An infusion of state money has kept the MTA from dire fiscal straits for now — but the agency needs to grow ridership if it wants to stay afloat, state Comptroller Thomas DiNapoli says in a report due Thursday.
While MTA has exceeded its farebox revenue expectations by $36 million so far this year — largely the result of increased ridership on the subway system and Metro-North — any downward trend in ridership could put the agency back in financial peril, the comptroller said.
State lawmakers bailed the MTA out of a $1.2 billion deficit this year in the state budget that gave the agency $300 million in taxpayer money, a $500 million share of the licensing fees from downstate casinos, and $1.1 billion from a payroll tax hike on large New York City businesses.
“The MTA must use this substantial increase in resources to execute its most critical goal: bringing riders back to the system,” DiNapoli wrote.
“If the Authority is unable to bring riders back to the system, it will once again face fiscal pressures that could lead to higher-than-projected fares, reductions to service or disinvestment in the system,” he added.
Ridership on all MTA buses, subways and commuter rail lines took a nosedive in 2020.
As the COVID-19 pandemic left New Yorkers home-bound and locked down, the MTA counted just 640 million subway trips, down from 1.7 billion in 2019. At the height of the lockdown in April 2020, ridership fell to less than 400,000 riders a day.
Ridership is now rising, with MTA officials announcing a new milestone last month: 4.1 million subway straphangers on September 19, 72% of the pre-COVID benchmark.
Citing a five-year fscal plan released by the MTA in July, DiNapoli wrote that the agency “assumes riders will return to the system slowly, reaching a ‘new normal’ ridership of 1.4 billion in 2027.” That would amount to 80% of 2019 ridership levels.
Fewer riders could cost the system millions of dollars. Citing the MTA’s own assessment, the comptroller said the agency stands to lose $325 million per year for every 5% drop in ridership.
DiNapoli also expressed concern over the MTA’s projections for Long Island Rail Road ridership into Grand Central Madison.
“The LIRR expects ridership on GCM to increase to 2.8 million in 2024 and close to 5 million riders in 2027,” up from a projected 914,000 this year.
“[That] may be unrealistic,” he wrote.
If Grand Central Madison ridership instead followed the MTA’s projections for the LIRR as a whole, the comptroller’s office estimates $28 million less in farebox revenue than predicted by 2026.
In addition to ridership concerns, the report identified other potential risks to the MTA’s financial security.
Overtime costs at the agency are exceeding predictions this year, the comptroller wrote, coming in at $750 million as of August.
If the MTA’s average monthly overtime expenditure of $94 million continues, DiNapoli wrote, it’ll exceed it’s $927 million overtime budget by more than $200 million.
DiNapoli also warned that any delay in the approvals of the downstate casinos — whose licensing fees go to the MTA as part of the budget deal —– could return the agency to the fiscal cliff.
Three casino licenses are up for grabs, and the MTA is counting on $500 million in revenue from the casinos in 2026 and 2027.
