Watchdog warns of potential New York MTA budget gaps

Bonds

New York’s Metropolitan Transportation Authority faces potential budget gaps that could widen to nearly $900 million in 2026, according to the Citizens Budget Commission.

The nonprofit think tank that analyzes state and city finances warns in a report released Monday that the MTA’s promised cost-saving measures may fall short and revenue from yet-to-be-built casinos could be delayed. The MTA oversees the city’s subways, buses and commuter rail lines – the largest transit system in the US.

The deficit projections come as the transit agency anticipates balanced budgets through 2027 with additional tax revenue from the state. Those spending plans rely on about $1 billion of operating savings during the next four years that the MTA has yet to realize and $500 million of future gaming revenue, although New York state has yet to award licenses for three downstate casinos.

Passengers board a New York Subway train. Parent Metropolitan Transportation Authority’s promised cost-saving measures may fall short, the Citizen’s Budget Commission says.

Bloomberg News

“While the budget outlook is positive, caution is warranted,” Jason Wagner, a CBC senior research associate and Ana Champeny, CBC’s vice president for research, wrote in the report. “The MTA and stakeholders should closely monitor ongoing results because certain risks threaten its projected revenue and expenses.”

The CBC forecasts possible deficits of $413 million in 2024 and $583 million in 2025. It’s critical for the MTA to follow through with bi-annual fare and toll increases, find efficiencies and increase productivity, they wrote.

Operating shortfalls put the MTA at risk of service cuts — which can discourage ridership — and layoffs. The transit provider avoided those actions earlier this year after state lawmakers boosted the MTA’s dedicated tax revenue and city officials agreed to direct more money — for two years — to Paratransit service, for riders with disabilities. The MTA also increased fares and tolls.

“Thanks to Governor Hochul, for the first time in years the MTA’s operating budget is showing no deficits over the next five years,” John McCarthy, MTA’s head of policy and external relations, said in a statement. “This balanced budget includes annual efficiency savings rising to $500 million per year and the MTA is already on track to reach that ambitious goal.”

Increasing overtime costs and bus fare evasion may also put a strain on MTA’s budget, according to the CBC report.

The authority has enjoyed positive actions from rating agencies recently, including October’s S&P Global Ratings upgrade to AA-minus from BBB-plus on its transportation revenue bond credit.

Articles You May Like

2 out of 5 industrial stocks are at record highs. Here’s our post-earnings outlook on all of them
Dust settles from inflation report as USTs, munis recalibrate
Alexei Navalny, Russian opposition activist, 1976-2024
US says it will act if China dumps goods on global markets
People are moving out of cities with poor air quality — but many end up facing other climate risks