MTA Expected To Fall Off Fiscal Cliff As Less New Yorkers Commute: MTA

NEW YORK CITY — New York City's trains could plummet from a fiscal cliff sooner than expected, transit officials warned New Yorkers this week.

A new forecast of the MTA’s preliminary budget projects the transportation agency will face "a fiscal cliff" by 2025, a year earlier than estimates that were released in February.

McKinsey & Company, the D.C.-based global consulting firm that issued the forecast, blamed rider sentiment and a shift in travel choices for the projected $500 million decline in anticipated annual revenues.

Ridership projections also dropped to 80 percent of pre-pandemic levels for 2026, according to a MTA report.

"The reforecast of ridership projections has created a new higher and earlier fiscal cliff for the MTA,” Kevin Willens, MTA’s CFO, said in a prepared statement.

Willens urged the city and state to action by 2023 to "save billions in costly debt service expenses.”

Covid-19 relief aid from the federal government is expected to largely be exhausted by 2024, said the report.

Instead of using the federal funds to cover deficits throughout 2023 and 2024, the transportation agency wants to spread it out through 2028 as it seeks other revenue funds, because the revised financial projections foresaw the a $2.5 billion structural deficit within two years, which will increase by $2.75 billion six years from now, according to the MTA.

If the agency can find new sources of revenue it will not have to hike fares, layoff workers or cut service, said the agency.

“Identifying new, dedicated revenues to fund mass transit is imperative as we seek to address our fiscal cliff,”Janno Lieber, chairman and CEO of the MTA, said in a statement.

“Transit is essential to the economic future of New York as we continue to recover from the pandemic, and it should be treated as an essential service, with strategies that don’t just put the problem on the backs of our riders through painful service cuts and fare increases.”

A slower-than-expected return to the office for many employers, fewer non-work trips, and customer sentiment on issues including safety have seen transit and railroad ridership lag behind the 2020 pre-pandemic fare and toll 2026 forecast of $9.6 billion. Economic disruptions are another factor, according to the report.

If more people continue to work from home, even for three days, ridership will continue to shift from mass transit. Covid-19’s ingrained nature, slow employment growth and the rise of ecommerce and telehealth will prevent the MTA from bouncing back, analysts depicted.

Fare evasion, congestion pricing, incomplete expansion projects, and people driving, biking and walking for travel will also play a factor in MTA’s future deficits, according to McKinsey & Company.

Along with engaging with stakeholders to find new revenue streams, addressing operating efficiencies are another way that the agency plans to lower its deficits, said the MTA.