The COVID -19 Pandemic: Threatening the Lifeblood of New York City
Just recently, the city of New York began its recovery journey from a brutal lockdown that shut down all businesses. For about three months, the whole state was on a virtual standstill. However, not even several months are gone, and the top government officials are sending warning over the stress on the city’s finances.
New York was one of the most affected cities by the COVID-19 virus. The result: siphoning of more than 9 billion dollars in tax revenue from the New York City government to contain the pandemic. But according to Mayor Bill de Blasio, that may not be enough. The city is preparing to lay off around 22,000 municipal workers by fall.
With the dire financial situation, the city is in, that may not be the only predicament it faces. The transit agency run by the state decided to halt the modernization of the city’s antiquated transport system that was worth $54 billion.
This move came due to the severe financial crisis that the Metropolitan Transport Authority (MTA) was facing. The MTA is the body that oversees all the buses and subways. To help the agency remain afloat, the MTA put a request for about $3.9 billion in federal emergency funds.
According to the Mayor, Mr. de Blasio, implementing such measures of budget cuts and layoffs are necessary to provide adequate balance to the budgetary shortfalls that arise due to a reduction in business activity brought about by the pandemic.
While the pandemic continues to ravage the city, the New York administration may continue enforcing several more spending cuts in various areas to meet the continually rising budget shortfalls.
Currently, the city is looking for ways to save around $1 billion in hopes of forestalling the layoff of the municipal workers. As such, Mr. de Blasio took to talks with the municipal labor unions.
According to Mr. Rein, the president of the Citizens Budget Commission, finding the $1 billion in labor savings alone may not be enough to give the mayor peace of mind in regards to the financial future of the city. The coming years may suffer from the same financial shortfalls.
However, looking at the current situation today, there are other methods the New York administration could enforce to find labor savings without necessarily laying off staff. Such include consolidating the union welfare funds and improving the efficiency of operation.
The city of New York had not witnessed such a historic number of layoffs since the 1970s. Then, the workforce reduced by 20 percent. The last layoffs to impact the municipal was in 2012 and did not affect more than 1000 employees.
The extensive capital program by the MTA was one of the most awaited renovation programs in New York. It involved the improvement of the old subway system by purchasing new subway cars, electric buses, installing new subway signals, and elevators in 70 stations across New York.
However, when the onset of the pandemic resulted in a decline in revenue used to run the system, the project became uncertain. Moreover, the congestion pricing plan of the agency that involved charging people driving into the busiest parts of Manhattan was also put on hold. Its revenue was to go into the subway modernization plan.
To help with the loss of revenue, the MTA received a $4 billion federal bailout but also lobbied for another $3.9 billion. Within the next two years, it is estimated that the agency may be facing a $10 billion deficit.
The transit officials are willing to increase the fare and toll prices, reduce the number of jobs and services to help the agency withstand the financial crisis. While lawmakers suggest the MTA should borrow money for operational costs to ensure trains are always working, Albany is unwilling to follow that course.
Instead, Albany has given the MTA the right to use the funds set aside for the capital program as an operational expense. If the agency fails to receive another federal bailout, it would mean the shelving of the capital program indefinitely.
But what would that mean to the future if the subways system? Any further delay to the upgrade of the subway system could hamper the ability of the MTA to lure back subway users when the city resumes back to normal. As a result, the overall regional economy would be in trouble.