1/8/2023 0 Comments State spending on masstransitAdvocates had hoped that the state would reallocate gas-tax revenues for mass transit instead of highways. This year, however, in the teeth of rising fuel costs, Albany funded a gas-tax holiday, saying it would use general fund money for any MTA shortfalls. In December, Chairman and CEO Janno Lieber said that mass transit should be funded like the essential service it is and rely less on fares. The MTA leadership has been asking Albany for more money for a while. This is not the responsible way to go, this is in essence just kicking the can, particularly in light of now we have a new forecast showing how entrenched the assumptions are on our ridership recovery. The result is the fiscal cliff of $2.5 to $2.7 billion per year. “The current assumption is spend all the federal aid early, delay taking any action, bond out the deficit financing. “If we start working together and start solving the deficit by 2023, we can lower the fiscal cliff by a billion dollars a year,” he said. Graphic: MTAĪlthough legislators might balk at providing the MTA with that kind of money, Willens implored the state to act sooner rather than later in order to to keep mass transit alive. Two scenarios for dealing with the MTA’s upcoming budget deficits. Doing so, however, also would require Albany to find a new revenue stream for the agency that could cover a $795 million deficit in 2023 and $1.6 billion deficits for each of the following five years. If the MTA spent less of its federal pandemic aid beginning next year, it could stretch out the rescue money until 2028 and lower the remaining deficits to $1.6 billion a year from 2024 to 2028. ![]() Willens laid out a scenario in which the MTA might avoid such deficit strategies, but it requires state legislators to play along. That hole means the MTA will exhaust its federal pandemic aid by the end of 2024, and must find a way to fill deficits of more than $2.4 billion each year from 2025 to 2028 - which state law says the agency may do through fare hikes, service cuts or layoffs. Now, however, the agency is projecting that, at its current pace of spending and ridership, it will lose almost $4 billion in expected fare and toll revenue through 2026. The MTA’s most-recent ridership projections were estimated by McKinsey & Co. The agency had budgeted based on a projection that 86 percent of pre-pandemic riders would return by 2023, which had put it on pace for a (relatively manageable) $500 million deficit in 2025. In a presentation to the MTA Board, Chief Financial Officer Kevin Willens disclosed that the agency’s projections (it relies on forecasts from McKinsey & Co.) show a “substantially” smaller ridership recovery: Thus, the MTA must base future spending on a scenario in which only 74 percent of pre-pandemic riders return to subways, trains and buses by 2024. ![]() And without the fare-box revenue from those riders, the MTA will eat up the funds it received in 2021 as part of the American Rescue Plan Act a year earlier than it had expected. The agency’s mid-year finance update on Monday afternoon showed that a combination of work-from-home trends and fewer non-work transit trips are driving pokey ridership. The MTA’s finances going forward are a choice between bleak and bleaker - depending on state action.
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