View all Articles
Commentary By Nicole Gelinas

The MTA Is Weathering the Corona Crisis — but It’s Going to Need Help

Cities, Cities, Cities Tax & Budget, Infrastructure & Transportation, New York City

How will the Metropolitan Transportation ­Authority weather the coronavirus crisis, which rivals 9/11, the 2008 financial crash and Hurricane Sandy in its seriousness?

This disaster is unique, in that a big part of containing it means keeping people off the subways and buses. Washington should acknowledge this fact as it prepares emergency aid to states.

Our state-run MTA, deeply troubled in normal times, is pretty good at handling acute emergencies. After Sandy, the authority amassed bus caravans to get people to and from Manhattan when tunnels were flooded, helping to get New Yorkers back to work quickly. The MTA even resumed most service on the afternoon of 9/11 to help people flee the aftermath of the attacks.

Coronavirus, though, is the opposite of all past MTA crises, where the goal was always to get as many people around as possible, whatever the physical difficulties.

This time, the goal is the opposite: keep most people away from each other to slow the spread of the virus and prevent hospitals from being overwhelmed as they treat the sickest patients in ICUs.

Last week, Gov. Cuomo closed Broadway, stadiums and museums to encourage people not to gather together. Most New Yorkers who can do so are working at home.

But the MTA can’t drastically cut back service to match the lower ridership, as that would screw up the whole point: Keeping trains and buses as uncrowded as possible, for the people who need to get around, like grocery store workers and home health aides. “For now, we are running a normal service,” acting subways chief Sarah Feinberg told radio host Brian Lehrer Thursday.

This may change: If cases continue to spread, despite ­Cuomo’s canceling of large gatherings, he will have to consider a more drastic measure. To really lock down the city, you close off its transit, as New York has always relearned through its once-in-a-generation subway strikes. Indeed, the governor did this once before a predicted snowstorm, just to keep people home before the storm hit.

For now, though, the MTA is stuck with a potential apocalypse, financially: massive drops in ridership coupled with higher-than-normal costs, as it scrambles to keep trains and buses clean.

Toward the middle of last week, subway ridership was down nearly 20 percent and bus ridership was down 15 percent, while commuter rail ridership was down by one third to nearly one half. Toll collections on bridges and tunnels were down, too.

This means less fare revenue. In a typical March, the MTA collects about $700 million in fares and tolls, and $6.5 billion over the full year. Losing even 20 percent of that revenue would mean a $140 million budget hit just for one month.

And with coronavirus’ spread unclear, this estimate is conservative: A $500 million or more loss over several months isn’t out of the question. Subway ridership was down 38 percent Friday. A school closure will make the drop deeper, as will tourists staying away during the spring and summer.

Then there is the other half (roughly) of MTA revenues: $6.5 billion in taxes. These taxes are highly sensitive to the economy. The MTA gets half a billion dollars a year from taxes related to new mortgages, for example, and $1.6 billion from a tax of one-third of 1 percent on downstate payrolls. It also gets money from the sales tax. If people stop buying apartments and tourists keep away from Fifth Avenue, that income will drop.

After 2008, the MTA saw a half-billion-dollar drop in tax revenues over just a few months. It took three years, plus ­Albany’s creation of the huge new payroll tax, to recover. An equivalent drop today would be $800 million. And back then, ridership didn’t fall.

The MTA doesn’t enter this crisis from a terrific position. As of last month, it expected to end this year with just $81 million in spare cash. And that’s if it can achieve $250 million in savings from back-office “transformation,” something that responding to coronavirus could delay.

Nor will the MTA be alone, nationwide, in seeing transit-system ridership and revenues plummet.

As Congress and President Trump consider the fastest ways to help states get through this crisis, no-strings-attached emergency aid for mass transit is an obvious one. Longer-term, Washington should tie additional recovery aid to cost reform.

As coronavirus unfortunately demonstrates, the nation’s economy depends on urban crowds — and subways, buses and commuter trains to move those crowds.

This piece originally appeared at the New York Post

______________________

Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. Follow her on Twitter here.

This piece originally appeared in New York Post