SAN JUAN, Puerto Rico — As New York’s political class descended on San Juan this week for their annual post-Election Day gathering, lawmakers and lobbyists were joined by an out-of-the ordinary guest.
Janno Lieber, the MTA chairperson and CEO, made his first trip to the Somos Conference, where he called for legislators to find new sources of revenue for a system imperiled by a looming fiscal cliff because transit ridership is well below pre-pandemic levels.
Transit insiders, former brass and conference attendees couldn’t recall previous MTA chairs ever attending the tropical confab.
But with so many lawmakers in one place, Lieber underscored the importance of helping the MTA avoid a financial collapse once more than $15 billion in federal emergency aid runs out — possibly as soon as 2024.
“The MTA chair has been speaking with elected officials and other stakeholders — as he does regularly — about the importance of keeping mass transit funded in order to provide reliable service to millions of daily riders at a time when remote work has changed ridership patterns and revenue projections,” John McCarthy, an MTA spokesperson, told THE CITY in a statement.
Lieber himself declined to comment to THE CITY in San Juan.
The Somos trip marked the MTA chair’s latest push to get elected officials to reconsider how the agency is funded. For months, Lieber has been saying the mass transit system is “like air and water” to New Yorkers and should be treated like an essential service, such as police, fire and sanitation departments, which aren’t required to make their own money.
It came days after sources say MTA leadership made a presentation titled “A New Transit Compact” to City Council members. A copy of the PowerPoint presentation, obtained by THE CITY, warns “The MTA faces an existential crisis.”
The presentation highlights how the transit agency faces a post-COVID farebox operating ratio of about 35% for several years — far below the 50% or more that had been in place for more than a decade.
Even as the MTA now regularly hits pandemic-era ridership highs, overall weekday usage of subways and buses is hovering around 65% of what it was in 2019, when close to than 7 million people rode daily.
An Unviable Business Model?
Pre-pandemic, the MTA had the highest farebox operating ratio among U.S. transit agencies, according to the presentation obtained by THE CITY.
Accounting for 51% of its operating budget, the MTA’s pre-COVID revenue from ridership was significantly higher than systems like the Massachusetts Bay Transportation Authority (45%), the Chicago Transit Authority (41%), the Washington Metro (33%) and the Los Angeles Metro (15%).
“Our prior business model was the revenue from the farebox made up 40 to 50% of our budget, we were celebrated widely, that made us businesslike,” Lieber said at the MTA’s July board meeting. “But it’s clear that no longer is viable or realistic.”
Transit officials and MTA board members have said service cuts are not an option, warning that some higher-than-projected fare increases or layoffs could lead to a severe downward turn that drives away riders.
“That’s a death spiral,” said Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the MTA. “You want people to come back to transit, not go away from it.”
Raiding the funds in the MTA’s long-term capital projects budget — which could reduce transit system maintenance, cut plans for new signals, subway cars and more accessible stations or hurt plans to expand the Second Avenue subway line — is also an unsustainable option, transit officials noted.
But even fully funding the more than $50 billion capital program is no sure thing, with the rollout of congestion pricing — which would raise billions for system upkeep and expansion by tolling vehicles south of 60th Street in Manhattan — in the slow lane.
While Lieber and previous MTA chairpersons have long said the agency is “agnostic” when it comes to funding — meaning they’ll take it from anywhere — advocates and Albany watchdogs said lawmakers must consider new formulas for transit. That could also include taxing revenue from casinos and legalized cannabis.
But with MTA farebox operating ratio now on par with other transit systems in the U.S., other options for the agency could include increasing revenue sources already in place, such as gas and fuel taxes, the sales tax, the payroll tax or motor vehicle rental fees.
“All options need to be on the table for the MTA,” said Danny Pearlstein, policy director for Riders Alliance, an advocacy group. “It isn’t just taxing the rich, it’s not just depending on the drivers. It’s potentially an all-of-the-above strategy to maintain and expand the public transit service that New Yorkers depend on.”
Rachael Fauss, senior policy advisor with the watchdog group Reinvent Albany, cited the state’s gas tax holiday for motorists from June 1 through the end of the year, noting that the state could instead prioritize transit riders.
New York Focus reported last month that, out of every dollar the gas tax holiday costs the state, less than half of that made it to New Yorkers’ pockets. Gov. Kathy Hochul, who backed the gas tax holiday, in June said it provided some $600 million in relief.
“The real ask here is for new state dedicated revenue sources,” Fauss told THE CITY. “The person with the biggest control over that is the governor.”
A Hochul spokesperson cited how the governor “took action” last year to avoid a planned fare increase, as well as service reductions.
“Providing safe, quality and reliable mass transit to New Yorkers remains a priority,” said the spokesperson, Hazel Crampton-Hays.
In the early months of the pandemic — when ridership fell by more than 90% — but before the full package of federal emergency funding materialized, MTA board members, advocates and union leaders had called for the transit agency to stop relying so heavily on farebox revenue from its riders.
Now they are sounding that alarm again.
“The MTA has been saying for some time that something different has to happen and this is when that something different has to happen,” Daglian said. “We can’t wait another budget cycle for the red ink to get redder for the deficits to get bigger.”
Martinez reported from New York