Coronavirus News: MTA warns nationwide impact without $12 billion in federal funding

COVID-19 News and Information
LONG ISLAND (WABC) -- The MTA, with its budget in shambles amid a record drop in ridership, is continuing to plead for $12 billion in federal aid and outlining the catastrophe that could follow without the bailout.

On Thursday, officials warned the agencies major national suppliers that all contracts are in jeopardy without the federal funding. And that's in addition to proposed service and workforce cuts.

"If we have to cut the railroad budget by 50%, there isn't any good way to do that," LIRR President Phillip Eng said. "There isn't any painless way to do that."

Related: MTA outlines 'draconian' cuts without $12 billion in federal aid

Chairman and CEO Patrick Foye sent a series of letters to the MTA's 11 largest suppliers, warning that without an immediate injection of funds aid all current and future contracts with companies from Kentucky to California are in jeopardy.

"A lot of people think of our commuters as people who wear three-piece suits and who have six-figure salaries, that's not always the case," said Gerard Bringmann, of the Long Island Rail Road Commuter Council. "We have construction laborers, we have teachers in the New York City school district, we have administrative assistants."

The MTA says it already has made significant cuts in overtime and consulting costs, and they're starting to look at where else they could cut if this money doesn't materialize. They say none of the scenarios is pretty.

"I could come back to you in a week or two weeks or five weeks and tell you the specifics of the proposed cuts, but we already know today those specifics, whatever they are, will not be good, "Eng said. "It's simply not possible to cut the budget by 50% and have it be anything other than catastrophic."

On Wednesday, Long Island Congressman Lee Zeldin (R-Patchogue) sent a letter to congressional leaders urging them to include emergency funding for the MTA in a continuing resolution if a COVID-19 relief package cannot be agreed upon first.

"The dramatic and sustained drop in ridership and revenue due to the COVID-19 pandemic, coupled with increased costs needed to comply with health and safety guidelines, has put tremendous financial strain on the largest public transit system in the country," he wrote.

The agency says the MTA has created as many as 100,000 out-of-state jobs in nearly all 50 states since 2011, and MTA capital expenditures are among the nation's largest drivers of economic activity, generating nearly $50 billion in infrastructure investment nationwide.

Additionally, officials say hundreds of medium and smaller-sized suppliers, including minority and women-owned businesses, will also be impacted if the MTA does not receive federal assistance.

"The COVID-19 pandemic has exacted a horrific toll in human, social and economic terms across the nation," Foye said. "I am writing to alert you that because of this financial devastation, many current and all future contracts are in jeopardy without an injection of $12 billion in emergency federal aid. Let me be clear: federal funding for mass transit isn't a red or blue issue - it's a jobs issue. Our future - and the fate of approximately 100,000 MTA-created out-of-state jobs - rests squarely in the hands of the Senate and White House."

With federal relief talks stalled, letters were sent to the following 11 suppliers to demonstrate what the agency calls devastating potential impacts on local economies if the MTA does not receive additional robust federal assistance.

--Alstom Transportation, Inc.: Since 2011, prior MTA capital plans have resulted in more than $2.2 billion in direct spending and created nearly 28,000 jobs in the states where Alstom has U.S. locations - California, Illinois, Florida, Missouri, Kentucky, and Delaware.

--Bombardier Transportation: Since 2011, prior MTA capital plans have resulted in more than $2.6 billion in direct spending and created over 33,000 jobs in California and Pennsylvania, where bombardier manufactures vehicles and produce rail products.

--Cubic Transportation Systems, Inc.: Since 2011, prior MTA capital plans have resulted in more than $2.9 billion in direct spending and created over 37,000 jobs in the states where cubic has U.S. locations - Alabama, California, Florida, Illinois, North Carolina, Tennessee, Texas, and Virginia.

--Hitachi Rail STS USA, Inc.: Since 2011, prior MTA capital plans have resulted in more than $230 million in direct spending and created over 2,900 jobs in South Carolina, where Hhitachi's manufacturing facilities are located.

--Kawasaki Rail Car, Inc.: Since 2011, prior MTA capital plans have resulted in more than $15 billion in direct spending and created over 189,000 jobs in New York and Nebraska, where Kawasaki manufactures and tests rail cars.

--New Flyer of America, Inc.: Since 2011, prior MTA capital plans have resulted in more than $5.1 billion in direct spending and created over 64,500 jobs in the states where New Flyer and NFI Parts have U.S. locations - Kentucky, Ohio, California, New Jersey, Minnesota, Alabama and Washington.

--Prevost Car, Inc.: Since 2011, prior MTA capital plans have resulted in more than $4.75 billion in direct spending and created over 60,000 jobs in the states where Prevost has U.S. locations - Texas, Florida, Tennessee, California, Illinois, New Jersey and Washington D.C.

--Siemens Corporation: Since 2011, prior MTA capital plans have resulted in more than $3.5 billion in direct spending and created over 45,500 jobs in the states where Siemens has U.S. locations - Kentucky, Pennsylvania, Oregon, California and Illinois.

--Thales Transport & Security, Inc.: Since 2011, prior MTA capital plans have resulted in more than $1.6 billion in direct spending and created over 21,000 jobs in Pennsylvania, where Thales' manufacturing facilities are located.

--Transcore: Since 2011, prior MTA capital plans have resulted in more than $625 million in direct spending and created nearly 8,000 jobs in the states where Transcore has U.S. operations - Texas, Virginia, and Massachusetts.

--Wabtec Passenger Transit: Since 2011, prior MTA capital plans have resulted in nearly $575 million in direct spending and created over 7,200 jobs in North and South Carolina, where Wabtec'smanufacturing facilities are located.

Foye said that as outlined, certain states would be especially hard hit by the loss of MTA contracts.

The MTA is currently experiencing $200 million in revenue losses every week, an unprecedented crisis that eclipses even the Great Depression's impact on its ridership and finances. These declines, compounded by the loss of state and local taxes and subsidies that support the organization, have left the MTA with a $16 billion projected deficit through 2024.

Related: MTA in worse shape than during the Great Depression, officials say

In the face of federal inaction, the MTA is preparing for drastic and necessary reductions that include possible service cuts of up to 40% on subways and up to 50% on the Long Island and Metro-North railroads, measures that would have a profound negative impact on mobility in the New York Metropolitan region.

The MTA could potentially lay off more than 8,000 workers to reduce expenditures.

This is compounded by a looming fare hike and potentially gutting the historic $51.5 billion capital construction plan necessary to bring the 116-year-old system into the 21st Century.

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