(Bloomberg) -- New York’s Metropolitan Transportation Authority, the largest mass-transit provider in the US, approved a nearly $20 billion operating budget for 2025 that includes a planned 4% fare and toll increase.
The MTA, which runs New York City’s subways, buses and commuter trains, typically boosts its fees every two years. Fares and tolls are set to increase in August after the transit provider holds public hearings, according to MTA documents. The MTA’s board is expected to vote on the new fare and toll pricing structure in 2025.
The spending plan also assumes that a congestion pricing program will begin on Jan. 5. That initiative, the first of its kind in the US, will charge most passenger cars $9 to drive into the tolled district, which runs south of 60th Street.
“The budget speaks to our successes and provides for continued positive growth,” Janno Lieber, the MTA’s chief executive officer, said Wednesday during the MTA’s monthly board meeting.
Congestion pricing revenue won’t flow into the MTA’s operating budget but instead will help fund infrastructure upgrades to modernize a century-old transit system. But a delay of that new tolling plan would strain the MTA’s operating budget with higher than expected debt service payments and an increase in maintenance costs.
Congestion pricing faces various legal challenges that could delay the Jan. 5 start date. New Jersey Governor Phil Murphy last year sued to halt the program, saying it needs additional environmental review. Judge Leo M. Gordon is expected to rule on the issue soon.
In New York, US District Judge Lewis J. Liman on Friday is set to hear arguments from lawyers for a handful of different groups suing over whether to issue a temporary order blocking congestion pricing from starting.
The suits have been filed by two groups representing a variety of city residents, workers and business owners, the United Federation of Teachers, Staten Island Borough President Vito Fossella and the Trucking Association of New York.
The MTA’s $19.9 billion spending plan covers labor costs, operating expenses and includes $2.5 billion for principal and interest payments on outstanding debt. The transit agency owed $46 billion as of Dec. 11, according to MTA data.
The MTA needs to increase ridership and reduce fare evasion to help boost revenue collections. Average weekday subway ridership is roughly 80% of 2019 levels, according to MTA data.
Transit officials expect to find $500 million of operating savings annually. The budget anticipates a $378 million deficit in 2027 and a $419 million shortfall in 2028, even after factoring in the expected savings targets.
MTA’s board also approved Wednesday a $1.26 billion contract with Kawasaki Rail Car, Inc. to purchase 435 new subway cars that will replace existing rail cars with orange and yellow seats that are more than 40 years old. The MTA will begin receiving the new trains in 2027.
--With assistance from Chris Dolmetsch.
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