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7/28/2022
The Metropolitan Transportation Authority in New York yesterday released its preliminary 2023 budget and four-year financial plan, including an updated forecast of ridership recovery.
The budget predicts the MTA "fiscal cliff" first presented in February will hit the transit agency in 2025, one year earlier than anticipated, MTA officials said in a press release. That’s due to federal COVID-19 relief aid expected to be mostly exhausted by 2024.
The forecast, conducted by consulting firm McKinsey & Co., projects ridership levels to reach 69% of pre-pandemic levels in 2023 and 80% by the end of 2026, lagging behind initial projections due to a slower-than-expected return to the office, fewer leisure trips and “customer sentiment issues” regarding safety, MTA officials said.
The new projections represent a $500 million decline in anticipated farebox revenue in 2026 and a $1.8 billion decline compared with pre-pandemic farebox revenue.
"Identifying new, dedicated revenues to fund mass transit is imperative as we seek to address our fiscal cliff," said MTA Chair and CEO Janno Lieber.
The revised four-year financial plan projects annual structural deficits of $2.5 billion in two years, rising to $2.75 billion by 2028. Overall, the financial outlook between 2022 and 2026 includes a cumulative net decline of $2.7 billion to MTA’s bottom line.
Rather than spend down all federal funds on the 2023 and 2024 deficits, MTA Chief Financial Officer Kevin Willens presented to the board an alternative scenario to lower the looming fiscal cliff by $1 billion by spreading federal funds spending to decrease the medium-term cost structure and avoid borrowing.
"While there is sufficient federal aid to cover structural deficits through 2024, state and city action by 2023 to create new, dedicated revenue streams to the MTA can lower the fiscal cliff to $1.6 billion and save billions in costly debt service expense," Willens said.