MTA: Financial crisis might require layoffs, fare increases, service cuts

The Metropolitan Transportation Authority, reeling from the impact of the COVID-19 pandemic, faces an unprecedented “four-alarm fire” financial crisis that could require layoffs, fare increases and service cuts to address, even if the federal government comes through with every dollar the MTA has requested, agency leaders said Wednesday.

The news came at the MTA monthly board meeting, where officials provided “an emergency financial update.” It detailed the grim state of the agency’s budget, which has been decimated by plummeting ridership and other revenue streams, as well as new expenses aimed at preventing the spread of the coronavirus through the nation’s largest public transportation system.

On the Long Island Rail Road alone, ridership remains down 84% compared to the same time last year. At the height of the pandemic in April and May, the LIRR was carrying just 3% of its usual riders.

Using a consultant’s forecast of the pandemic’s impact on revenue, the MTA projects a deficit of $3.75 billion this year — or about 22% of its $17.1 billion annual operating budget. That prediction accounts for about $4 billion in aid already promised by the federal government, but not for another $3.8 billion the MTA is seeking in a second COVID-19 stimulus bill that is being considered by the U.S. Senate.

Even with a second round of federal relief that would allow the MTA to break even for the year, the authority still faces a $6.6 billion budget shortfall in 2021. To help fill the gap without further government aid, MTA chief financial officer Robert Foran said the board would have to consider “a combination of items” that could include fare increases, reductions in the work force, wage freezes, service cuts and long-term borrowing.

Putting into context the severity of the financial crisis, Foran noted that, following the economic collapse of 2008 and ensuing Great Recession, the MTA raised fares by 10%, laid off hundreds of workers, cut $110 million in service, and had the state institute new taxes and fees.

The goal at the time was to fill a two-year deficit that totaled about $2 billion, or about 9% of its budget. Absent additional federal aid, the MTA’s projected two-year shortfall this time around is about $10.3 billion, or 41% of its budget.

“To be clear, this is a four-alarm fire. We are facing the most acute financial crisis in the history of the MTA,” MTA chairman Patrick Foye said. “We cannot cut our way out of this crisis. Without additional federal funding, our options are limited, and none of them are good.”

The MTA already has taken the step of putting “essentially on hold” its five-year Capital Program, which aimed to fund nearly $55 billion in infrastructure improvements projects, including at the LIRR, according to MTA chief development officer Janno Lieber. However, the railroad’s two largest megaprojects — the Third Track between Floral Park and Hicksville, and the East Side Access link to Grand Central — are both going forward, having already been largely funded.

MTA board member Lawrence Schwartz, who chairs the board’s finance committee, called on the authority to “squeeze every ounce” of savings out of its agencies, including by potentially eliminating all nonessential overtime.

But some questioned the MTA’s commitment to cutting waste. Rachel Fauss, senior research analyst for Reinvent Albany, a watchdog group, noted the MTA is going forward with a plan to hire 500 police officers.

“The MTA is broke. This is clearly not the time to almost double the size of the MTA Police,” said Fauss, who calculated that nixing the plan could save the authority $530 million over 10 years.

While acknowledging the calls by some to defund police departments, Foye defended the agency’s hiring plan.

“The crime situation — not on the subways, but on the streets — demonstrated that there’s a continuing need for a police presence, no matter what police reforms are enacted,” Foye said.

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.