DiNapoli: the financial perspectives of the MTA in precarious balance
The Metropolitan Transportation Authority (MTA) has pushed back the fiscal disaster caused by the COVID pandemic, but it is not yet out of the woods, according to a report released today by New York State Comptroller Thomas P DiNapoli. The MTA’s annual financial report details how the combination of higher spending, the gradual reduction in federal aid, the risk of permanently declining ridership rates, the increased impact of extreme weather, potential reductions in services and other factors will create increasing challenges with a limited amount of time for the authority to resolve them.
“The MTA is the lifeblood of New York City’s economy and it operates on borrowed time,” said DiNapoli. “It has so far survived the worst crisis in its history by covering the budgets in massive federal aid. The MTA and its funding partners face tough choices in the face of challenges that can turn into emergencies if not addressed quickly. Bringing back runners, protecting against extreme weather, and maximizing new sources of income are all challenges the MTA must address before emergency federal funds run out in 2025. After that, the MTA faces challenges. huge budget deficits that could harm the regional economy without easy solutions. . “
The MTA plans to close large budget gaps ($ 4.8 billion in 2021, $ 2.9 billion in 2022, $ 2.5 billion in 2023, $ 2.8 billion in 2024 and 3.3 billion in 2025) primarily through the use of $ 10.5 billion in one-time federal assistance. During this period, MTA spending will increase annually by 4.2% on average, which is higher than expected inflation.
In 2025, when federal aid runs out, the MTA plans to balance its budget with more than $ 1 billion in deficit financing, a dangerous practice of long-term borrowing to pay for short-term needs. such as cleaning and maintenance. More worryingly, if the MTA is unable to execute its fiscal risk management plans through savings and revenue measures, it will begin using borrowed funds a year earlier, in 2024. DiNapoli has long warned against the use of such practices, which, when used recurrently, becomes unsustainable. In addition to adding to the MTA’s already disproportionate debt burden, which DiNapoli detailed in April, borrowing to cover operational costs risks reducing funds for much-needed capital investments.
Additional federal support in the Congressional Infrastructure Bill (HR 3684 – Infrastructure Investment and Jobs Act) could help ease the debt burden by allowing the MTA to borrow less, but the bill’s passage remains uncertain. In addition to the planned capital funding, the timely implementation of the congestion pricing program could bring more users and funding to the system and reduce ever-increasing congestion.
DiNapoli’s report also calls for a thorough reassessment of the MTA’s capital needs to prioritize service and win back passengers – whose return from the controller’s metro dashboard has been uneven – and review protections against future weather emergencies. .
The pandemic continues to cast a shadow over the recovery of MTA and the economy in general. Work on MTA’s 2020-2024 investment program, which is far behind schedule, did not start to accelerate until spring 2021. Further delays in approving congestion pricing could further hamper capital spending and the need for the MTA to build system resilience to inclement weather. .
The ridership also remains uncertain. Ridership during the financial plan period is not expected to reach pre-pandemic levels, but small fluctuations could have disproportionate impacts on MTA revenues. DiNapoli’s report estimates that if workers telecommute 1.5 days a week on average next year, earnings could be $ 300 million more than expected. But if workers telework 3-4 days a week, incomes would be $ 500 million lower than expected.
Among its other findings, DiNapoli’s report noted that:
- MTA expects revenue to remain relatively stable from 2021 to 2025 when federal funds are included.
- Not counting the planned fare increases, the MTA assumes that fare revenues will increase by 4% per year between 2022 and 2025 due to the increase in ridership, but the 2025 level would still be 14% lower than 2019.
- Congestion pricing is expected to bring in more than $ 1 billion per year, which would support $ 15 billion in new debt capacity for the 2020-2024 program, but revenues are not expected until 2023.
- The MTA’s debt burden will remain high as the impact of the pandemic wears off, consuming 21% of all income from 2023 to 2025. By 2031, debt servicing is expected to cost the MTA 4, $ 1 billion, or $ 1.4 billion (51%) more than in 2020.
- MTA’s operations and maintenance positions are understaffed, resulting in service reductions. Weekday subways provided only 89% of regular service in August 2021, up from 96% in August 2020. Further reductions could delay the return of passengers.
- The MTA cut 2,725 positions as part of its transformation plan to achieve efficiency gains through administrative consolidations, but 2,295 (84%) were in operations and maintenance and 1,840 of these positions were non-administrative positions. Savings from this initiative are likely at risk as the MTA continues to hire to manage service delivery.
- The MTA plans to reduce service costs to accommodate the “new normal” of reduced ridership, which is expected to be between 82% and 91% of pre-pandemic levels by 2025. This would save just over $ 200 million per year, but its impact on ridership and equitable economic recovery remains unknown.
Metropolitan Transportation Authority Financial Outlook
Metro ridership dashboard
MTA Debt Report
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