New York City’s mass-transit system may finally achieve long-term financial stability and wipe out estimated deficits if state lawmakers approve boosting a payroll tax on certain businesses.
(Bloomberg) — New York City’s mass-transit system may finally achieve long-term financial stability and wipe out estimated deficits if state lawmakers approve boosting a payroll tax on certain businesses.
New York’s Metropolitan Transportation Authority, the largest US public transit provider, estimates that a funding plan from Governor Kathy Hochul will help the agency balance its operating budgets through at least 2026.
If the state legislature fails to pass Hochul’s proposal or find an alternate financing plan, the MTA will be forced to resort to trim staff and reduce service to levels similar to those seen during the depths of the pandemic, Janno Lieber, the MTA’s chief executive officer, warned during a monthly board meeting Thursday.
“If we don’t get out of Albany what we need very quickly, we’ll have to start moving on the ugly fronts we don’t want to be active on, which is major fare hikes, major service cuts and layoffs,” Lieber told reporters after the meeting.
The MTA is a state agency that runs New York City’s subways, buses and commuter rail lines. It typically taps lawmakers every few years for near-term funding help, but it now faces a structural problem: With more people working from home, farebox revenue is expected to cover about 32% of this year’s spending plan, down from around half of 2019’s budget, MTA data show.
Tax Plan
Hochul’s plan includes a one-time allocation of $300 million in 2023 and would also increase to 0.5% a payroll-mobility tax on businesses in the New York City area. That boost would give the MTA $333 million in 2023 and about $800 million annually in future years.
Hochul also wants New York City to direct an additional $232 million to the MTA in 2023 and about $500 million annually beginning in 2024. Those funds will help cover its Paratransit service, for riders with disabilities.
Mayor Eric Adams has pushed back on Hochul’s plan, saying the city can’t afford to give the MTA more money. Sherif Soliman, an MTA board member appointed by Adams and director of the city’s Office of Policy and Planning, said taking funds away from other services will affect what happens in the subway.
“If you diminish the capacity of the city of New York to address services above ground, it will have an impact below ground,” Soliman said during Thursday’s meeting. “And the universal goal that we all share, which is to lure riders back to this system — which is the biggest problem that we have in terms of finances — will be impaired.”
The broad embrace of the work-from-home lifestyle has decreased the use of public transit: For example, average weekday subway ridership is about 65% of pre-pandemic levels.
The MTA was facing a budget deficit of as much as $3 billion a year beginning in 2025. It has slashed that shortfall by using federal pandemic aid over a longer period and refinancing debt, according to Kevin Willens, the MTA’s chief financial officer. That gap is now $1.2 billion in 2025 and $1.6 billion in 2026.
The transit provider anticipates hiking fares and tolls by 5.5% this year to help raise revenue. It would be the first fare increase since 2019.
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