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New York’s Metropolitan Transportation Authority, the largest U.S. mass-transit provider, is running on borrowed time, facing budget and revenue challenges as federal aid is set to tap out in 2025, State Comptroller Thomas DiNapoli said in a report yesterday, Bloomberg News reported. Ridership sank on the MTA’s New York City system of subways, buses and commuter rails during the coronavirus pandemic. Its subway system is still only carrying about half the number of weekday passengers it did in 2019. Recent severe weather has pummeled the transit network with record rainfall, flooding subway stations and suspending service. While $14.5 billion of federal aid is covering the sharp drop in fare-box revenue collections, the MTA estimates it will deplete those funds in 2025. The risk of permanently lower ridership, damage from extreme weather and the end of federal assistance are challenges for the MTA that can turn into emergencies if not dealt with promptly, according to DiNapoli. “Bringing riders back, protecting against extreme weather and maximizing new sources of revenue are all challenges the MTA needs to address before emergency federal funds dry up in 2025,” DiNapoli said. “After that, the MTA faces enormous budget shortfalls that could harm the regional economy, with no easy solutions.”

New York City schools are slated to receive over $8 billion in emergency federal funding by fiscal 2025 to blunt the impact of the pandemic on students. But some planned expenditures, such as staffing increases and new programs, will likely outlast the aid, Bloomberg News reported. Unless revenue improves, the Department of Education’s overhang of unfunded recurring costs will exceed $1 billion annually within four years, according to a report by the Office of the New York State Comptroller. “Historic federal investment has provided an opportunity to meet short-term challenges, but it won’t last forever,” Comptroller Thomas DiNapoli said in a press release Thursday. “I urge the department to address future budgetary risks and commit to prudent long-term financial planning.” The financial pressure comes as the nation’s largest district grapples with the fallout of a historic pandemic that has ravaged schools and students. About 85% of students attended online classes during the spring of 2020, compared to roughly 91% in-person on average pre-pandemic, the report said. Preliminary data shows the city lost 5% of its pre-K through 12th grade enrollment, and about half of those lost students are expected to return in the coming year.

The city of Harrisburg, Pa., can continue pressing legal claims that lawyers and bankers misled city officials into backing a $360 million incinerator project that wrecked the state capital’s finances, a Pennsylvania court said, WSJ Pro Bankruptcy reported. The Commonwealth Court of Pennsylvania on Thursday declined to dismiss the city’s lawsuit alleging that a working group of legal and financial advisers provided false information to get Harrisburg’s financial support for the ill-fated waste-to-energy project. Starting in 2003, Harrisburg pledged its taxing power to guarantee municipal debt sold to retrofit the incinerator, the revenue from which was supposed to repay bondholders. When revenue from the incinerator fell short, responsibility for the debt payments fell to Harrisburg, plunging the city of nearly 50,000 into insolvency. Harrisburg avoided defaulting on its general obligation bonds in 2010 only because the state stepped in with aid. State and city officials in 2018 sued underwriter RBC Capital Markets, financial adviser Public Financial Management Inc. and three law firms, alleging they made misrepresentations to get Harrisburg’s signoff. The professionals’ compensation was largely contingent on securing the city’s debt guarantee, which drove them to provide false information and conceal material facts about the project, according to the complaint.

U.S. groups representing transit systems and city leaders yesterday joined unions and environmental groups in calling on Congress to back at least $10 billion in additional public transit spending along with new funding for high-speed rail, Reuters reported. The American Public Transportation Association, U.S. Conference of Mayors, International Brotherhood of Teamsters, the Sierra Club, and more than 40 other groups called for the funding in a proposed $3.5 trillion spending bill Congress plans to take up next month. Last month, the U.S. Senate passed a $1 trillion infrastructure package that included $39 billion for public transit. A bipartisan Senate White House framework deal had included $49 billion for transit. Transit ridership has been hit hard during the COVID-19 pandemic. Since early 2020, Congress has approved $69.5 billion in emergency assistance, including $30.5 billion in March. U.S. passenger railroad Amtrak, which received about $2 billion from Congress in the year before the coronavirus pandemic, has been awarded $3.7 billion in emergency funding since March 2020. Nationally, transit ridership remains about 55% of pre-pandemic levels as many people continue to work at home and some riders are opting to use other modes of transportation.

The bipartisan infrastructure bill approved by the Senate this month is the latest effort to inject federal money into public transit agencies. But all that money likely won’t buy what transit really needs: more riders, the Wall Street Journal reported. Unless ridership recovers from its pandemic-induced drop, agencies will again confront large budget deficits once the federal money runs out in three or four years, analysts say. That could mean service cuts and fare increases, according to transit agencies. “As soon as the money stops flowing, transit agencies are going to be in the same position as they were before,” said Baruch Feigenbaum, a transportation policy expert at the libertarian-leaning Reason Foundation. New York’s Metropolitan Transportation Authority, for instance, expects to use up its $14.5 billion allocation of federal aid by 2024, at which point it will face a $3.5 billion two-year shortfall. Transit ridership nationwide fell by 78% between February and April 2020 as the rise in COVID-19 cases prompted people to stay home. Agencies pared back their services but still lost crucial revenue. Fares account for about a third of operating costs, according to the Transportation Department. In response, Congress passed three COVID-19 relief bills signed by both former President Trump and President Biden totaling $69.5 billion to help transit agencies. That is $15 billion more than the country’s 2,200 agencies spent combined to run their systems in 2019, the last year before the pandemic hit. The relief bills were intended as a bridge until riders returned. But riders haven’t returned in great numbers, and it is unclear when, if ever, they will. Transit trip levels in June were roughly half what they were in June 2019, before the pandemic, according to the Transportation Department. The bipartisan infrastructure bill directs another $39.2 billion to agencies for maintenance and expansion projects. But agencies can’t use it for day-to-day operating expenses such as paying salaries or buying fuel.