Mass transit systems in American cities face post-pandemic fiscal cliff

As millions of white-collar workers in American cities continue to work from home three years after the start of the COVID-19 pandemic, revenue generated by mass transit ridership remains far below pre-pandemic levels, posing a dire threat to regional economies and resulting in more traffic and pollution.

And now, with emergency funds from the American Rescue Plan of 2021 drying up, transit agencies are scrambling to find fresh infusions of cash to keep them afloat and are warning that service cuts and higher fares may be unavoidable.

“The large agencies in cities like New York, Philadelphia, Chicago and San Francisco that rely on a lot of white-collar office workers going into the central business district are really struggling in this moment,” Hayley Richardson, a spokesperson for TransitCenter, a national pro-public-transit advocacy organization, told Yahoo News. “Those agencies in that category are really facing enormous budget deficits — starting, for some agencies, this year, but will really become existential in the next couple of years.”

The hardest-hit agencies have seen their ridership cut in half. Last year, the Chicago Transit Authority had 54% as many riders as it did in 2019. As of mid-March, the Los Angeles Metro’s average daily rail ridership so far this year was 51% of 2019’s, and Bay Area Rapid Transit (BART), which connects San Francisco with cities and towns around the Bay Area, is at just 40% of its pre-pandemic ridership.

In November, 15 of the largest transit agencies in the country sent a joint letter to Transportation Secretary Pete Buttigieg asking his department to “include a transit recovery assistance program that would serve as a federal safety net to sustain transit systems across the country” in its annual budget request to Congress. But the DOT didn’t do so when it unveiled its budget proposal last month, and House Republicans have been outspoken about their desire to cut domestic spending.

Some conservative intellectuals continue to blame transit agencies for not trimming expenses to bring spending in line with new fiscal realities.

“Rather than sinking a larger share of taxpayer resources into transit, we should be looking at the cost side of the ledger,” David Ditch, a senior policy analyst at the Heritage Foundation, told Yahoo News.

In New York City, which has the largest public transit system in the country, subway and bus ridership is at 65% of its average daily levels from 2019. Without additional federal aid, the debate over increased funding for the Metropolitan Transportation Authority (MTA) has become a flashpoint in Gov. Kathy Hochul’s grueling negotiations with the New York Legislature over the state budget.

“It's not a secret that with the switchover of the House of Representatives, the federal government is less responsive to appeals for mass transit,” Janno Lieber, CEO of the MTA, told Yahoo News. “We have gone to the [state] Legislature and said ... COVID ain't over for mass transit. The fiscal cliff is the deficit caused by the fall-off in ridership.”

All 21 New York Republican state senators have demanded that Comptroller Thomas DiNapoli audit the MTA before it gets additional funding. “Turning to the taxpayers should be a last resort, not a first option,” they wrote in a March letter to DiNapoli.

In San Francisco, which has one of the nation’s lowest rates of workers returning to the office, lost fare revenue has created a $300 million hole in BART’s budget. Agency officials warn that any service cut big enough to close that gap would cause the system to enter a “death spiral,” in which declining service causes riders to flee, leading in turn to lower revenues and more service cuts.

“Before the pandemic, 71% of BART costs were paid by riders,” James Allison, a spokesperson for the agency, told Yahoo News. “Last fiscal year we only got 21% of our operating budget from fares. We have this federal emergency funding to keep operating. We project that that money would be expended in 2025, so what we’re doing now is looking for bridge funding to keep us going for a period of a few years, let’s say, and then we need to work out an entirely new paradigm for funding.”

In Ditch’s view, transit systems, like many public agencies, overpay their workers thanks to collective bargaining agreements with public sector unions that include generous retirement benefits and health insurance policies. In 2021, Ditch looked at six cities — Atlanta, Chicago, New York, Philadelphia, San Francisco and Washington, D.C. — and found that the average total compensation packages for transit agency employees were consistently higher than the average compensation in the region and often more than twice as high as the average transportation sector worker.

Lieber and Allison, whose systems are the two most generous, with per-employee costs of more than $150,000 per year, both told Yahoo News their agencies are unapologetic about offering good wages to workers performing vital and sometimes technically challenging tasks.

Not all critics of transit spending are opposed to the idea that more funding is needed to cope with decreased ridership, however. “The subway costs as much to run whether there's 20 people on the subway car or 100, and it needs to come just as often,” said Nicole Gelinas of the Manhattan Institute, a right-leaning think tank in New York City.

But, Gelinas argues, Hochul’s plan to boost MTA funding through an increase in the state payroll tax should be paired with cost-control measures.

“If you’re not going to do cost reform, don’t give them a new revenue stream. If you give them the payroll tax this year, they’re going to come back and ask for more.” Gelinas said. “It’s very sound to subsidize transit. Drivers should pay to subsidize transit because it keeps cars off the road, so it helps them.”

Without new subsidies, Lieber believes, the consequences of reduced transit service will quickly become apparent.

“We just don’t have unlimited room for single-occupancy vehicles, which cost about 10 times as much to operate for households as mass transit,” he observed.

Another consequence of decreased ridership has been that transit systems have become magnets for crime, drug use and the homeless. “Since January, 22 people have died on Metro buses and trains, mostly from suspected overdoses — more people than all of 2022,” the Los Angeles Times recently reported.

Getting those issues under control is key to luring back riders, Marc Joffe, a state policy analyst at the Cato Institute, told Yahoo News.

“When you see people who are really strung out and acting really strung out it makes you feel unsafe, especially when it’s a confined space,” Joffe, who rides BART, said.

Allison of BART said the agency, which has its own police force, has created a new deployment strategy that will put more cops patrolling the trains. Officials in New York are also looking to restore a sense of order on public transit.

“Coming out of COVID in the public space in general, but especially in New York City because it’s more public-space intensive, there was a sense that the rules had broken down,” Lieber said, adding that work by the MTA and the NYPD has reduced the rate of major crimes on the subway such as robbery and assault by 40% this year compared with last winter.

Most experts agree that in order to fix what ails transit systems in the nation’s largest cities, officials will need to focus on boosting ridership and service.

“Ridership is very contingent on service, and the more attractive and frequent the service is, the more people decide to use it,” Danny Pearlstein, a spokesperson for the Riders Alliance, a New York City-focused transit advocacy group, told Yahoo News. “So we’re not talking primarily about people who aren’t going to the office, but everybody else, or even those same people but for different trips at different times of the day. So we’re saying leave the peak service where it is for the people still going to offices, or still commuting during the rush hour — but boost the off-peak service, so that transit is more competitive with other ways of getting around or even the decision not to go anywhere during the off-peak.”

Where the money to do that will come from, however, is another issue altogether.