(The Center Square) — New York’s beleaguered public transit system has averted a “fiscal crisis” thanks to an influx of state and city funds, according to a new report.
The report from State Comptroller Tom DiNapoli found that new funding made available by the state and city, including more than $1 billion a year from an increase in the Payroll Mobility Tax on large New York City employers, will allow the Metropolitan Transit Authority to balance its budgets throughout its five-year financial plan ending in 2027.
Early in 2023, the MTA faced a $600 million budget shortfall for the year, with gaps of more than $1 billion in 2024, which the report notes could have ballooned to $1.6 billion in two years, absent the infusion of new funds.
DiNapoli said while financial risks remain for the MTA, the influx of new funding has helped “shore up its finances” for the time being.
“This newfound fiscal stability gives the MTA the opportunity to make improvements that will ensure a safe, clean and on time transit system that riders want to use,” he said. “If riders don’t continue to come back, the MTA risks returning to its all too familiar cycles of crisis.”
DiNapoli said the greatest potential fiscal risk to the MTA is a recession that could reduce the agency’s tax revenue from $250 million to $750 million a year and reduce ridership.
He noted that the MTA is also relying on revenue from planned downstate casinos to provide $500 million in each of 2026 and 2027. He said that delays in the casinos’ approval could throw the authority’s budget off-track.
The report points to other risks that could increase the MTA’s budget gaps by as much as $594 million in 2027. For one, the MTA hasn’t said how it will save $500 million by 2025. DiNapoli urges MTA to finalize those savings plans “before the end of 2023 and explain to riders what impact the savings may have on service.”
A delay in revenue from the MTA’s new congestion pricing, which was initially expected in 2021, could also factor into the transit agency’s finances going forward, he said.
Under the congestion pricing plan, the MTA will charge some motorists a fee ranging from $9 to $23 to drive into Manhattan’s central business district. But details of the plan are still being hashed out, and New Jersey officials are challenging the plan in court.
“Any additional delay could create a large shortfall in funds for the MTA’s 2020-2024 capital program, delay needed projects and increase pressure on the 2025-2029 capital program,” DiNapoli noted.
Overtime costs are another concern, he said, which in 2023 are projected to be $200 million higher than planned amid ongoing staffing shortages and other labor issues.
Meanwhile, the MTA projects it will reach only 69% of pre-pandemic ridership in 2023 and 80% by the end of 2026. He said the transit agency must do more to improve the service and reliability of the system of subway cars, buses and trains to improve those metrics.
DiNapoli said that if the MTA fails to bring riders back, it will once again face fiscal pressures “that could lead to higher-than-projected fares, reductions to service, or disinvestment in the system.”
“The consequences of slower ridership recovery can be steep,” he said. “Each drop of 5% in anticipated rider recovery means $325 million less in annual revenue.”