Ask the experts: Is Hochul’s plan enough to fix the MTA’s financial problems?

Gov. Kathy Hochul unveiled a proposal to tackle the Metropolitan Transportation Authority’s financial crisis as part of her fiscal year 2024 executive budget. The plan included more money from payroll mobility taxes, a $500 million investment from the city, a one-time $300 million investment from the state and identifying $400 million in operating efficiencies within the agency.

The governor’s proposal was met with both support and criticism from transit advocates and state lawmakers. Ahead of this year’s budget negotiations, there has also been growing enthusiasm for the Fix the MTA bill, a measure supporters argued will address reliability problems for straphangers with six-minute service and generate revenue for the agency.

Today, lawmakers and advocates rallied at the state Capitol for the bill, including state Senate Deputy Majority Leader Michael Gianaris, state Sens. Jessica Ramos, Nathalia Fernandez and Andrew Gounardes as well as Assembly Members Jessica González-Rojas, Michaelle Solages, Robert Carroll and Jeffrey Dinowitz. Gianaris, the Senate sponsor of the bill, said it was time to directly address the MTA’s issues with long-term solutions.

“When we talk about fixing the MTA, we’re not talking about putting a Band-Aid on the problem. We’re not talking about scraping a couple of nickels together to make it through another year and then facing the same problems next year,” Gianaris said.

City & State spoke with experts and advocates about the governor’s plan to help the MTA, including Daniel Pearlstein, policy and communications director at Riders Alliance; Nicole Gelinas, a senior fellow at the Manhattan Institute; Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the MTA, and Assembly Member Zohran Mamdani, who is sponsoring the Fix the MTA bill in the lower chamber. The responses have been edited for length and clarity.

Do you think Gov. Kathy Hochul’s proposal to help fund the Metropolitan Transportation Authority will be effective? Why or why not?

Lisa Daglian: It’s really clear that there needs to be a change in the way the MTA is funded. Just doing things the way that they’ve always been done isn’t going to work going forward. The governor has put the opening salvo for discussions with the Legislature on some funding proposals and we’re looking forward to a robust conversation. There’s been a lot of pushback against the payroll mobility tax and how it may drive businesses away. But there is relatively a small number of businesses that are being affected. I think there’s always a lot of concern about increasing taxes and fees, but there has to be something that will fix the funding problems once and for all. As riders’ fears, concerns and problems grow, so do businesses – so it’s really crucial for businesses and our regional economy that our foundation is stable. We rely heavily on transit and asking everyone to contribute to stabilizing this important service is what it’s going to take.

Danny Pearlstein: Gov. Hochul’s proposal was a firm foundation and now we need to build on it in the final negotiations. Riders need the governor to make transit better than it was before the pandemic. That means more frequent service with $300 million in this year’s budget – beyond what the governor has proposed. It could come from any number of places. As we saw last year when the governor suspended the gas tax, there is money available.

Nicole Gelinas: This is not a long-term fix for the MTA. We have a governor who said multiple times, she doesn’t want to raise taxes on the middle class – but increasing payroll taxes hits all downstate payrolls. You don’t see it in your paycheck because your employer pays it before it gets to you. Secondly, Mayor Eric Adams has said the city is not thrilled about the idea of just giving another $500 million to the MTA. The operating efficiencies are already baked into the MTA’s budget, so they don’t make the budget deficits any lower. The biggest thing is there’s really no big-picture effort at cost reform.

Zohran Mamdani: I welcome this much-needed investment, but it does nothing to avert a fare hike to $3, provides no funding for any increase in service and ensures that New York City continues to lag behind other cities when it comes to implementing fare-free buses. While the governor’s proposal staves off the worst-case scenario for the MTA, it will not be effective because it does not address the authority’s many crises beyond its operating budget shortfall.

Where do you see MTA’s financial crisis going in the next five years?

Daglian: Fixing the problem has to start now. The COVID-19 pandemic showed us that transit is an essential service. We all have to be a part of the solution because the problem affects us all. Over the next five years, finding efficiencies within the MTA is something that is super important so everyone feels that they are contributing to the solution. Also looking at the new revenue streams – such as the casinos, taxes on cannabis sales and sports betting – and how they can be dedicated to the MTA as the engine of the region is key.

