BART, MTA facing financial crisis amid COVID-19 pandemic revenue losses

The loss of ridership in a short amount of time is staggering and the resulting loss of revenue is stunning. BART reports ridership on Monday, March 16 was down 70 percent, while initial data shows Tuesday’s decline to be 85 percent. The loss of ridership translates into lost revenue in both fares and parking fees that BART estimates will be $37 million per month.

BART has a farebox recovery ratio of 60 percent. Fares pay for a significant portion of its operating expenses and while the benchmark is admired among industry peers, it also makes BART vulnerable to significant declines in ridership. BART explains a sustained ridership loss of 85 percent and a 50 percent reduction of economic activity impacting other revenue sources could reduce BART's monthly revenues by $55 million.

“This is a financial crisis for BART,” said Board President Lateefah Simon. “This level of catastrophic revenue loss is not sustainable and threatens future service. We need reassurance from all levels of government that transit will not be left out.”

Simon and BART General Manager Bob Powers sent letters to local, state and federal officials requesting emergency stimulus funding.

MTA’s daily reports show ridership has fallen approximately 60 percent on the subways, 49 percent on buses, 90 percent on Metro-North and 67 percent on Long Island Rail Road (LIRR). According to the National Transit Database 2018 Metrics, New York City Transit’s farebox recovery ratio is .02, Metro-North is .59 and LIRR is .50. MTA projects the full impact of the loss of revenue will be more than $4 billion by the end of 2020. MTA says that number does not take into account the expected collapse of more than $6 billion in state and local taxes dedicated to the MTA.

“I am urgently requesting substantial federal aid at the level of MTA revenue losses ($3.7 billion assuming ridership trends this week continue for six months) and COVID-19 expenses (approximately $300 million annualized) as we continue to respond to the coronavirus pandemic,” MTA Chairman and CEO Patrick J. Foye wrote in a letter to the New York Congressional delegation.  

To fiscal hawks who would question if the transit agencies are doing all they can to cut expenses, Simon and Powers explain in their letters that most of the BART’s operating expenses are directly related to labor costs.

“As we continue regular service levels and increase cleaning to help reduce the spread of the virus, BART has limited options to reduce operating expenses in the short term,” Simon and Powers wrote.

Foye says MTA is committed to finding $2.8 billion in savings during the next several years, but added the current situation is a national disaster that requires a national response.

“No agency of our size can find additional billions in savings equivalent to the damages we have and will sustain as a result of this pandemic,” said Foye.

The federal, state and local asks

BART is asking federal lawmakers, including House Speaker Nancy Pelosi and both of California’s U.S. Sens. Dianne Feinstein and Kamala Harris to include transit specifically in future stimulus bills.

BART explains that the Coronavirus Preparedness and Response Supplemental Appropriations Act provides a total of $8.3 billion to support response efforts to the virus with $950 million set aside for state and local efforts, including infection control at the local level to prevent additional cases. Approximately $37 million will be sent to California, but BART says, to date, neither the Centers for Disease Control and Prevention nor the state of California has issued guidance on whether a local special district, such as BART, could directly apply for funding.

Additionally, BART will be applying for a grant from the Federal Emergency Management Agency (FEMA) under their program to support operational expenses in response to COVID-19.

At the state level, BART says, as a special district, it should be eligible for the $500 million for COVID-19 response funding that was signed by Gov. Gavin Newsom on March 17. BART says it will pursue funds through the Office of the Governor, California Office of Emergency Services and the California State Transportation Agency. However, BART says how the $500 million appropriation will be allocated is not clear and is requesting a direct allocation of $55 million to offset the loss in revenue.

At the local level, BART is requesting an immediate operating subsidy from the Metropolitan Transportation Commission (MTC).

“BART is currently providing lifeline train service to workers who are keeping the region functioning during this pandemic,” said Powers. “As the backbone of transportation in the Bay Area, we will also play an essential role during the economic recovery process. Access to emergency funding is needed to keep the Bay Area moving once the region begins to recover.”

MTA’s Foye notes that a supplemental formula increase to existing funding sources does not go far enough nor should a federal solution be found in redirecting federal funds currently allocated for capital projects.

“Not only does this approach unnecessarily pit our operating costs against needed State of Good Repair investments to maintain our system, it has the potential to slow the critical growth of the MTA,” said Foye. “Such a huge blow would come at a time when we have achieved tremendous progress. Across our system – subways, buses and commuter railroads alike – on-time performance has achieved sustained improvement and ridership was steadily growing, defying national trends. Our hard-fought, historic capital plan will benefit our customers and the New York economy.”

He reminds lawmakers that New York produces nearly 10 percent of the entire U.S. gross domestic product and believes the U.S. will need a strong New York to fully recover from the pandemic.

“The mass transit system operated by the MTA is essential to that objective, and restoring it is a matter of national interest,” explained Foye. “But it’s also a matter of fairness. As you know, New York is one of the top donor states, sending Washington $35 billion more every year than it receives in federal assistance. Now that it’s desperately needed, we’re asking for the federal government to redirect some of this money back to New York.”