make substantial cuts,” said Paul Dyson, director in S&P’s Public Power & Transportation Group. “They’ve been through challenges before, but nothing like what we’re seeing now.”
The Riders Alliance, an advocacy group for straphangers, has warned of dire consequences for the MTA’s ability to provide service, noting in a recent report that it could be forced to shut down half of its subway lines, provide only local subway service or eliminate commuter trains and bus lines to preserve the subway system.
The Regional Plan Association, a prominent planning group, has said the MTA would have to triple its fares and tolls over the next six months just to make up the projected shortfall for 2020, a change that would create a $9 base subway fare.
“Decisions that will have to be made in the very short term will dictate what the recovery looks like — and that’s the tragedy,” said Tom Wright, head of the RPA.
The MTA has taken some actions to stem the bleeding. It has enacted a hiring freeze and indefinitely delayed its $54.8 billion capital plan. The authority also identified modest cuts amounting to $575 million in potential new savings over the next two years.
But for the most part, the MTA has only dealt in hypotheticals for what it could do next to preserve the system. Transit officials have said fare and toll hikes, service cuts, layoffs, deferral of pension payments and wage freezes are all on the table.
Foye said the authority will have to make a final call by November, when it approves its budget for the next fiscal year.
Other factors are working against the MTA as it scrambles for money.
The federal government has delayed the implementation of congestion pricing, a system the officials said could have generated $1 billion for capital projects next year.
The authority is also already grappling with an overwhelming debt load, making borrowing more money an unsavory option. Debt is expected to account for 25 percent of its operating budget next year, said Rachael Fauss, senior research analyst at Reinvent Albany.
“Deficit borrowing is like going to the top of 2 Broadway and lighting million dollar bills and throwing them into Broadway,” Foye said, referring to the MTA’s headquarters.
The MTA will hold an emergency board meeting next week to further discuss its financial turmoil. Foye declined to say what specifically is on the table ahead of the meeting, but without federal funding the MTA’s situation looks bleak.
“The MTA has faced fiscal challenges in the past, [but] the size of the deficits we face in 2020 and 2021 and beyond are unprecedented,” Foye said. “The deficit is so large, unlike the past, that we can’t cut our way out of it.”
from Politics, Policy, Political News Top Stories https://ift.tt/2Y8stIK
via 400 Since 1619
