MTA plans 5.5% fare hike next year, needs $600M more to plug deficit

The MTA plans to raise fares and tolls by 5.5% next June to help plug a major budget shortfall caused by dwindling ridership since the start of the pandemic, officials announced on Wednesday.

The hike is larger than the 4% fare and toll increases the MTA put in place every two years from 2009 to 2019.

The MTA board last year held off on increasing transit fares in an effort to attract more riders, although the group did raise bridge and tunnel tolls by 7%.

Riders won’t know exactly how the increases will affect their wallets until next year, when the MTA holds hearings and lays out a proposed pricing structure.

Even with riders and drivers paying more, MTA Chief Financial Officer Kevin Willens said the agency still needs another $600 million in subsidies next year to balance its budget, which is required by law.

If city, state and federal officials don’t come up with the money, transit officials warn service cuts, layoffs and even higher fare hikes will be necessary.

“My goal is to protect service first and foremost, that any cuts to service, God forbid, have to be a last resort,” MTA Chairman Janno Lieber said Wednesday. “I want to make sure our system remains affordable, especially for our working-class riders.”

The figures were released as part of the MTA’s 2023 budget proposal, which will be voted on next month by the agency’s board. Lieber has for more than a year warned of a “fiscal cliff,” pointing to a sharp drop in revenue from transit fares, the agency’s largest source of revenue. Subway ridership is down by roughly 40% from before the pandemic, or about 2 million fewer turnstile entries per week.

The MTA received $15.1 billion in relief from Congress in 2020 and 2021 to help balance its books. Willens on Wednesday said the agency has spent all but $5.6 billion of that money, and estimated the rest will dry up by the end of 2026.

Willens said the $600 million budget shortfall next year is just the beginning: The MTA still faces a deficit of $1.2 billion in 2024, increasing to $1.6 billion in 2026.

The MTA is projecting $19 billion in expenses next year, with $11.4 billion of that going to labor costs and $3.2 billion used for debt payments. This comes as the MTA is expecting to negotiate a new contract with Transport Workers Union Local 100 next year.

Lieber said the agency needs to know soon whether it will get the $600 million, and if not, it could impact the labor talks.

“We’re under the gun if there’s no solution forthcoming, we have to take earlier action than may be self-evident,” Lieber said Wednesday after the MTA board meeting.

Lieber said any labor or service cuts would take about a year-and-a-half to implement.

“All levels of government must step up and fund the bus and subway system — or we are going to quickly slide back into another horrible era with equipment breakdowns, delayed trips, track fires and graffiti everywhere,” TWU Local 100 President Tony Utano wrote in a statement.

Andrew Rein, president of the Citizens Budget Commission, said labor should work with the MTA to find ways to make the transit system run more efficiently.

“The bottom line is even when they roll up their sleeves and work with labor they still need help,” Rein said. “Nobody should be casual in the belief that the state has a magic money tree to divert money from other programs to fill the MTA’s gap.”

Rein also thinks state lawmakers should avoid raising taxes to find the money.

“We need a strong economy and a strong MTA and we can’t be pitting those against each other,” he added.

gov. Kathy Hochul said at a press conference this month she would provide an update on new funding sources for the MTA in January during her State of the State address. She also expects the MTA to find “alternative sources of revenue,” although she didn’t elaborate.

“Gov. Hochul took action last year to avoid a fare hike or service reductions, and she is committed to providing safe, quality, and reliable transit service to riders,” Hochul spokesperson John Lindsay wrote in a statement. “We will continue working with federal partners and state legislators on how to best support public transit.”

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