The New York Metropolitan Transportation Authority (MTA) Board adopted the authority’s 2021 budget and 2021-2024 financial plan, that avoids drastic cuts in 2021, but is dependent on $4.5 billion in federal emergency funding relief. Should that relief not come to fruition, MTA warns its doomsday scenario outlined in mid-November with cuts to both service and staffing levels would need to be implemented.
“We are closely monitoring events in Washington and will revise the budget and prepare necessary actions, depending on what our federal leaders deliver,” said MTA Chairman and CEO Patrick J. Foye. “Congress should stay in session until passing a COVID relief bill that includes funding for public transportation. The MTA continues to face a once-in-100-year fiscal tsunami and this is without a doubt one of the most difficult budgets in agency history, with devastating deficits projected. No one at the MTA wants to undertake these horrific cuts and the only way to avoid them is with the $12 billion in desperately needed federal relief we have been arguing for months is needed."
MTA explains its 2020 budget is balanced only with borrowing from the Federal Reserve's Municipal Liquidity Facility (MLF). Should the additional $4.5 billion in emergency funding relief be delivered, the 2021 budget would become balanced, but MTA would still face a deficit over its four-year plan.
The MTA projects it would still face nearly $8 billion in deficits through 2022-2024 that will need to be addressed. The MTA says it is prepared to make any necessary budget adjustments during this period, depending on the amount of federal aid it receives in the current negotiations in Washington.
“The MTA continues to face the worst financial crisis in history and was able to close our budget deficit for 2021 with 2020 deficit borrowing and the assumption we will receive $4.5 billion from the federal government,” said MTA Chief Financial Officer Bob Foran. “If Washington does not come through, our budget will be in free fall – and that does not even account for significant out-year budget gaps we are facing in 2022, 2023 and 2024. There will be hard choices ahead."
The MTA has closed budget deficits exceeding a combined $8 billion for 2020 and 2021 by leveraging $2.9 billion from the Federal Reserve Municipal Liquidity Facility and assuming $4.5 billion in federal aid in 2021, in addition to significant agency cost saving efforts.
For its part, the MTA has taken aggressive measures to cut costs internally, focusing on three key areas: reducing overtime, consulting contracts, and other non-personnel expense reductions. Agencies have already begun implementing these savings, which are now projected to reduce expenses by $259 million in 2020, $601 million in 2021, $498 million in 2022, $466 million in 2023 and $461 million in 2024. These are on top of $2.8 billion in annual recurring cost savings achieved by the agency over the past several years.
In addition to borrowing the maximum from the MLF, MTA is taking additional actions to address the 2020 deficit by releasing the current 2020 General Reserve of $170 million, applying the $337 million in the OPEB Trust Fund to current OPEB payments, and retaining Committed to Capital transfers in the operating budget at $187 million for 2020, $181 million for 2021, $120 million for 2022 and $114 million for 2023.
