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MTA Banks On Democratic Win To Save Transit System, As It Braces For Major Cuts And Borrowing To Keep Lights On
By
Stephen Nessen
Published Sep 25, 2020
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Stephen Nessen/Gothamist
By
Stephen Nessen
Published Sep 25, 2020
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With just over two months left before the agency presents its “Doomsday” budget for next year, the MTA continues to pray on a possible $12 billion federal bailout, which appears to hinge on Democrats winning the White House and Senate this November.
“Our calls for federal assistance have fallen on deaf ears by our congress and by our federal government,” said Larry Schwartz, MTA’s Chair of Finance and confidante of Governor Andrew Cuomo, at a board meeting on Wednesday. He warned that if the agency scales back service due to lost revenue it can deal a blow to the local and state economy.
Schwartz said even if Democrats win, there won’t be any changes until at least January, and the board must present a balanced budget for 2021 in December.
He suggested borrowing $2.9 billion from a loan program established by the Federal Reserve to assist state and city governments experiencing serious declines in revenue due to the ongoing pandemic. These so-called Municipal Liquidity Facility loans have an interest rate of around 1.8% and would have to be paid back in three years. The agency already has an existing debt load that accounts for 16% of its operating budget. Such a move requires MTA board approval.
“We cannot wait any longer for Washington to act because the reality is they’re not going to act,” Schwartz said.
MTA Chairman Pat Foye said that money would be helpful, but won’t solve it’s larger financial problems. “For an agency that spends $300 million a week that is not a long-term solution,” Foye said.
Budget watchdogs support the action, but hope the MTA can get better rates.
“It is logical for the MTA to look for less expensive sources of credit, especially since MTA’s fare-backed Transportation Revenue Bonds were downgraded by Moody’s just last week. Schwartz claims that MLF loans could be repaid with no interest paid in the event that federal emergency funds are delivered soon. If the MTA seeks to access the MLF, it should work with federal partners, including Senator Schumer, to access even lower interest rates,” Rachael Fauss with Reinvent Albany wrote in a statement.
In addition to the $12 billion the MTA seeks, the city is also seeking $30 billion in federal relief and the state has requested $30 billion. The argument the MTA and Cuomo have made repeatedly is that the downstate New York region accounts for 8% of the country’s gross domestic product and if the country wants to recover, New York must recover.
On Thursday, Foye compared Senate Republicans' possible bailout of the airlines as playing “Hunger Games” with transit.
"Reports that Senate Republicans are pushing their latest bill to prop up private airlines—which have billion-dollar stock market capitalizations—while again ignoring the massive needs of public transportation agencies across the country are both absurd and outrageous,” Foye wrote in a statement. He said without federal relief aid, public mass transit systems across the country would face catastrophic service reductions, tens of thousands of layoffs, and hikes in fares and tolls.
While ridership is still far below what it was before the pandemic, it is returning faster than the MTA had projected. Subways are now down 69% from what they were prior to the pandemic, and bus ridership is down by about 50%.
In order to save money, the agency has put its largest ever, $51 billion capital plan, on hold. The plan included modernizing the system with new signals and train cars, and making stations close to fully accessible.
This year the agency was also supposed to undergo a major transformation to consolidate its offices and management. It created a three-figure executive position and named Anthony McCord Chief Transformation Officer. McCord announced earlier this year he would cut 2,700 jobs. But on Wednesday, McCord acknowledged the agency was able to cut the 2,700 jobs through attrition alone.
Despite the projected deficit in revenue this year from lost fares and taxes, the MTA’s Chief Financial Officer Bob Foran said the agency has enough money to get through the first quarter of next year.
“We’re in a good position now in terms of liquidity, but we need to be prepared to cover this deficit,” Foran said Wednesday, referring to the $12 billion in losses expected by next year.
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we the commuters
MTA
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Stephen Nessen
Stephen Nessen covers transportation. Since 2008 he has reported on everything from Occupy Wall Street, the rebuilding of the World Trade Center site, Hurricane Sandy, to Trump’s campaign for president. His transportation reporting has taken him everywhere from the MTA’s secret Rail Control Center to the gleaming subways of Seoul. Got a tip? Email [email protected].
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