MTA Board approves 2023 budget and four-year financial plan

Dec. 22, 2022
The financial plan contains a roadmap for the MTA’s longer-term fiscal stability.

The Metropolitan Transportation Authority (MTA) Board approved the 2023 budget and four-year financial plan. The financial plan contains a roadmap for the MTA’s longer-term fiscal stability, safeguards essential services, enhances transit equity and provides a sustainable foundation for the region's continued economic growth.

“I’ve been talking about the financial crisis facing the MTA for many months,” said MTA Chair and CEO Janno Lieber. “The MTA’s plan balances the budget while also preserving flexibility as to how we get there – with the help and financial support of Washington, Albany and City Hall. Mass transit for New Yorkers is like air and water; we need it to survive. By working with all stakeholders, we must find creative ways to stabilize the MTA’s finances while supporting the region’s recovery.”

“The ridership trends that have emerged post-COVID have created a fiscal cliff higher and earlier than previously anticipated,” said MTA Chief Financial Officer Kevin Willens. “The much-needed federal aid the MTA received from three COVID-relief packages has enabled a reduction in deficits in the immediate future. However, beginning in 2023, we need new dedicated revenue streams to ensure that essential transit service remains at the levels riders expect.”

The plan proposed in November followed recommendations put forward in the July financial plan, which outlined actions from the MTA to shrink its structural deficit from $2.6 billion to $600 million in 2023 and from almost $3 billion in 2024 and 2025 down to $1.2 billion. Starting in 2023, the MTA is working to implement operating efficiencies, yielding $100 million in savings in 2023 and rising to $416 million in savings by 2026.

The budget assumes the restoration of recurring biannual fare and toll increases, with 5.5 percent assumed in 2023. A board/staff fare and toll strategies working group will develop plans for fare and toll changes before the MTA Board takes additional action. In addition, the proposed budget also assumes $600 million in additional dedicated funding in 2023 and projects a need of $1.2 billion per year in recurring new revenue beginning in 2024. Absent additional support from either the state, city and/or federal government, it would be necessary to take other actions to achieve a balanced budget, which could include service cuts, staffing reductions, higher fare increases, cancellation of capital projects, and/or the faster spend-down of remaining funds.

In calculating the outyear 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.