Welcome Short-Term Relief, But Concerns Remain about Huge Deficits and State Raids
It is good news for the MTA and its riders that Congress has reached agreement on a COVID-19 emergency aid package that includes more than $4B for the MTA. We thank Senator Schumer and the New York Congressional Delegation for their work to ensure the MTA was included in the package. This emergency funding will stave off the debilitating 40% service cuts and layoffs that would have been necessary to close the MTA’s 2021 budget gap.
The MTA’s long-term financial health is still of concern, however, given large remaining deficits of at least $8B from 2022 to 2024. In the absence of an earlier aid package in 2020, the MTA borrowed $3.4B from the Federal Reserve in 2020 to balance its 2020 budget, and will start making payments on that loan in 2023. While this borrowing helped solve immediate cash-flow problems, it should not be viewed as a substitute for direct federal emergency aid.
We also remain deeply concerned about possible raids on the MTA’s state dedicated taxes, given that the Congressional aid package does not include aid for state and local governments. Through the “budget adjustment process” agreed upon by the Governor and Legislature in April, the state Division of the Budget has been withholding payments to the MTA, local governments, and state vendors. This has resulted in large balances in MTA dedicated fund accounts. The state has accumulated a total cash hoard of $27B or $15B more in the bank than this time last year, according to the latest report from the State Comptroller.