Fare Hikes Could Be Coming To LIRR To Address 'Fiscal Cliff': MTA

LONG ISLAND, NY — A dramatic drop in ridership since the COVID-19 pandemic has led to a funding shortfall for the MTA — 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 specifically just the LIRR.

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

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.

Discussing ridership recovery, Willens said, currently ridership is tracking at about 63 percent, with the forecast projecting an improvement to 69 percent by 2023 and a jump back to 80 percent by 2026.

"The continued lower ridership as a result of the pandemic creates revenue shortfalls in excess of $2 billion per year for 2023 to 2026," Willens said.

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.”

“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.”

“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 Long Island Rail Road Interim President and 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 budget assumes the June 2023 restoration of recurring fare and toll increases, ultimately providing $373 million in additional annual revenue.