The Metropolitan Transportation Authority (MTA) released its proposed 2023 budget and four-year financial plan, bringing clarity to the financial challenges the MTA faces as $15 billion in federal COVID-19 relief funds, now down to $5.6 billion, begin to be exhausted. The proposed 2023 budget assumes $600 million in additional governmental funding or alternative, significant additional cost-saving MTA actions. The proposed financial plan also contains a roadmap for the MTA’s longer-term fiscal stability, safeguards New York’s essential transportation services, enhances transit equity and provides a sustainable foundation for New York’s continued economic growth.
The November plan, following recommendations put forward in the July financial plan, outlines actions from the MTA to shrink the structural deficit from $2.6 billion to $600 million in 2023 and from almost $3 billion in 2025 down to $1.2 billion in 2026. Starting in 2023, the MTA projects operating efficiencies yielding $100 million in savings in 2023 and rising to $416 million in savings by 2026. Further MTA actions will be necessary to address 2023’s $600 million deficit, including the faster spend-down of remaining federal funds, staffing reductions, higher fare increases, deferral or cancellation of capital projects and/or service reductions.
“The past three years have proven how essential the MTA is to the success of the New York City region. In New York, robust transit service is as critical as air and water,” said MTA Chair and CEO Janno Lieber. “The budget proposed today puts us in a position to continue delivering the essential transit services customers rely on while also prioritizing long-term fiscal responsibility.”
“In the July financial plan, we laid out the case for early action to address the MTA’s looming fiscal cliff,” said MTA Chief Financial Officer Kevin Willens. “Today's proposed budget and financial plan further demonstrates the need for new, dedicated sources of funding which, combined with MTA actions to find savings without limiting service, can greatly reduce the fiscal cliff and protect mass transit for the region.”
"In my six months at New York City Transit, I have seen first-hand that subways, buses and paratransit are the lifeblood of this city, moving five million New Yorkers every day,” said New York City Transit President Richard Davey. “We are focused on finding cost-savings to ensure fiscal stability into the future while delivering frequent, reliable service and achieving a sustained level of at least 70 percent customer satisfaction across subway, bus and paratransit by June 2024.”
The proposed budget assumes the June 2023 restoration of recurring fare and toll increases, ultimately providing $373 million in additional annual revenue.
In calculating the out-year deficits, McKinsey & Company conducted an updated ridership forecast, released in concurrence with the MTA’s July Financial Plan. In the four months since the forecast’s release, ridership across MTA services is tracking the midpoint projection of the forecast. The farebox revenue gap based on the McKinsey forecast when compared with pre-pandemic fare and toll revenue projections averages $2.1 billion from 2022-2026. The MTA is projected to have a lower than anticipated 2022 deficit, driven by lower than forecast expenses and higher than expected revenues. The outyear deficits exceed the July plan, primarily due to increased pension cost projections.
The MTA Board will meet on December 21 to consider and approve the 2023 budget.
