NYC Commuters Won't See MTA Fare Increases In 2021 Thanks To Feds

NEW YORK CITY — An influx of $10.5 billion in federal funding will allow the Metropolitan Transit Authority to hike fares for New York City’s public transportation system and leaves the MTA financially stable through the first half of 2024, MTA officials announced on Wednesday.

The funding comes from last year’s Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act, which, MTA officials said, keeps the authority from implementing cost-cutting measures such as wage freezes and other right-sizing of service.

While the funding keeps the MTA on solid financial footing for the foreseeable future, MTA officials did not make any promises about fare increases beyond 2021. Toll revenues for the MTA have remained consistent with the best-case scenario and Congress passed an additional round of federal funding, which is expected to bring the MTA $6.5 billion in funding, a news release indicated.

MTA officials faced a dire fiscal crisis last year as ridership cratered during the coronavirus crisis, Patch reported previously. They voted to pursue looking at a 4 percent fare increase, as well as warned of "draconian" cuts if billions in federal aid didn't come their way.

During the February meeting of the MTA Board, the board approved a toll increase that took effect in April on its bridges and tunnels, which raised tolls rates to yield a 6 percent increase in revenue and preserves the resident discount programs, officials said. The Board also approved the creation of a new mid-tier toll rate for motorists who are NYCSC E-ZPass holders but are nevertheless tolled via license plate because they are not using their E-ZPass tags properly.

Larry Schwartz , the head of the MTA Board's finance committee, said in February that raking in stimulus money while charging more for passengers isn't a good look for the MTA as it tries to increase ridership.

Forecasted farebox revenues are expected to increase by $3.7 billion through 2024 and if the toll revenue rates continue to hold on at the best-case scenario, revenues could rise by $799 million by 2024.

However, without recurring revenue streams to offset the postponement of fare increases, the MTA is expected to face a deficit of $605 million in 2025 even after $2.9 billion in deficit bond proceeds are added to the mix, officials said.

“The $10.5 billion in expected Federal dollars gives us a bridge towards the future, which now allows us to see how ridership further recovers and avoids some of the drastic cost-saving measures we outlined in February’s plan,” MTA Chief Financial Officer Robert Foran said in a news release on Wednesday. “With farebox revenue trending towards the midpoint scenario and toll revenue trending towards the best-case scenario, the major challenge ahead will be addressing the structural deficits remaining in 2025.”

To cover budget deficits in 2024 and 2025, officials said Wednesday that the MTA was granted the authority by the 2020-2021 State Enacted Budget to borrow up to $10 billion in deficit financing through December 2022.

In 2020, the MTA utilized the Federal Reserve’s Municipal Liquidity Facility, which the federal reserve established as a source of emergency financing for state and local governments and public entities to ensure they have access to credit during the COVID pandemic, to borrow the maximum $2.9 billion allowed, according to the release. The MLF loan is due for repayment in 2023, and the MTA expects to issue long-term bonds in 2023 to repay the Federal Reserve.