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MTA Proposes 2023 Budget as Post-COVID Ridership Patterns Create Funding Shortfall

Updated November 30, 2022 8:45 p.m.
Riders return to school and the office, taking subway, bus and commuter railroads to get there.

MTA Proposes Significant Deficit Reductions Through Operating Efficiencies and Restoration of Recurring Fare and Toll Increases

More Action Needed in 2023 to Preserve Essential Transit Service While Avoiding Substantial Fare Increases and Service Reductions

View the November Financial Plan Presentation Here

View Post-Board Meeting Press Conference Here

The Metropolitan Transportation Authority (MTA) today released its proposed 2023 budget and four-year financial plan, bringing clarity to the financial challenges the MTA faces as $15 billion in federal COVID-relief funds, now down to $5.6 billion, begin to be exhausted. The proposed 2023 budget assumes $600 million in additional governmental funding or alternatively, significant additional cost-saving MTA actions. The proposed financial plan also contains a roadmap for the MTA’s longer-term fiscal stability, safeguards New York’s essential transportation services, enhances transit equity, and provides a sustainable foundation for New York’s continued economic growth.

The November plan, following recommendations put forward in the July financial plan, outlines actions from the MTA to shrink the structural deficit from $2.6 billion to $600 million in 2023 and from almost $3 billion in 2025 and 2026 down to $1.2 billion. Starting in 2023, the MTA projects operating efficiencies yielding $100 million in savings in 2023 and rising to $416 million in savings by 2026. Absent additional government funding to address 2023’s $600 million deficit, further MTA actions will be necessary, including the faster spend-down of remaining federal funds, staffing reductions, higher fare increases, deferral or cancellation of capital projects, and/or service reductions.

“The past three years have proven how essential the MTA is to the success of the New York City region – in New York, robust transit service is as critical as air and water,” said MTA Chair and CEO Janno Lieber. “The budget proposed today puts us in a position to continue delivering the essential transit services that customers rely on while also prioritizing long-term fiscal responsibility.”

“In the July financial plan, we laid out the case for early action to address the MTA’s looming fiscal cliff,” said MTA Chief Financial Officer Kevin Willens. “Today's proposed budget and financial plan further demonstrates the need for new, dedicated sources of funding which, combined with MTA actions to find savings without limiting service, can greatly reduce the fiscal cliff and protect mass transit for the region.”

"In my six months at New York City Transit, I have seen first-hand that subways, buses, and paratransit are the lifeblood of this city, moving 5 million New Yorkers every day,” said New York City Transit President Richard Davey. “We are focused on finding cost-savings to ensure fiscal stability into the future while delivering frequent, reliable service and achieving a sustained level of at least 70% customer satisfaction across subway, bus, and paratransit by June 2024.”

“As we prepare to unveil the biggest expansion to commuter rail service in generations, it has never been more critical to provide the quality of service that railroad customers depend on,” said Long Island Rail Road Interim President and Metro-North President Catherine Rinaldi. “As ridership continues to recover, we are committed to delivering service while providing the cost-savings needed to address long-term fiscal challenges.”

The proposed budget assumes the June 2023 restoration of recurring fare and toll increases, ultimately providing $373 million in additional annual revenue.

In calculating the out-year deficits, McKinsey & Company conducted an updated ridership forecast, released in concurrence with the MTA’s July Financial Plan. In the four months since the forecast’s release, ridership across MTA services is tracking the midpoint projection of the forecast. The farebox revenue gap based on the McKinsey forecast when compared with pre-pandemic fare and toll revenue projections averages $2.1 billion from 2022-2026. The MTA is projected to have a lower than anticipated 2022 deficit, driven by lower than forecast expenses and higher than expected revenues. The outyear deficits exceed the July plan, primarily due to increased pension cost projections.

The MTA Board will meet on December 21 to consider and approve the 2023 budget.