MTA borrows to get through the year, but drastic measures still possible next year
The MTA expects to fill the budget gap for this year and reduce next year's expected deficit, but it warns that layoffs, LIRR service cuts and fare hikes could be on the horizon. Credit: Newsday/J. Conrad Williams Jr.
The Metropolitan Transportation Authority will balance its 2020 budget without drastic cuts in service this year, but mass layoffs, steep fare hikes, and a 50% reduction in LIRR service may still be coming in 2021, MTA officials said.
At the MTA’s monthly board meeting Wednesday, officials also unveiled details of the agency’s next potential fare increase, which could entail a major overhaul of Long Island Rail Road ticketing and may include going from eight fare zones to just three.
With the COVID-19 pandemic continuing to rob the MTA of most of its riders and revenue streams, the authority offered a small bit of good news: a faster-than-expected rebound in toll revenue at the MTA’s crossings has reduced the 2020 budget gap from $3.2 billion to $2.5 billion.
The MTA said it expects to fill the budget gap for this year, and shrink next year’s expected deficit through internal cost-cutting and an expected $2.9 billion federal loan.
But, absent a federal bailout early next year, the MTA could still be forced to take severe measures, officials said.
"This is the greatest financial calamity the MTA has ever faced — from a ridership and revenue point of view, orders of magnitude worse than the Great Depression," Foye said. "We are taking the approach of planning for the worst, but leaving room for adjusting for the best, should that happen."
The worst-case scenario could include a 50% cut in LIRR service, with peak hour service being reduced to "every 20-30 minutes or hourly in certain instances," and a "full or partial suspension of service on both weekdays and weekends" in some areas.
MTA Chairman and Chief Executive Officer Patrick Foye. Credit: AP/Mark Lennihan
New York City buses and subways could also see service reductions of up to 40%, for a total agency savings of about $1.3 billion. The savings would come, largely, from laying off 9,000 workers.
Anthony Simon, head of the LIRR's largest union, said workers won't stand for it.
"Once again the MTA wants savings from the essential work force who have delivered throughout this pandemic, while management positions were able to stay home and work safely on big salaries," Simon said.
MTA officials said the changes could come as early as May. Even with those drastic measures, the MTA would be eyeing a budget deficit of around $3.2 billion in 2021.
"Nobody likes this. Nobody likes the impact on the customers. Nobody likes the potential impact on our employees. This is just ugly," MTA Chief Financial Officer Robert Foran said. "But this is just something that we must consider, if we’re going to survive."
The MTA is holding out hope that President-Elect Joe Biden — a longtime user and supporter of mass transit — will be able to broker a $12 billion rescue of the MTA, still operating with only about a quarter of its usual riders as compared to pre-pandemic levels.
And the agency is now predicting that at least 10% of its former riders are gone for good. According to a new consultant’s analysis, under a best-case scenario, 90% of the MTA riders would return by 2024 — representing a "new normal" for ridership levels in a post-pandemic New York, whereas many as 12% of former commuters remain working remotely and up to 3% choose another mode of travel. Because of those changes, Foye said that, even with a federal bailout, adjusting service to the new demand may be the "the right thing" to do.
The MTA also offered the first details of its next fare increase proposal, which could include major changes in the fare structure at the LIRR. While the agency will aim to raise fare revenue by the usual 4%, it is considering some new ways of getting there.
They include leaving fares as they are on monthly tickets, but raising the price of other tickets, including one-way and round-trip tickets, by between 7% and 16%; doing away with the existing LIRR zone structure and replacing it with 2 zones (suburban and city) and three fares (city-suburban, city-city, suburban-suburban). Riders would pay the same fare for any trips in those zones, regardless of when they travel.
The agency may also eliminate mail-order monthly tickets, which are costly to print and mail, and replace them with downloadable e-tickets. MTA officials said they plan to conduct pilot programs to test the various fare proposals.
MTA Board Member Kevin Law, who represents Suffolk County, urged the agency to consider one other strategy to increase fare revenue: discounting fares. "I really, seriously believe that if we were to cut fares, at least for ’21, we may generate more revenue by increasing ridership, than if we increased fares and continue to depress ridership," Law said. "We need to lure back riders. Increasing fares is not the way to lure riders back."
Foye agreed to postpone issuing a public notice for hearings on the fare changes so that the agency could further consider Law's fare discount proposal. The virtual public hearings on the fare changes will be held sometime next month, and the MTA Board will vote on fare changes in January. New fares would take effect in March.
MTA BUDGET HIGHLIGHTS
* The MTA expects to fill a $2.5 billion budget deficit this year through internal cost-cutting and a $2.9 billion federal loan.
* Without a federal bailout in 2021, the MTA could resort to deep service cuts — as high as 50% on the LIRR — and laying off 9,000 workers.
* Ridership is not expected to reach 90% of pre-pandemic levels until 2024.
* A 4% fare increase in 2021 — scheduled before the pandemic — could include overhauling the LIRR's fare structure. Zones could be reduced from eight to three, and the same fares would be charged at all times.
* The MTA is also considering a proposal from Suffolk board member Kevin Law to discount fares in 2021 to lure back lapsed riders.
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.
