Fare Hikes Could Come To Metro-North To Address 'Fiscal Cliff': MTA

HUDSON VALLEY, NY — A dramatic drop in ridership during the COVID-19 pandemic has led to a funding shortfall for the Metropolitan Transportation Authority — and could lead to potential fare hikes, service cuts and other measures to bridge the gap, officials said at a board meeting Wednesday.

One measure proposed by MTA Chief Financial Officer Kevin Willens was a 5 1/2 percent fare and toll hike — but MTA representatives told Patch that total amount would be across all arms of MTA service, not just Metro-North Railroad.

The MTA said that "significant deficit reductions through operating efficiencies and restoration of recurring fare and toll increases" are needed to preserve essential services for those who need it most, while avoiding substantial fare increases and service reductions.

In addition, the MTA is undertaking a huge new project to provide direct commuter rail service across the iconic Hell Gate Bridge from Connecticut, Westchester and the Bronx to Manhattan's West Side. It will give Metro-North's busiest line — the New Haven —a second route into Manhattan. SEE: $2.9B Contract Awarded For Penn Station Access From Westchester

“As we prepare to unveil the biggest expansion to commuter rail service in generations, it has never been more critical to provide the quality of service that railroad customers depend on,” said Metro-North President Catherine Rinaldi. “As ridership continues to recover, we are committed to delivering service while providing the cost-savings needed to address long-term fiscal challenges.”

The proposed $19.2 billion budget for 2023 will not entirely address the "fiscal cliff" the MTA is facing, Willens said.

The board was not asked to take any action Wednesday; a vote on the proposed budget and plan will take place on Dec. 21.

Although the financial forecast for 2022 was better than expected, for 2023 to 2026, the financial picture worsens, with deficits of $3 billion projected by 2026, he said. Those higher numbers are due to the newly released pension cost increases, Willens said.

"The fact is, our remaining federal aid will not cover the next four years of the deficit," Willens said.

Currently, the MTA has $5.6 billion left of the $15 billion it received in COVID-relief aid, he said — with a total of $11.4 billion in cumulative deficits over the coming plan period. "It is clearly not enough to cover those deficits. What's the best way to tackle that looming shortfall?"

The answer, Willens said, is not in "kicking the can," which could lead to "catastrophic results, including large fare hikes, service cuts, layoffs, and cancellation of capital projects.

Instead, Willens recommended shrinking deficits to more manageable levels by starting to take action in 2023. That approach includes ramping up higher operating efficiencies at the MTA, spreading the federal aid over four years, lowering debt costs, and a fare and toll hike by a "slightly additional amount above the four percent base."

Those measures will bring the deficit down but not fully eliminate it, Willens said. The deficit would then stand at $600 million in 2023 and $1.2 billion in 2024 and 2025.

The fare hike would result in $50 million in revenue in 2023, and $100 million in 2024. The increase would keep pace with labor and inflation costs, Willens said. There has been no fare or toll increase since 2019, and since then, labor costs have increased by 7.4 percent, he said.

He added the Port Authority has proposed an increase of 7.3 percent.

"This will only partially cover the increase in labor costs but it will help in a modest way," he said.
WIth the remaining deficit of $600 million in 2023, $1.2 billion in 2024 and 2025, and $1.6 billion in 2026, there are still challenges, Willens said.

In 2023, $600 million in new government funding is expected. "If that does not materialize, we will come back with alternatives in the February financial plan," Willens said. "But we need more than just a one-shot solution in 2023. The $1.2 billion deficits need recurring funding solutions. Without new recurring revenue, it could lead to larger fare hikes, service cuts, and head count reduction — to close the remaining gaps," Willens said.

The November 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 and 2026 down to $1.2 billion.

“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 that customers rely on while also prioritizing long-term fiscal responsibility.”

While ridership is still about two-thirds of its pre-pandemic peak, the MTA actually set a post-COVID systemwide ridership record Sept. 14, carrying more than 5.6 million riders. Metro-North set a ridership record on two consecutive days in September, carrying more than 181,600 riders, the highest since at least March 2020.

"It is nice to see customers returning in such numbers, as it speaks to the attractiveness of taking the railroad to move around the region. This ridership resurgence comes at a great time," Rinaldi said then. "We look forward to welcoming more riders back to the railroads as we head into the fall and the holiday season."

“In the July financial plan, we laid out the case for early action to address the MTA’s looming fiscal cliff," Willens said. “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.”

The proposed budget assumes the June 2023 restoration of recurring fare and toll increases, ultimately providing $373 million in additional annual revenue.

by Patch Editor Lisa Finn. Editor Lanning Taliaferro contributed to this report.