New York's subway system needs a light at the end of the tunnel, fiscal cliff approaching

There doesn’t appear to be much light at the end of the tunnel for the beleaguered Metropolitan Transportation Authority.

The New York state-run agency that oversees mass transit in the New York City area is not seeing ridership return anywhere near levels prior to COVID-19, and because of that, the MTA’s dreaded “fiscal cliff” is now expected to hit even sooner than expected.

Earlier this year, MTA officials believed the agency would not hit that cliff until 2026. A new report by consultants at McKinsey shows ridership at just 61% of prepandemic levels. A report in February predicted ridership at 77%.

That’s led officials to increase forecasted deficits for the rest of this year and future years. Five months ago, the MTA anticipated a $1.54 billion hole. Now, it’s $2.67 billion.

Federal assistance is expected to prop up the agency through 2024, but come the following year, MTA leaders forecast a $2.58 billion deficit they will need to address. By 2028, the annual hole is expected to grow to $2.75 billion.

State Comptroller Thomas DiNapoli warned that the already gloomy forecast could take a turn for the worse in the event of a recession, which has since been confirmed with this week's announcement of a second consecutive quarter of decline by the U.S. GDP.

Democrats are in denial a recession is at hand.

“The growing disparity between revenues and expenditures necessitate that the MTA act quickly and creatively to provide options to boost revenue amid service demand changes and generate cost efficiencies and savings solutions to mitigate the widening gap,” DiNapoli said.

MTA Chair and CEO Janno Lieber said finding new revenue sources is imperative.

“Transit is essential to the economic future of New York as we continue to recover from the pandemic, and it should be treated as an essential service, with strategies that don’t just put the problem on the backs of our riders through painful service cuts and fare increases,” Lieber said.

A potential source of revenue could come through a plan to implement so-called congestion pricing, which would enact tolls on driving through the central business district.

The state expects an environmental assessment to be released in about two weeks. In late August, the state will hold a series of virtual public forums on the plan.

If the Federal Highway Administration signs off on the plan, a panel called the Traffic Mobility Review Board would come up with recommended toll rates as well as policies to issue credits or waivers that the MTA Board would need to approve.

DiNapoli said getting the board set up is a key step in helping the agency fund its capital plan projects.

Five members of that board have been announced, with a sixth to be recommended by New York City Mayor Eric Adams.