By James Nani

Law360 (April 17, 2020, 5:45 PM EDT) -- The top executive of metropolitan New York transit said his agency won't seek new tax revenue to counter billions of dollars of shortfalls caused by the novel coronavirus pandemic but is seeking an additional $3.9 billion from the federal government.

Patrick J. Foye, the Metropolitan Transportation Authority's chairman and chief executive officer, interviewed Thursday on New York City radio station WCBS 880, said the first round of federal funding of nearly $3.8 billion is expected to arrive next month. Passed last month, the federal Coronavirus Aid, Relief, and Economic Security Act , or CARES Act, allocated $3.8 billion in funding to the MTA through the Federal Transit Administration. The money is meant to help with the costs of maintaining transportation service for New Yorkers.

But with ridership down and other revenue streams also declining, Foye said a second round of federal funding for $3.9 billion was needed to help the authority. Foye said it was essential the federal government step in.

"To be honest, it's really not an option," Foye said. "The MTA does not have the ability to tax nor are we looking for that. But the revenue declines have been so precipitous that a second round of federal funding of $3.9 billion is literally essential to keeping the MTA going."

The MTA has said it expects revenue decreases between $4.7 billion and $5.9 billion due to lower ridership, plus a significant decline in state and local revenue between $1.6 billion and $1.8 billion. In addition, the agency is expecting $800 million in costs because of additional safety measures taken for the pandemic.

The MTA is North America's largest transportation network, serving New York City, Long Island, Connecticut and southeastern New York, according to the authority. It also runs New York City's subway and bus system.

While the MTA doesn't levy taxes, there are a host of taxes and fees imposed by the state dedicated to its operations. Those include petroleum business taxes, which are made up of a business privilege tax, a gasoline and diesel fuel excise tax and fees for vehicle registrations and driver licenses. There's also mortgage recording taxes from New York City and the seven other counties within the MTA's service area.

New York City and seven counties within the MTA's service area impose a mortgage recording tax dedicated to the city. Revenue from a real property transfer tax on New York City commercial real estate deals is also dedicated to the authority. In 2019, the state dedicated a new surcharge on for-hire vehicle trips for trips that start, end or go through Manhattan below 96th Street. There's also revenue from the Metropolitan Commuter Transportation Mobility Tax, a payroll tax on certain employers.

John Kaehny, executive director of the New York open government nonprofit Reinvent Albany, told Law360 on Friday that the MTA's finances have been "destroyed" by the coronavirus emergency. The group estimates the MTA's costs have exceeded revenue by $350 million to $400 million a week during the crisis, Kaehny said, and the $3.8 billion in federal emergency aid from the first stimulus bill will get the MTA only to the end of July.

"Without at least $4 billion in additional federal aid from CARES 2, we expect the MTA to be borrowing billions to pay for everyday operations and face severe downgrades by credit rating agencies," Kaehny said, referring to a potential next federal relief package.

Kaehny also said the group strongly expects the pandemic to delay until late 2021 or 2022 plans for a new congestion pricing plan that was meant to go into effect in January 2021. With New York City and the state facing their own massive revenue shortfalls, he said a local bailout was unlikely. That was especially true since the state has dedicated funds to the MTA from an expansion to sales and use tax with a marketplace facilitator law and a so-called New York City mansion tax.

"Only the federal government can print money, though the federal reserve could also take on long-term MTA or state debt as another form of aid," Kaehny said. "We are looking at a complete fiscal disaster, and New York is in big trouble without a huge flow of federal aid over the next year plus."

The office of Democratic Gov. Andrew Cuomo didn't immediately respond to requests for comment Friday.

The offices of state Assembly Speaker Carl Heastie, D-Bronx, and Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, did not immediately respond to requests for comment.

The office of Senate Majority Leader Mitch McConnell, R-Ky., didn't immediately respond to requests for comment.

The communications director for Senate Finance Chairman Chuck Grassley, R-Iowa, referred comment to the offices of the Senate Appropriations and Banking committees, which didn't immediately respond to requests for comment.

Rep. Eliot L. Engel, D-N.Y., co-dean of the New York congressional delegation, told Law360 in a statement Friday that the delegation understands the struggle the MTA and its workers are facing in dealing with COVID-19, the respiratory illness caused by the coronavirus.

"We are pushing for robust federal funding to help the MTA maintain operation through 2020 as part of our next stimulus, in addition to much more [personal protective equipment] for the MTA workers who every day put their health on the line to keep New York City moving," Engel said. 

In a statement, Rep. Nita M. Lowey, D-N.Y., told Law360 the $3.8 billion for the MTA in the CARES Act was "simply the first step the federal government" would take to help New York recover from the pandemic. Lowey chairs the House Appropriations Committee.

"We are fighting to get more money to states and cities and additional funding for public transit across the country," Lowey said.

A representative of Senate Minority Leader Chuck Schumer, D-N.Y., said Schumer "overcame significant Republican opposition to deliver $4 billion for the MTA in the CARES Act, which saved the agency."

"He will work to secure more support for mass transit in future legislation," the representative said.

New York Mayor Bill de Blasio, speaking to the media Friday, called on President Donald Trump and federal leaders to pass a new stimulus bill that includes money to make cities and states whole. He said it wasn't only the right thing to do, but would also restart the economy.

"This could happen today, literally today," de Blasio said. "I've asked and I've asked nicely. Mr. President, your hometown needs you. Leader McConnell, your nation needs you. Let's get this right, right now."

The White House news office didn't immediately respond to requests for comment Friday. But in a series of tweets Friday, Trump criticized Cuomo and said the federal government has spent plenty in New York already.

"We have given New York far more money, help and equipment than any other state, by far, & these great men & women who did the job never hear you say thanks. Your numbers are not good. Less talk and more action!" Trump said in a tweet.

--Editing by Neil Cohen.

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