MTA faces $300M deficit, pointing to 'uncontrollable' labor, health costs

The MTA is facing a nearly $300 million deficit next year, with higher-than-anticipated raises won by LIRR union workers following their three-day strike in May costing the agency an additional $180 million per year, officials said Wednesday.

That operating shortfall could grow to almost $900 million by 2030, according to MTA officials, who noted there’s little they can do to increase revenue beyond raising fares and tolls.

At the Metropolitan Transportation Authority’s monthly board meeting in Manhattan Wednesday, chief financial officer Jai Patel revealed that, after four years of balanced budgets, the transit agency is now anticipating a $297 deficit in 2027. By 2030, the deficit would grow to $897 million — about $800 more than the MTA’s last forecast in November.

Patel said the soaring costs have been driven primarily by soaring "uncontrollable costs," including fuel and employee benefits, as well as by wage increases included in contracts recently finalized with five Long Island Rail Road labor organizations.

The MTA had sought a three-year contract with raises of 3% in each of the first two years and 3.5% in the third, as had already been accepted by most other MTA unions. But the LIRR unions sought a fourth year at 4.5%. After a the strike in May, the MTA agreed to the raises, and now expect to have to offer similar raises to other unions in the first year of their next contracts. Because of some concessions, the MTA has said the raise would equal about 3.8%. Patel said the raises will cost the MTA an extra $180 million per year across the system, including New York City subway and bus workers.

Patel noted that while fares and tolls typically rise by about 2% a year, the new raises are contributing to cost overruns. As one example, Patel noted that health benefit costs for employees are expected to reach $2.7 billion by 2030 — more than double what they were in 2019.

Total labor costs account for about 60% of the MTA’s operating budget, which Patel said are expected to reach $22.8 billion next year. Without productivity increases or other changes to offset soaring labor expenses, Patel said closing future deficits "would require additional action."

The MTA has already achieved $500 million in recurring annual cost cutting since 2023, and has plans for another $250 million in efficiencies by 2029. But, "you cannot cut your way to fiscal stability," said MTA Board member Neal Zuckerman, who chairs the board's finance committee.

"We can do some of the load, but we cannot do all of it," said Zuckerman, who noted that the MTA has very few tools to improve its finances, "unless we decide to drive fares up dramatically," which he did not expect to do.

"We’re not going to do that, but it’s the only real lever we have," he said.

Check back for updates on this developing story.

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.