State Senators Admit They Don’t Understand The MTA’s Enormous Deficit

Damn, you're telling me scenes like this have almost bankrupted the MTA? Photo: Kate Hinds
Damn, you're telling me scenes like this have almost bankrupted the MTA? Photo: Kate Hinds

Legislators on Tuesday displayed a stunning lack of insight into where the MTA’s money comes from and the long-term financial state of the hobbled transit agency.

At a joint Assembly and Senate oversight hearing, State Senator John Liu continually cast doubt on the transit agency’s financial standing after MTA Chairman and CEO Pat Foye told legislators that the MTA was asking the federal government for $12 billion through 2021 to cover part of an anticipated $16-billion deficit over the next four years, thanks to massive decline in transit ridership and loss of billions in usual subsidies and taxes during the COVID-induced economic contraction.

Liu, who represents northeast Queens, had not appeared to have read the agency’s multiple studies and financial impact documents, and wrongly suggested multiple times that the agency’s revenue is only from fares and tolls, and that it was somehow hiding money or overstating its deficit in 2020. Or maybe he was just trying to score political points by beating up on the MTA, which is certainly not the state’s most popular authority.

“How does the MTA get into a $7.5-billion operating deficit just for this year when the total fare revenue is only $6 billion?” an incredulous Liu asked agency bigwigs.

MTA CFO Bob Foran explained that most of the MTA’s losses during the coronavirus crisis did indeed result from losses in fares and tolls, but the agency relies on more than that for revenue.

“The amount of money that we lost in terms of fares and tolls from the pandemic, $5.3 billion in 2020, is the projected loss this year,” Foran explained. “The subsidies we are projected to lose this year are $1.7 billion, and an additional $750 million in costs are projected. So 45 percent of our budget we had in February has been lost or increased in costs.”

Liu also suggested, in a throwback to his hit conspiracy around the MTA’s “two sets of books,” that the MTA was inventing its deficit to the detriment of a potential federal rescue: “I’m not sure where the MTA is coming up with its numbers. Where do you get the numbers from? Because the federal government needs to be able to believe those numbers as well.”

“The numbers are the numbers. They are in our financial plan,” an exasperated Foran told the senator.

The MTA has published multiple public reports on its tremendously bad financial situation, including a financial update to the MTA Board published in June that showed projected revenue from real estate and gas taxes and fees on for-hire-vehicle riders has completely melted away in 2020. The agency also published a McKinsey analysis that demonstrated the assumptions that went into various recovery scenarios for both ridership and economic recovery. In addition, multiple local media outlets have published stories on the agency’s financial calamity and the tough choices ahead of it as federal gridlock continues.

Transit advocates, who have been working overtime to convince Congress of the importance of a federal rescue for transit, were blown away at Liu’s sudden declaration that the deficit was made up or somehow inflated.

“Senator Liu seems to be actively undermining the MTA’s very real need for emergency aid,” said TransitCenter Senior Advocacy Associate Colin Wright. “It’s extremely unhelpful. New York City is in a crisis situation, and our leaders need to be united in getting the agency and its riders the resources we need.”

The unfamiliarity with the MTA’s fiscal situation was a bipartisan affair though. State Senator Robert O’Mara, who represents a district in Western New York, followed Liu’s questioning with a stunning admission of his own.

“I was under the impression that $12 billion [deficit] was through this year,” O’Mara told Foye and Foran, before suggesting that the MTA should ask for less money from the federal government and just go back for more when that money runs out.

Despite the fact that legislators didn’t do their homework, other advocates were willing to let things slide somewhat under the idea that practice makes perfect, and that any mistakes can be corrected with additional hearings.

“Legislative oversight of the MTA can only be strengthened with practice — the more hearings that are held, the more informed the members will be about the issues and the better they can hold the MTA accountable,” said Reinvent Albany Senior Researcher Rachael Fauss. “This is why we are asking for an additional hearing to be held this fall on the MTA’s financial state due to COVID-19.”

ALSO ON STREETSBLOG

The Last Thing New York Needs Is a Tax Break for Drivers

|
The MTA capital program, which funds maintenance and expansion of the transit system, is on the final year of its five-year cycle. A new plan is being developed, and the big question is how the state is going to pay for it. At a hearing of the Assembly Committee on Corporations, Authorities and Commissions, state […]