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I Asked ChatGPT How to Address New York MTA's Revenue Shortfall
The MTA needs over $600 million this year, and over $1 billion in subsequent years, to address its post-pandemic ridership declines.
ChatGPT launched November 30 and is the latest in a long line of technologies developed to generate readable text on demand. AI programs have created art, written books, and produced other artistic content. (We’ve come a long way since IBM’s Watson competed on Jeopardy!). However, the development of these new programs have raised concerns among schools and colleges about plagiarism and whether we should give the same credit to machine creations as we do to human artists. But back to the MTA.
With Governor Hochul releasing her fiscal 2024 executive budget proposal and an expected fix for the MTA’s revenue shortfalls, I wanted to see what ChatGPT would produce. The Governor’s plan provides a combined estimated $1.3 billion of new revenue for the MTA annually.
The state’s proposed financial plan anticipates receiving about $1.8 billion of payroll mobility tax (PMT) by increasing the levy from 0.34% to 0.5% and having New York City contribute an additional $500 million. PMT consists of an employer tax levied within the Metropolitan Commuter Transportation District (MCTD) served by the MTA. In the past few years, the MTA starting using PMT revenues for capital programs and was approved for pandemic-related deficit borrowing.
In addition to the $800 million from the PMT and $500 million from New York City annually, the Governor’s proposal for shoring up the MTA’s finances also includes:
A one-time $300 million infusion from the state
More than $400 million in MTA operating efficiencies, and
For the longer haul, potential gambling revenue
But like everything affecting the country’s largest transit operator, the situation is complicated.
Let’s see what ChatGPT had to say.
Does ChatGPT Understand the MTA’s Issues?
Based on a simple question, ChatGPT demonstrated some understanding of the MTA’s fiscal conundrum. It references all the standard issues, including the COVID-19 pandemic. However, even if it did not mention COVID-19, the issues facing the MTA are well known. Back in 2015, the Citizens Budget Commission (CBC) warned the MTA could experience a shortfall of $1.5 billion over its financial plan at the time, or as high as $616 million in a single year based on recession scenarios.
Past analysis of the MTA has cited a lack of state and city funding, high debt service costs, and an inability to control operating costs as issues facing the agency. In particular, the MTA had difficulty controlling overtime pay.
Similar to transit agencies around the country, the MTA must address its financial issues in order to remain competitive and continue providing critical services for New Yorkers. ChatGPT has some understanding of these problems, now let’s look at solutions.
What does ChatGPT Suggest to Fix the MTA’s Budget Shortfall?
It is important to note that more than just a superficial understanding is required to solve these complex issues. But personally, I was impressed by the six options put forward by ChatGPT. At the very least, without specifics, it covers the major items that could be considered:
Cost cutting measures: The MTA could look for ways to reduce costs, such as streamlining operations, reducing staffing levels, and consolidating services.
Fare and fee increases: The MTA could consider increasing fares, tolls, and other fees to generate additional revenue. To reduce the impact on vulnerable riders, the MTA could consider implementing fare reductions or discounts for low-income riders.
Government subsidies: The MTA could seek additional funding from the state or federal government to make up the shortfall. This could come in the form of direct funding or tax credits.
Public-private partnerships: The MTA could explore partnerships with the private sector to generate revenue through advertising, sponsorships, and other initiatives.
Debt restructuring: The MTA could consider restructuring its debt to reduce interest payments and free up funds for operations.
Taxation: The MTA could consider implementing new taxes or fees, such as congestion pricing or a payroll tax on employers within the transit district, to generate additional revenue. However, this may increase the already high tax burden on residents and companies within the transit district.
The six options outlined by ChatGPT are a basic starting point for discussion. Mention of congestion pricing is laudable, but the MTA has that already approved this for its capital program.
Importantly, ChatGPT mentions reducing the impact on vulnerable riders. Transit access, or lack thereof, can often reflect or reinforce existing disparities between neighborhoods and impede economic development, job opportunities, and quality of life. It has been over three years since the pandemic began, but cities still have a long way to go before reaching a "new normal."
Is there a Grand Solution? No, it’s Complicated.
No easy or single solution exists to solve the MTA’s budget woes. The complex nature of the agencies operations and stakeholder needs means that a wide variety of solutions must be considered in order to achieve an equitable and sustainable system.
Here’s what ChatGPT had to say:
Balancing equity, reducing the impact of fare increases and service cuts on vulnerable riders, and managing the tax burden of residents and companies within the MTA transit district is a complex challenge. No single solution will address all of these concerns, so a comprehensive approach that balances multiple solutions may be the best way to address the budget shortfall.
The Governor’s proposals are a starting point as the executive begins negotiations with the legislature. New York State’s fiscal year ends March 31, but the state has a history of late budget adoptions when major issues need to be resolved. Time will tell if this year’s budget solves the current problem or if long-term budget shortfalls in the MTA’s financial plan are recurring.
Any opinions expressed herein are those of the author and the author alone.