New York City’s transit system, the Metropolitan Transportation Authority, is staggering through the pandemic. Ridership has dropped by over 90%, and the authority expects to lose more than $14 billion through next year.
The MTA is turning to an unusual source for a little relief: the Federal Reserve, specifically, its Municipal Liquidity Facility, a loan program set up to help state and local governments through the COVID-19 crisis.
The authority has a hard time making ends meet even during normal times, said Nick Sifuentes, executive director of the Tri-State Transportation Campaign.
“There’s only so much that any public transit agency can rely on the farebox,” he said.
With barely any farebox revenues, the MTA’s putting together a patchwork of aid. The Coronavirus Aid, Relief and Economic Security Act provided about $4 billion. The agency’s asking for an additional $4 billion, but that bill is stuck in the Senate.
With a $10 billion shortfall that the MTA still needs to cover, Sifuentes said, the agency is looking for any port in a storm.
“For the MTA, when you’re drowning, any rope is an option, even a frayed one,” he said.
One of the MTA’s options is a $3 billion loan from the Fed’s Municipal Liquidity Facility.
“The MTA rolls over billions of dollars of short-term debt every year,” said John Kaehny of watchdog group Reinvent Albany. “So this would actually just be another short-term lending source.”
The Fed’s loans have to be paid back in no more than three years.
“Who the heck is going to be able to pay back this loan in three years, given the fact that the COVID revenue damage is expected to continue at least all the way through the end of 2021?” Kaehny asked.
The Fed loans aren’t cheap. Seth Lehman at the ratings agency Fitch Ratings analyzed how the Fed’s Municipal Liquidity Facility compared to more traditional forms of borrowing, e.g., government bonds. He found that the MLF was much more expensive.
The MTA is the first transit agency to consider borrowing from the Fed, according to the Reason Foundation’s Baruch Feigenbaum.
“The question is, is this the best way for them to borrow? Is this the cheapest rate?” Feigenbaum said. “And I don’t know that it is.”
Without additional funding, the MTA said it might have to scale back its $55 billion plan to modernize the subway. For now, all new projects are on hold.
COVID-19 Economy FAQs
It’s still the question on everyone’s minds: What’s going on with extra COVID-19 unemployment benefits?
The $600-a-week payments have ended, officially, as of July 31. For now, there is no additional federal pandemic unemployment assistance. House Democrats want to renew the $600 payments. Senate Republicans have proposed giving the unemployed 70% of their most recent salary by this October, when state unemployment offices have had time to reconfigure their computer systems to do those calculations. Until then, jobless workers would just get another $200. But, nothing has been agreed upon yet.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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