Pearlstein: It depends. Gov. Hochul has proposed a budget sufficient to keep buses and trains running, but we need to do better than that because transit needs to compete better than before the pandemic with other ways of getting around it. Frankly, the MTA needs to compete better with staying home and to do that we need to save riders time. We need to make transit more competitive with other ways of getting around – that means more frequent service, faster trips, shorter waits on platforms and bus stops, and more seamless service that brings the city closer within reach of more New Yorkers.

Gelinas: The state Legislature, the governor and the city government have to acknowledge we’re probably not getting anywhere close to 2019 ridership anytime soon. So what does a sustainable cost and revenue structure in that environment look like? We still have too many people looking at different parts of the problem and not coming up with one big solution.

Mamdani: If we follow the governor’s proposal, we will be back in the middle of yet another MTA financial crisis in that time, if not sooner. Here’s why: One of the root causes of the MTA’s current deficit is the continued gap between pre-pandemic ridership and today, the latter roughly 65% of the former. The governor’s proposal does nothing to incentivize riders to get back on the train or the bus, instead it makes the same insufficient level of service more expensive – all amidst a cost of living crisis. If you ask New Yorkers to pay more for the same, you are creating the conditions for a downward spiral where more and more of our constituents stop taking the train or riding the bus, which then has serious knock-on effects for the MTA’s finances given how much of their revenues are tied to the farebox. Now is the time to break this cycle of disinvestment.

Lawmakers and transit advocates are calling on the governor and state Legislature to support the Fix the MTA bill, which would reject fare hikes and fund six-minute service and make buses free. What is your perspective on this proposal?

Daglian: The proposals in the Fix the MTA package are really comprehensive. They look to increase transparency and they look to increase the representation of riders – with people who are riding the system on a daily basis and those on the MTA board. You have legislation that looks to further lock in funding for the capital program and is a fairly comprehensive approach to looking at the different needs to make the MTA financially whole and to address the long-term sustainable needs of transit riders for decades.

The governor proposed $300 million is one-shot emergency aid. We think that that’s a great place to start to be adjusted for inflation and added to the budget every year. Also when there was a gas tax holiday, the state made whole the MTA’s losses. The money from the gas tax and the business petroleum tax goes to fund transit and roads and bridges. If that money is available to fund transit, and it can be found, then let’s just keep that in the budget. Let’s do that regularly, let’s do that annually, and keep that as a floor number. There should also be a comprehensive review of existing fees and services, fees and taxes that could be looked at to raise additional revenue for this essential service – that really is the lifeblood of the agency and the region’s economy.

Pearlstein: Gov. Hochul owes her historic victory last fall to public transit riders and workers in New York City. The bluest neighborhoods on the map are right next to subway stations. We’re looking to the governor to deliver for us when Albany has previously taken us for granted. Fixing the MTA is about making a targeted investment in more frequent service so that transit attracts more riders, operates more safely and delivers on the promise of equity and climate resilience that New Yorkers need.

Gelinas: There’s nothing wrong with the concept of six-minute service, but there is another financial cost. In making the buses free, you are giving up a source of revenue without a replacement source of revenue at a time when we have enormous deficits, so probably not wise to do so.

Where do you see aid for the MTA going in the budget negotiations this year?

Pearlstein: We saw the foundation in the governor’s executive budget, but we’re looking very closely at our 21-day amendments next week, and our 30-day amendments the following week and we know there is room in negotiations. We heard from the comptroller last month that there’s a $7.7 billion budget surplus, and the governor has said she’s putting money into a rainy day fund. It’s pouring on public transit riders. We are suffering from wait times of 12, 15, even 20 minutes. This is the year to make that investment in New York’s future with better transit.

Gelinas: One point of negotiation will be the payroll tax increase. This falls on all counties in the downstate region, including suburban counties where most people drive to work and are not relying on mass transit. Another point that lawmakers should bring up is: What is going on with congestion pricing? The Legislature enacted congestion pricing four years ago in the state budget, but we still don’t have congestion pricing and we don’t know when it’s going to be enacted. To sort of “leapfrog over that” and create a new tax doesn’t make a lot of sense.

Mamdani: This is the budget where we move beyond the bare minimum when it comes to the MTA. Dozens of my colleagues and I see this year as the one where we not only fill the authority’s operating budget deficit, but also take critical steps toward creating a transit system that is affordable, reliable and universally accessible.