News Every Day | 03 September 2020, 23:55

New York City transit needs a $12 billion bailout—or the entire U.S. economic recovery may suffer

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The Metropolitan Transit Authority, which runs New York City’s subways, buses, and commuter rail lines, needs a $12 billion cash infusion to offset losses due to the coronavirus. If the federal government doesn’t approve aid, MTA CEO Patrick Foye says massive cuts to staffing and service could be implemented as soon as November.

“There will be a deterioration in service in New York City as we saw in the 70s and 80s,” Foye told reporters Thursday morning. “We don’t want to go back to that.”

Foye also argued that, because New York City is such an economic powerhouse, a weakened transit system there would slow the entire country’s economic recovery.

“There will be fewer people employed in New York City, and the region, and the nation, if the MTA doesn’t get funding,” he told reporters. “The economic recovery will be stunted and thwarted if that doesn’t happen … the economy will be depressed.”

New York City was an early epicenter of the coronavirus pandemic. The MTA reported ridership (and fare revenue) on trains, buses and subways plummeted as much as 92% in March. Foye says ridership remains down 72% for subways compared to last year, and 50% for buses, while increased cleaning protocols have driven costs up. The agency now reports it is losing $200 million weekly, and faces a $16 billion deficit through 2024. (After reaching historic highs in 2015, ridership had already begun declining by as much as 5% annually before the pandemic.)

The first installment of the Federal CARES act provided close to $4 billion in relief funding for the MTA, but a second round of relief funds has been stalled in Congress. Foye told reporters an additional $12 billion from Congress would allow the MTA to avoid cuts for the rest of 2020 as well as 2021, when a coronavirus vaccine is expected to become widely available. Without that aid, he said, decisions about service and staffing cuts would be made by MTA leadership in November.

The potential cuts are shocking. Foye said they would include an as much as 40% reduction in passenger service within the city, and a 50% decrease in service on commuter rail lines, which connect the city to outlying areas where many city workers live. Those reductions would mean much longer wait times and more crowded buses and subways.

Also on the chopping block would be 8,400 jobs across the MTA system, and further delays of long-planned upgrades to the system. Foye said fare increases could also be part of the necessary restructuring.

New York has maintained aggressive restrictions on indoor dining and other businesses that can contribute to coronavirus transmission. That has helped the city contain the pandemic in recent months better than most of the U.S., but not without a serious toll: unemployment in New York City is currently 19.8%, nearly twice the nationwide rate.

Reduced MTA service could make recovery much more difficult. New Yorkers overwhelmingly rely on public transit to access jobs – only 45.4 % of households in the city own a car, dropping to 24.4% in Manhattan. That’s compared to nearly two cars per household on average nationwide. Reliance on transit rather than cars bolsters the city’s economic vibrancy by increasing density and, in turn, labor and capital productivity.

That’s why the MTA’s health is not merely a local issue: the New York City region generates 8% of total U.S. GDP. According to an analysis by SUNY’s Rockefeller Institute of Government, New York’s massive economy means the state sends $116 billion more in tax revenues to the federal government than residents receive in benefits and services, though Gov. Andrew Cuomo’s framing of New York as a “donor state” has been disputed.