The post-pandemic reality for America’s public transportation is bleak. Work from home has solidly set in, leaving transit agencies that rely on fare-box revenue facing a fiscal cliff.
As pandemic aid dwindles, the nation’s biggest transit systems face a roughly $6.6 billion shortfall through fiscal year 2026, according to a tally of the top eight US transportation agencies based on passenger trips. Rising labor costs and inflation are hitting as farebox revenue stagnates after ridership collapsed. Those eight agencies serve regions that combined contribute about $6 trillion annually to the national economy.Local officials are pressing for help.
The MTA had initially projected a $600 million deficit this year that was estimated to grow to $3 billion in 2025 as federal pandemic aid runs out. It won a reprieve when New York Governor Kathy Hochul and lawmakers reached a last-minute deal in April to raise the payroll tax on New York City’s largest businesses to bring in about $1.1 billion for the agency. Lawmakers also agreed to provide another $300 million in one-time state aid to the transit agency.
“If BART doesn’t find new funding sources and the federal emergency money runs out, cutting service and operating hours, and closing some stations will be on the table,” General Manager Bob Powers said.That fiscal strain is threatening its AA credit rating, which could make it more expensive to borrow. And that’s crucial as it ponders building a second trans-bay tube at a cost of about $29 billion. BART is also expanding to downtown San Jose and Santa Clara, an approximately $9 billion project.
Metro says that in order to bring back and retain ridership the system has implemented a series of discounted and free fare programs, which puts further strain on the availability of eligible funding and its take from sales taxes dedicated to transit. Aside from its deficit, like many transit agencies, MBTA is suffering from labor shortages. A report released April 3 by the Massachusetts Taxpayers Foundation says the system needs to hire and train 2,800 workers in the next 12 months to safely and reliably operate and maintain its agency. In an effort to hire workers the agency is offering a $7,500 sign-on bonus for eligible roles, such as bus operators, rail repairers.
The system is expected to see federal funding run out in early to mid 2024 with a $240 million deficit annually. The transit provider is anticipating significant fare increases and services reductions starting in fiscal year 2025. Pre-Covid, about 38% of SEPTA’s operating budget expenses were paid by fare revenue, compared to about 21% now with ridership lagging 2019 levels.
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