Recorded November 16, 2020
Re: MTA Board Must Be Transparent About its Plans for Massive Operating Budget Deficit — Including Possible Service Cuts and Fare Hikes — Given Great Uncertainty About Federal Emergency Aid
Good morning. I am Rachael Fauss, Senior Research Analyst for Reinvent Albany. We advocate for more transparent and accountable state government, including for authorities like the MTA.
Reinvent Albany continues to work with transit advocates, the MTA and our congressional delegates to press for billions of dollars in federal COVID emergency operating assistance. Also of great importance is for the federal government to provide clarity on congestion pricing ASAP so that the program can be implemented quickly and billions in much needed revenue can flow to the MTA. Congestion pricing remains as important as ever for the future of the MTA and the NYC region.
Unfortunately, no one knows exactly when and how much the MTA will get from the federal government. But the MTA does know roughly when it will run out of operating funds. We believe the MTA board — which has a fiduciary duty to the MTA and under law essentially “owns” the authority — should tell the public when cuts could become necessary. It must be more transparent about how the MTA plans to deal with its massive operating deficit.
We hope this week’s Board presentation includes multiple scenarios for closing the MTA budget gap, including: full federal emergency aid, partial federal funding, and borrowing from the Federal Reserve’s Municipal Liquidity Facility (MLF) program. For all of these scenarios, the public deserves to know exactly when the “drop dead” date for service cuts and fare hikes will be, and exactly when the Board will need to vote on any changes.
We emphasize that the Board should have a say in any mid-year adjustments to the MTA budget, with public votes on any changes to service and/or fares. The public stakes for service cuts and fare hikes are huge given the hit NYC has already taken to its economy, and the Board as the fiduciaries of the MTA should have a vote on any mid-year changes.
Regarding the Federal Reserve’s Municipal Liquidity Fund or “MLF” program, we thank Senator Schumer for asking the Fed to extend the program beyond 2020. A longer borrowing window would help the MTA to borrow as needed, rather than the maximum $2.9B this year. The Board authorization being put forward today would allow for incremental borrowing, should the MLF be extended. We ask that the MTA work with Senator Schumer to make this change happen, and further improve the program with lower interest rates, 5-year bond terms, and an increased cap. The MLF program is not a substitute for direct emergency aid, but can support the MTA with a low-interest bridge loan as it weathers the COVID-19 crisis.
We would also like to remind the Board that a short-term loan from the Fed cannot be an excuse for the Governor to raid MTA dedicated funds. The Governor must do his part and deliver to the MTA 100% of the dedicated transit funding that comes in. This means not withholding any funds, and not subjecting MTA dedicated taxes to 20% across-the-board cuts — an additional $600M hit.
Thank you for your consideration.