Persistent fare evasion and a decline in real estate tax revenues were on track to land the MTA’s day-to-day operating budget in a $428 million deficit in 2027, with a $469 million deficit projected for 2028, the transit agency said Wednesday.
Not included in that official accounting were multiple anticipated operating budget expenses due to Gov. Hochul’s pause on congestion pricing.
Those potential costs, listed in the MTA’s budget analysis as “risks to the operating budget from the congestion pricing pause,” include $800 million to $1 billion in additional maintenance costs, debt service and the loss of a projected increase in ridership over the next four years — meaning the agency’s much-lauded projection of a deficit-free half decade did not last long.
The toll on drivers entering Midtown and lower Manhattan had been expected to fund $15 billion in bonds to fund the MTA’s large-project capital budget. But as previously reported, that loss in funding will mean the MTA must spend from its day-to-day operating budget to upkeep aging equipment.
“We do take the governor at her word that she is committed to funding the capital program — through congestion pricing, as this board has endorsed so strongly, or otherwise,” said MTA chair Janno Lieber.
“I’m confident that the decision makers in Albany — all of them — understand the need, and that they will respond,” he said.
Congestion pricing notwithstanding, Kevin Willens, MTA’s chief financial officer, said ridership revenues and tax revenues had been generating less revenue than expected.
“Subway and bus revenue is below budget by about 5.5%,” Willens said. “That’s primarily due to fare evasion.”
The CFO said the agency is roughly $100 million under budget for the first six months of bus and subway revenue.
While fare evasion has not necessarily increased since the MTA’s blue-ribbon panel reported roughly $700 million in losses across all of the transit agency’s services, the problem has not abated at the rate the MTA’s finance chiefs had projected when authoring the five-year financial plan.
“We’re bringing down the forecast by about $200 million a year,” Willens said of anticipated bus and subway fares.
Real-estate tax revenues have also been below expectations, Willens said.
The Mortgage Recording Tax — based on MTA region mortgages — and the Urban Tax — based on real estate transactions in the five boroughs — are expected to underperform to the tune of $790 million.
Willens said his office expected the real estate market to take four years to recover back to expected levels of tax revenues.
The July financial report included some silver linings. Debt service costs were projected to be $370 million lower than anticipated, Willens said.
Paid ridership on the MTA’s commuter rail were meeting or exceeding expectations, as were bridge and tunnel tolls, to the tune of roughly $320 million.
