The MTA will avoid catastrophic service cuts, layoffs, and fare hikes through 2022, but is still facing billions of dollars in shortfalls in the years ahead.
The reprieve was announced at the agency’s board meeting on Thursday, and was made possible in part by a combination of $8 billion in federal aid last year, plus $3 billion more in borrowed money. On top of that, the agency will receive at least another $6 billion in the forthcoming pandemic relief package, Senate Majority Leader Chuck Schumer told the Times on Thursday, though CEO Pat Foye is still holding out for $8 billion.
“We continue to urgently request $8 billion in additional federal aid as part of the American Rescue Plan so we can serve as the economic engine leading New York’s recovery from this devastating pandemic,” Foye said in a statement.
This flow of money, along with modest toll hikes in April that will raise $178 million over two years, will also allow the MTA to maintain a decent level of service at a time when ridership is still down nearly 70% compared to last year. The MTA’s consultants have estimated that it may not be until 2024 when ridership is 92% of what it was before the pandemic.
Earlier this week, Governor Cuomo announced that 22-hour subway service would begin on February 22nd, and that the stations and trains would be closed to riders for overnight cleaning from 2 a.m. to 4 a.m.
Despite the bleak forecast for fare revenues (and for the MTA’s desperately needed, $51 billion modernization plan), the Cuomo administration is still poised to divert and withhold hundreds of millions of dedicated tax revenue from the agency.
“The ballpark is really $400 million total that the state has taken and plans to take from the MTA, altogether,” said Rachael Fauss, a senior research analyst who studies the MTA for the watchdog group Reinvent Albany.
During the height of the pandemic last spring, the state legislature took the unprecedented step of giving the governor the power to “withhold” portions of the budget as a way of avoiding permanent cuts in an uncertain year. The MTA’s budgeted withholding: $261 million.
Last week, Cuomo released plans for his upcoming budget due in April that showed that $145 million in dedicated MTA tax revenue would be diverted to the state’s general fund. Transit advocates and lawmakers were outraged that the governor would conduct yet another “raid” on tax revenue that is explicitly meant for the MTA, and was already deflated because of the pandemic.
“It’s not just that there’s a little bit less tax revenue for the MTA, but that the state’s actually taking it on top of an already contracted revenue source—it’s a double hit,” Fauss said.
The governor’s budget director, Robert Mujica, told reporters last month that they would continue to “withhold” 5% of aid to all localities—down from the 20% they initially said would be necessary.
“We don’t know how much they intend to pay back from that $261 million,” Fauss said. “The raid for next year is crystal clear, but the way they’ve done this withholding process has been incredibly opaque.”
As Streetblog reported, the MTA’s leadership, many of whom are Cuomo appointees, do not appear inclined to claw back the state funding.
“While the MTA may incredibly be willing to accept less money to fulfill its mission, dedicated funds should remain dedicated,” Senate Deputy Leader Michael Gianaris told the outlet. “I am committed to opposing any effort to appropriate less than what the MTA needs and deserves.”
“As we’ve said, in the absence of federal funding to offset the state’s devastating revenue losses, the state has no choice but to reduce spending by 5% across all local aid, including transit systems across the state,” said Freeman Klopott, a spokesperson for the governor’s budget division. “If the state receives the $15 billion in requested federal funding, many of these reductions can go away, and we are working to minimize impact as much as possible for both riders and transit employees.”
Fauss pointed out that the withholdings and cuts have not been made evenly across the board—school districts were not hit as badly as initially predicted. As the April 1 budget deadline grows closer, it puts state legislators in a position of trying to figure out what funding will be restored from last year’s budget this year, while also debating what is needed in this year’s budget.
“Here we are, debating two budgets at once,” Fauss said.
[UPDATE / 6:01 p.m.] In a followup email, Klopott revealed how much had been withheld from the MTA last year—$426 million—and how much was ultimately cut from their budget: $98 million. The $426 million will be restored this year, Klopott said.
"We are reducing funding across the board by 5%, which amounts to $98 million for the MTA in FY 2021, and we are releasing the $426 million that was previously withheld. We’re waiting for final federal funding amounts to determine the final reductions that would be necessary," Klopott said.
