Federal Funding Provides MTA with Financial Stability Through First Half of 2024; No Fare Increase in 2021

The Metropolitan Transportation Authority (MTA) announced that Federal funding will provide the Authority with financial stability through the first half of 2024. The MTA is expected to receive $10.5 billion in Federal funding from December 2020’s Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) and the American Rescue Plan Act (ARPA) passed in March 2021. As a result, the Authority will not have to take immediate action on cost-cutting measures such as right-sizing of service and wage freezes. The MTA will also forgo a fare increase in 2021.

Since the February plan farebox revenues have improved, toll revenues have remained consistent with the best-case scenario, and Congress passed another Federal relief package that is expected to provide $6.5 billion in aid to the MTA. Farebox revenue, which was forecasted for the worst-case scenario in February, is now trending toward the midpoint scenario, increasing revenue by $3.7 billion through 2024. Toll revenue holding consistent to the best-case scenario, is expected to increase revenue by $799 million by 2024. Absent of recurring revenue streams to offset the postponement of fare increases, service right-sizing and wage freezes, the Authority forecasts a deficit of $605 million in 2025, even after the use of $2.9 billion of deficit bond proceeds.

Not included in the financial plan is risk that some intended revenues from CRRSAA might be redirected to another state.

To cover the budget deficits in 2024 and 2025, 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 (MLF), 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. 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.

During the February meeting of the MTA Board, the Board did approve a toll increase that took effect in April on its bridges and tunnels, which raised tolls rates to yield a 6% increase in revenue and preserves the resident discount programs. 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.

-via Press Release

This article was posted on: July 22, 2021