U.S. markets open in 7 hours 10 minutes
  • S&P Futures

    +26.00 (+0.73%)
  • Dow Futures

    +246.00 (+0.83%)
  • Nasdaq Futures

    +65.00 (+0.55%)
  • Russell 2000 Futures

    +21.40 (+1.18%)
  • Crude Oil

    +0.55 (+1.28%)
  • Gold

    -10.10 (-0.55%)
  • Silver

    -0.14 (-0.61%)

    +0.0010 (+0.08%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    -1.04 (-4.39%)

    +0.0019 (+0.14%)

    -0.0290 (-0.03%)

    +45.79 (+0.25%)
  • CMC Crypto 200

    +6.94 (+1.92%)
  • FTSE 100

    -17.61 (-0.28%)
  • Nikkei 225

    +638.22 (+2.50%)

New York’s MTA Says Region Risks $65 Billion Economic Loss

Michelle Kaske
·3 min read

(Bloomberg) -- The New York City region is at risk of losing an estimated $65 billion in gross domestic product annually if the federal government fails to allocate billions in aid to the Metropolitan Transportation Authority, according a report released Wednesday.

Without help from Washington, the nation’s largest public transit agency will have to drastically curtail services and lay off staff. That would reverberate through the New York City regional economy, potentially costing 450,000 jobs by 2022 and a $50 billion yearly loss in earnings in addition to the GDP blow, Pat Foye, MTA’s chief executive officer, said during the agency’s monthly board meeting on Wednesday.

“That federal investment would generate more than a 5 to 1 return and accelerate the regional and national recovery from this ongoing crisis,” Foye said regarding the MTA’s need for $12 billion of federal aid. “This should be a no-brainer on Capital Hill, but instead of desperately needed aid at this moment, we’re facing indifference from the Republican Senate leadership in Washington.”

His estimates come from a report released Wednesday by the NYU Rudin Center for Transportation Policy and Management and New York-based consulting firm Appleseed.

Potential Service Cuts

The coronavirus pandemic has decimated MTA ridership and revenue. The agency has been warning that it will be forced to slash subway and bus service by 40% and commuter rail service by 50%, impose layoffs and potentially use deficit financing without an additional $12 billion of federal help.

“The damage to the region of the proposed cutbacks in MTA spending would undermine the city’s and the region’s capacity to recover from the economic effects of the pandemic, and seriously harm the capacity of the city and region to retain and attract people and jobs in all sectors of the economy,” Mitchell L. Moss, director of the NYU Rudin Center for Transportation and Hugh O’Neill, president of Appleseed, wrote in the report.

Riders and MTA workers would see those changes by the end of March, if Congress declines to direct cash to the MTA or if it receives a much smaller aid package, Bob Foran, MTA’s chief financial officer, told reporters following Wednesday’s board meeting.

“We need to be doing something and getting it moving by the end of the first quarter,” Foran said.

Fed Loan

The MTA’s dire finances has prompted the agency to consider tapping the Federal Reserve’s Municipal Liquidity Facility program for a second time. The MTA and Illinois are the only issuers to utilize the Fed program as low interest rates have limited such borrowing to the most financially-stressed issuers.

The MTA, which owed nearly $46 billion as of Oct. 9, may borrow as much as $2.9 billion of remaining available capacity through the MLF. The agency submitted a notice of intent to the Fed and has been invited to file an application for the loan, Foran said during the meeting.

MTA officials in November will present a proposed 2021 budget that contains contingency plans if the agency fails to receive federal money or is allocated less than the $12 billion needed to cover budget gaps, Foran said. Board members will vote on the spending plan in December.

Crafting the 2021 budget will be an evolving process, Foran said. The outcome of November’s election, and whether Democrats win the White House and take back the U.S. Senate, could change the MTA’s prospects for receiving federal money.

“We’ll have a better idea after next week of what the possibilities are for the likelihood, probabilities, however you want to characterize it,” Foran said about getting federal aid. “We’ll know even more in December. If we still don’t have a clear cut direction when the board adopts the budget, we will be prepared to revise the budget, again, in January.”

(Updates with potential timing of service cuts in the seventh paragraph.)

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.