Transit systems received only a short-term reprieve

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Two people with face masks await the arrival of a New York subway train in Brooklyn. The city's subway system operated by the larger New York Metropolitan Transportation Authority, which received $3.9 billion in federal funding under the CARES Act.

Major transit systems will need another round of federal aid later this year in order to maintain their operations according to new findings in a report by the Transit Center, a transit advocacy group.

Federal grants for the 10 transit systems with the highest ridership will cover their funding shortfalls an average of 5.4 to 8.3 months, the group estimates.

The analysis released last week found that for smaller transit agencies the funding would last about twice as long, with the average running between just over a year to 20.8 months.

The $538 million in federal aid to Seattle is estimated last the shortest, helping that transit agency for as little as three months and as long as just under six months.

The nation’s biggest transit system operated by the New York Metropolitan Transportation Authority received $3.9 billion in federal funding which will cover its operating shortfall for as little as four months or up to six, the report estimated.

The MTA stands to lose up to $8.5 billion this calendar year, according to a report by consulting firm McKinsey & Co. in conjunction with the authority’s capital construction chief, Janno Lieber. The MTA has requested another $3.9 billion from Congress to maintain operations for the rest of 2020.

Moody’s Investors Service, S&P Global Ratings and Fitch Ratings have lowered the rating on the authority’s primary transportation revenue bonds, its primary credit.

The San Francisco Bay Area and Los Angeles transit systems also may burn through their federal aid in as little as six months, according to the Transit Center.

New Jersey, Chicago, Washington D.C., Boston, Philadelphia, Atlanta and Miami transit systems rounded out the list of the 10 that could use all their federal aid in less than a year.

The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act signed into law March 27 included $25 billion for transit agencies and $1 billion for Amtrak. The funding covers operating expenses incurred since Jan. 20 for maintaining service, lost revenue related to the coronavirus, the purchase of personal protective equipment and the payment of administrative leave of operations personnel.

The Amtrak funding is split between $492 million for the Northeast Corridor and $526 million for state-supported routes that are part of Amtrak’s national network.

The Transit Center has estimated that transit agencies will need between $26 billion and $40 billion to cover their coronavirus-related shortfalls.

The $25 billion was viewed favorably by S&P Global, which a day before the legislation was signed into law had revised its ratings outlook for transportation issuers to negative.

Kurt Forsgren, a managing director and sector lead for transportation at S&P Global, said in an email Tuesday that the $25 billion in federal aid “has alleviated immediate liquidity pressures for many systems.”

“However, long-term credit implications across all sectors have yet to unfold,” Forsgren said.

During the near term of the next months S&P Global is focusing on “liquidity or refinancing or remarketing risks faced by issuers, with primary attention on issuers with weaker credit profiles and lower liquidity,” Forsgren said.

S&P expects “that the significant declines we've seen will extend into the late summer to early fall,” he said.

Congress is considering direct aid to state and local governments in its next round of coronavirus emergency aid in legislation that will be dubbed CARES Act 2.

“It looks like we’re going to need $500 billion for the states,” Speaker Nancy Pelosi, D-Calif., said Tuesday, adding that additional funding would be needed for local governments.

Even though the House has indefinitely postponed returning into session past its previously scheduled date of May 4, Pelosi told reporters in a conference call that work on the next round of legislation is continuing.

Pelosi said the postponement came at the recommendation of the House physician because of the local conditions in the Washington, D.C. region.

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Coronavirus State and local finance Transportation industry Washington DC
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