The MTA is “highly likely” to cut service and take on more debt to close its COVID-19 budget hole — even if it receives $4 billion from the latest pandemic relief bill, according to Moody’s credit agency.
Moody’s analysts warned Wednesday that while the money in the relief bill awaiting President Trump’s signature would make the MTA’s 2021 budget “manageable,” it may not be enough to prevent further calamity down the line.
“This federal support would provide much needed bridge funding in 2021 that would stabilize liquidity and reduce the need for additional deficit financing or large scale service cuts,” the firm wrote in its latest comment on the MTA’s finances.
“However, 2021 budget risks remain for MTA, and it will be challenging to restore structural budget balance over the medium term due to a protracted and incomplete ridership and economic recovery through 2024.”
New York transit leaders have toiled in financial uncertainty for months thanks to depleted ridership and tax revenues amid COVID-19.
New Yorkers are not expected to return to the system en masse for some time, Moody’s said. Tax revenues also remain uncertain — and depend both on the region’s economy and the whims of state officials, who have withheld millions from the MTA in order to balance their own budget, according to the report.
Proposed fare and toll hikes, meanwhile, another potential source of cash, have shown to be “politically challenging,” Moody’s said.
That leaves borrowing as the MTA’s best bet for cash, which Moody’s cautioned “results in higher debt and fixed costs that crowd out other important spending.”
The conclusions match comments from MTA officials, who have said the incoming cash will only be enough to stave off layoffs and cuts in the short term. The MTA faces a nearly $8 billion deficit in 2022, 2023 and 2024, according to budget docs.
“The deficits continue,” Chief Financial Officer Bob Foran told MTA board members last week.
“We are going to have to take actions to offset those actions in the future, absent continuing federal support.”