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MTA postpones 4% fare hike; budget deficit could hit $600M by 2025

MTA officials said Wednesday that trimming service on

MTA officials said Wednesday that trimming service on the LIRR makes sense, given that ridership isn't expected to return to even 85% of pre-pandemic levels until 2025. Credit: Newsday/Alejandra Villa Loarca

The MTA will have to find new ways to generate revenue now that it has nixed a planned fare increase this year, and that could impact future service for Long Island Rail Road riders, agency officials said Wednesday.

A day after Metropolitan Transportation Authority chairman Patrick Foye relented to calls from board members to further postpone a planned 4% fare increase, agency officials resuscitated calls to "right-size" service to reflect the reduced demand due to the COVID-19 outbreak.

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The MTA Board officially rescinded its plan to raise fares this year by 4%, but in doing so removed from its budget $17 million in projected fare revenue this year — money officials say will have to be made up somewhere.

After exhausting $14.5 billion in COVID-19 stimulus funds, and a $2.9 billion federal loan, the MTA expects to be left with a budget deficit of $600 million by 2025.

Among the options to fill future deficits, MTA officials said, is “right-sizing” service to meet reduced demand. Ridership is expected to remain up to 20% below pre-pandemic levels even by 2024. The MTA’s chairman said any future cuts would be “modest” and not occur before 2023.

"We've got to align our service to whatever the new normal is going to be," MTA chief financial officer Robert Foran said during an MTA Board meeting in Manhattan as he gave his midyear update on the agency's finances.

Foye, in his last MTA meeting before leaving the agency to head Empire State Development, the state's economic development arm, later said reducing service was one of many options, but that any cuts would be modest and that "there is not the possibility" for them to be significant. He added that any reductions would not come before 2023.

For the LIRR, which is already running about 15% fewer trains than before the pandemic, Foye said the next change in service would likely be to bump it back up.

After surviving the worst fiscal crisis in its history last year, when the pandemic decimated ridership and revenues, Foran said things have been looking up for the MTA, with the federal government coming through with $14.5 billion in stimulus aid and ridership returning faster than anticipated.

But forgoing the $17 million in additional fare revenue that was forecast with a fare hike this year will contribute to future deficits, which could reach $600 million by 2025, he said. The shortfall would come even after exhausting a $2.9 billion federal loan that MTA officials hoped to not have to use.

The prospect of further reducing service troubled some MTA Board members, who want the agency to find new ways of generating revenue besides raising fares. Some ideas have included new fees on tourists, a gas tax, and discounting bus and subway fares for low-income New Yorkers to discourage them from evading paying fares.

MTA Board member Norman Brown suggested cutting service — and thereby increasing wait times and crowding on trains — would discourage riders from returning to the system, and undo much of the good accomplished by freezing fares this year.

Brown also took issue with the MTA claim that it would merely be "right-sizing" service.

"Why don't we just call it a 'cut'? I think it's important for people to really focus on what we're talking about when we say a thing like 'right-sizing.' It means a cut," Brown said.

MTA officials later clarified that "right-sizing service" could mean increasing it, if ridership levels warrant it. After bottoming out at around 3% of pre-pandemic levels in the spring of 2020, the LIRR's weekday ridership has gradually recovered to around 45%. MTA officials have predicted that it could take until 2025 for ridership to return to 85% of what it was in 2019.

Although a fare hike was kicked to next year, the MTA Board did approve one measure that will affect what LIRR riders pay for their tickets. The board officially designated the new Elmont station, set to open later this year, as part of the LIRR's Zone 4.

That means a peak, one-way ticket to or from Penn Station will cost $12.50. A monthly commuter pass will be priced at $270.

The existing Belmont station, which is only open during horse racing season, is also now considered part of Zone 4. It was previously considered a "special events station" with a unique fare structure.

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