During Coronavirus, the M.T.A Subway Faces Its Worst Financial Crisis – The New York Times

The New York City subway system rebounded from the 1970s, when the city teetered on the edge of bankruptcy, crumbling cars routinely broke down and rampant crime scared riders away.

It survived the Sept. 11, 2001, terror attacks and Hurricane Sandy in 2012, which led to years of costly rebuilding and service disruptions. And it turned a corner after a spate of meltdowns and accidents in 2017 including a derailment injuring dozens of riders that prompted Gov. Andrew M. Cuomo to declare a state of emergency.

But now, the subway faces its worst financial crisis yet one that threatens to hobble the system and have a lasting impact on the city and region.

As the coronavirus pandemic has shut down New York, over 90 percent of the citys subway ridership has disappeared along with critical fare revenue leaving behind escalating expenses and an uncertain timeline of when and how the citys transit lifeline will recover.

It is unclear what the actual fallout could be. But past crises suggest a potentially grim reckoning for riders: subway and bus lines eliminated, unpredictable wait times for trains as service is slashed, more breakdowns with less money spent on upkeep and steeper fare hikes.

We dont want to turn the clock back to the bad old days of the M.T.A., when state of good repair and system expansion was gutted to balance operating budgets, said Patrick J. Foye, chairman of the Metropolitan Transportation Authority. Weve come too far.

The agency, which operates the citys subways, buses and two commuter rails, faces a shortfall of up to $8.5 billion even after temporarily scaling back service and receiving a $3.8 billion federal bailout, according to transit leaders and fiscal experts.

Financial projections for the next two years also look bleak, making it likely that money meant to be spent on improving the system will have to be used just to keep the subway and buses running.

Its highly likely that the worst-case scenario is the likely scenario, said Nick Sifuentes, the executive director of Tri-State Transportation Campaign, an advocacy group.

Across the country, transit agencies are grappling with plummeting ridership, shrinking revenue and mounting pandemic-related expenses that could plunge public transit systems into financial calamity.

In New York, the epicenter of the coronavirus outbreak, the transit authority has struggled to maintain an already-reduced service schedule as workers fall sick: as of Thursday, 2,400 workers had tested positive for the virus and 4,000 were quarantined. At least 79 workers have died.

M.T.A. officials have made an emergency request for another $3.9 billion in federal money. We need substantially more help and we need it now, Mr. Foye said.

On Friday, a bipartisan group of New York lawmakers sent a letter supporting the M.T.A.s request to congressional leadership.

The M.T.A. is in crisis. This additional funding of $4 billion is absolutely vital, said Representative Jerrold Nadler, a Democrat. Unfortunately with Trump you never know, but we in the delegation will fight tooth and nail to make sure that funding is there.

Senator Chuck Schumer of New York, the minority leader, said he is optimistic the M.T.A. will receive the federal aid, noting that congressional leaders successfully secured the agencys first request for emergency funds in March.

Transit officials did not have an answer for what the agency would do if it failed to secure the additional aid, characterizing it as a critical stopgap measure to keep the system moving.

But the unique nature of this crisis complicates options the transit agency has taken in the past.

With less than a million riders using public transit, raising the fare now would be futile. Cutting service beyond the reduced schedules is complicated by the critical role public transit plays in moving doctors, nurses and other essential workers. And indefinitely delaying long-overdue upgrades and maintenance could set back service for years to come.

The traditional levers we would use in worst-case scenarios are not useful, said Robert E. Foran, chief financial officer at the M.T.A. None of these are now tenable choices.

An analysis of M.T.A. finances by McKinsey & Company projects fare and toll revenue losses up to $5.9 billion and dedicated tax revenue losses as high as $1.8 billion. By the end of the year, the authority will face revenue losses as high as $8.5 billion, officials said.

These losses will cripple the M.T.A.s operating budget: Nearly all of its operating revenue comes from fares and tolls, and taxes and subsidies including payroll, real estate transfer and business taxes that are expected to drop sharply in the coming months.

The agency might have to consider taking drastic measures, transit experts said, including raising tolls and fares beyond two planned fare and toll increases of 4 percent each in 2021 and 2023.

In 2010, the M.T.A. eliminated two subway lines and dozens of bus routes to help close a major budget gap.

Even before the pandemic, some fiscal experts had questioned the M.T.A.s budget, which relies on what some saw as rosy revenue projections.

When people asked me two months ago, I said the M.T.A.s fiscal situation was precarious and that was during the good times, said Andrew Rein, the president of the Citizens Budget Commission, a nonprofit watchdog group.

The financial crisis hits at a critical time for the M.T.A., which has made slow but steady improvements to subway and bus service.

The agency has unveiled a sweeping $54 billion program to transform an antiquated century-old system into a modern network that will be pivotal to New Yorks recovery.

The plan includes replacing signals that date back as far as the 1930s with new signals that will allow trains to run faster and increase capacity. It also calls for adding 70 elevators to improve access for the disabled and extending the Second Avenue subway north into East Harlem.

All the capital projects we have in mind need to be done, said Robert W. Linn, a member of the M.T.A. board.

Underscoring the transit agencys precarious situation, New York lawmakers, acting they said at the insistence of Mr. Cuomo, opened the door for the M.T.A. to help cover its operating costs by tapping revenue that was supposed to be used to make improvements.

That revenue comes from a portion of the sales tax, a new tax on high-end real estates sales and tolls from a hard-fought congestion pricing plan that is expected to start next year.

In normal circumstances, it would have been a move that many organizations opposed, said Kate Slevin, a senior vice president for the Regional Plan Association, a research and advocacy group. But given the circumstances, the M.T.A. has few good alternatives here so we found it acceptable.

Still, Mr. Rein, of the Citizens Budget Commission, said the M.T.A. must strike a careful balance between paying to run the subway and investing in upgrades that will ensure a well-functioning system as the city struggles to return to a semblance of normal life.

Many transit experts said the last time New Yorks subways were anywhere near such a dire financial strait was in the late 1970s, after decades of cost-cutting and deferred maintenance had turned the system into a worldwide symbol of urban decay.

Officials resorted to using federal funding earmarked for capital projects to cover shortfalls in the agencys operating budget to keep the system afloat as ridership and farebox revenue plummeted.

But the financial fallout from the coronavirus pandemic will plunge the M.T.A. into uncharted territory, as it confronts both economic and public health challenges, experts say.

What its facing today is far more serious, said Richard Ravitch, who was chairman of the M.T.A. during the 1970s crisis. If you look at the number of people who are unemployed, if you look at the projections for the citys deficit, if you look at the states deficit, you have to ask yourself: Where is the revenue going to come from to support the M.T.A.?

Beside decimating revenue, the public health crisis has also triggered hundreds of millions in new expenses to protect transit workers and disinfect equipment.

And even when stay-at-home restrictions are eased, some riders may fear returning to crowded subway platforms and cars because of lasting concerns about being exposed to viruses.

How long does this level of ridership stay where it is? Mr. Rein said. Once we start going back to work, what level of ridership comes back? The behavioral impacts of this is still unknown.

Still, experts say an efficient and effective public transit system will be critical to the city and the country the New York region contributes 10 percent of the countrys gross domestic product.

The M.T.A. is the economic engine of the entire region; the economy is built around the spine of the subway, buses and commuter rails, said Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the M.T.A., a watchdog group.

You cant reopen the economy without the transit system in New York.

Luis Ferr-Sadurn contributed reporting.

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During Coronavirus, the M.T.A Subway Faces Its Worst Financial Crisis - The New York Times