The Metropolitan Transportation Authority has warned for months that the agency would be forced to make draconian cuts, including slashing New York City’s subway service by 40 percent, as the pandemic plunged the nation’s largest public transit agency into its worst financial crisis.
But as Joseph R. Biden Jr. prepares to move into the White House, Congress in recent days seemed to be edging closer to reaching a compromise on a federal aid package that would likely provide $4 billion to the M.T.A., allowing the agency to avoid, for now, imposing its doomsday plan.
The agency’s board on Wednesday is expected to approve a budget that will include fare and toll increases that had been planned before the pandemic. Transit officials also plan to announce service reductions for the Long Island Rail Road, one of two commuter rails that the M.T.A. operates along with the subway and buses.
The M.T.A. welcomed the information emerging from Washington about a new stimulus bill, a dose of good news in what has otherwise been a grim year after ridership and revenue cratered during the pandemic.
Receiving $4 billion in federal funding “would be a tremendously positive thing for the M.T.A. in the short term,” Patrick J. Foye, the chairman of the agency, told reporters on Tuesday.
Still, officials said, while that infusion of federal money would cover the agency’s shortfall through the end of next year, the M.T.A. still faces a $7.3 billion deficit from 2022 through 2024.
Mr. Foye said the agency continues to seek a total of $12 billion in federal aid to help stabilize its finances, which have been decimated by a ridership that has only rebounded to 30 percent of pre-pandemic levels.
Beside massive cuts to subway service, the agency has also proposed slashing commuter rail service in half and laying off over 9,000 transit workers.
For now, discussions around these worst-case reductions have been put off until next year. But even if federal aid staves off the M.T.A.’s doomsday scenario, transit officials have said they are considering some cuts to subway and bus service next year to adjust to current ridership levels.
In recent weeks, transit agencies across the country have outlined devastating service cuts that could go into effect in 2021 as they contend with adopting austerity budgets in the face of uncertainty over possible federal relief. The compromise stimulus legislation includes a total of $15 billion for public transit agencies across the country — less than half of the $32 billion agencies have lobbied for in recent months.
The M.T.A. board is building federal aid into the agency’s financial planning, allowing the agency to meet its obligation to adopt a balanced budget by the end of the year.
“The M.T.A. is trying to put off the tough decisions for as long as possible because they are holding out hope for federal funding,” said Rachael Fauss, a senior research analyst at Reinvent Albany, a watchdog group. “It’s not uncommon for the M.T.A. to put in assumptions in its budget about funding from the state or city that isn’t guaranteed yet. This is just on a scale that hasn’t been seen before.”
Early next year, the M.T.A. board is expected to approve 4 percent increases in fares and tolls that would take effect in the spring and generate more revenue for the 2021 budget, according to people familiar with the proposed plan who asked not to be identified before the board takes action.
Transit officials are also planning to announce that service on the Long Island Rail Road would be reduced to between 75 and 80 percent of the level that existed before the pandemic. The details of the cuts remained unclear, but the agency is seeking to adjust service levels to account for a ridership that remains around 25 percent of normal.
The Long Island Rail Road is currently operating at 90 percent of its usual services, while the Metro-North Railroad is running at about 63 percent of usual.
The decision to omit draconian subway or bus service reductions from the budget reflects the tightrope transit officials have had to walk in recent weeks as they have threatened brutal cuts to pressure federal lawmakers while confronting outraged riders and transit workers who would bear the brunt of those measures.
John Samuelsen, the international president of the powerful Transport Workers Union, warned that even discussions of slashing thousands of transit jobs could lead to a work slowdown that would disrupt service.
A reliable public transit system for commuters and tourists will be critical to the city’s economic recovery.
Transportation advocates have urged Gov. Andrew M. Cuomo, who controls the M.T.A., and state lawmakers to identify new revenue streams — including raising the gas tax or creating a surcharge on nonessential items purchased online — to help the agency dig out of its financial hole without relying so heavily on future federal help.
On Tuesday, a coalition of 30 civic organizations also demanded that Mr. Cuomo preserve current service levels, restore overnight service and abandon any fare and toll hikes next year. Mr. Cuomo suspended overnight service in May to carve out time to thoroughly clean the system and has not said when he might allow it to restart.
“The governor needs to act decisively to protect bus and subway service,” said Danny Pearlstein, a spokesman for Riders Alliance, an advocacy group. “There is no way to bring back a dense, highly inequitable city like New York without a highly functional transit system.”
The agency has already achieved $1 billion in savings by trimming administrative expenses, like reducing overtime and cutting consultant contracts, and borrowed $3.4 billion, the maximum amount allowed, from an emergency lending program provided by the Federal Reserve.
The M.T.A. also received around $4 billion in federal relief from the first stimulus bill adopted in the spring.
The combination of the Federal Reserve loan, administrative savings, earlier federal aid and anticipated federal relief eliminates the M.T.A.’s shortfall through the end of 2021.
Transit officials have said they are hopeful that more relief could come under Mr. Biden, who is known as a fan of Amtrak, the national railroad, and has also signaled support for public transit systems.
Another major source of revenue that transit officials are counting on in the coming years is congestion pricing, a plan to charge drivers fees to travel into Manhattan’s busiest neighborhoods.
The plan was supposed to start this year, but has been held up by the Trump administration over an environmental review.
Still, financial experts warn that the M.T.A. — which is known for overspending and inefficiency — is hardly out of the woods and needs to find ways to rein in spending now to ensure that it can provide vital day-to-day services while also investing money in building a more modern 21st-century network.
“Federal aid would be critical and incredibly beneficial in the short term,” said Andrew Rein, the president of the Citizens Budget Commission, a financial watchdog. “But the M.T.A. has a long-term problem. So they need to look at other tools in their belt too.”