Flossi Reviews the MTA

The Metropolitan Transportation Authority (MTA) is the largest public transportation network in the United States, serving the New York metropolitan area, including parts of New Jersey. Its budget is divided into two primary components: the Operating and Capital Budget.

Operating Budget

The Operating Budget covers the day-to-day expenses of running subways, buses, commuter railroads, and other services. For 2024, the MTA's Adopted Operating Budget is approximately $19.29 billion. This budget is allocated as follows:

 Labor Costs: $11.79 billion

 NonLabor Costs: $4.48 billion

 Debt Service Payments: $2.82 billion

These figures are detailed in the New York City Council's budget report. 

Capital Budget

The Capital Budget funds long-term investments in infrastructure, such as system expansions, modernization projects, and significant repairs. The MTA's proposed Capital Plan for 20252029 is $68.4 billion, marking the most important funding request in its history. This plan aims to address critical infrastructure needs and system enhancements. 

Revenue Sources

The MTA's revenue comes from various sources:

Fares and Tolls: Approximately $6.87 billion Dedicated Taxes and Subsidies: Around $7.22 billion

Federal Aid: Including COVIDrelated assistance, totaling about $2.88 billion

The MTA faces significant financial challenges, including:

Funding Gaps: A $16.5 billion gap in the current 20202024 capital plan, initially expected to be funded by congestion pricing, has been delayed. 

Debt Obligations: Debt service payments constitute a substantial portion of the operating budget, impacting financial flexibility.

The Metropolitan Transportation Authority (MTA) offers its employees a defined benefit pension plan that guarantees a percentage of the final average salary for life. However, this traditional pension plan is becoming increasingly rare in the private sector, with only an estimated 18% of new hires in large private companies having access to such benefits. 

Pension Plan Costs

The MTA's pension plan costs are a significant component of its financial obligations. For instance, in 2022, the MTA's Defined Benefit Pension Plan reported total assets of approximately $5.37 billion, a decrease from $5.76 billion in 2021. This decline was attributed to underperformance in the plan's investments and contributions net of benefit payments and expenses during the year. 

Employer Contributions

The MTA contributes 8% of an employee's salary each year into the defined contribution plan, more than twice the 3.6% median contribution for typical large private companies. 

Financial Challenges

The MTA faces financial challenges related to its pension obligations. Projections indicate that annual benefit payments are expected to increase between 3.0% and 4.0% over the next decade, rising from $37 million in 2019 to $48 million in 2027. These increases are attributed to demographic and economic factors and costs associated with pension enhancements.