By tf-lawyer.com New York State Comptroller Thomas P. DiNapoli recently released a report criticizing the Metropolitan Transportation Authority (MTA) for its severely compromised financial status. He warned that the agency is facing a growing budget deficit over the next few years, relying heavily on state funding to barely maintain its operations. The report highlights a vicious cycle, where declining fare revenues have led to reduced service levels, further discouraging passengers from choosing public transportation.
The findings indicate that the MTA temporarily stabilized its finances last year through state funding, but ongoing issues in actual operations and capital management put it at risk of a significant financial crisis in the near future. It is projected that the agency will face a $211 million deficit this year, which could exceed $600 million by 2027 and 2028. The Comptroller’s office noted that their calculations, which account for broader uncertainties, suggest that the actual financial gap could far surpass the estimates provided in the MTA’s five-year fiscal plan.
As passenger numbers continuously dwindle, it is projected that fare revenues could decrease by over $800 million by 2027. The report emphasizes that the MTA’s financial recovery post-pandemic heavily depends on the return of paying passengers. However, actual ridership growth has consistently fallen below expectations. Data shows that between May and June of this year, subway ridership reached about 70% of pre-pandemic levels but has since shown sluggish growth, leading to a slight overall decline in total passengers—figures that are significantly lower than previous predictions by consulting firm McKinsey. Initially forecasting that subway ridership would reach 86% of pre-pandemic levels by the end of 2024, McKinsey has since downgraded its estimates, pushing the timeline for reaching 80% recovery to late 2026.
In addition to fare collection challenges, the MTA’s revenue from properties has also suffered due to the downturn in commercial real estate following the pandemic, with expectations of a $790 million drop in related income over the next four years. While toll revenue from paid bridges and tunnels is gradually increasing, it is insufficient to offset losses from other areas.
The report also reveals concerns about recruitment shortages and rising costs, with the MTA facing significant operational challenges due to passenger losses and fare evasion. Forecasts suggest that labor costs will see an average annual increase of 7.6% from 2024 to 2028, alongside 6.8% growth in debt service costs, and increases of 6.2% and 5.4% in materials and outsourced contract costs, respectively. Adding to this burden, insufficient staff hiring has led to a surge in overtime expenses, which reached a historic record of $1.4 billion in 2023.
Rising baseline costs and declining fare revenues are severely impacting the MTA’s capital projects, forcing delays or cancellations of major upgrades. The report underscores that these factors contribute to a decline in the operational quality of the public transportation system, which in turn continues to deter residents from using these services.
