New York’s MTA Chief on Trump’s Funding Threats

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. So I have to ask you before we get started, how did you get over here today? What was your transit mode of choice? It's always fastest when you're going north-south, downtown to midtown. You've got to take the train. A few weeks ago, I sat down with Jano Lieber, the head of New York's Metropolitan Transportation Authority, the MTA. I am to blame for the fact that the MetroCard is going to transit heaven to spend the rest of its days with its friend, Mr. Token, because we are ready to have an all-digital system. The MTA is North America's largest public transportation network, managing many of the New York metro area's bridges, tunnels, buses, commuter rail lines, and, of course, subways.

1:52Stand clear of the closing doors, please. Fun fact, the voice of the subway system, Charlie Pellett, also happens to be a Bloomberg News anchor. But back to Lieber. He rides the subway a lot. And when I tell him my subway line of choice, the 456, which runs up and down Manhattan's east side, he approves. It's a numbered line, which means it's one of New York City's oldest, dating all the way back to 1904. And weirdly, they are better and more reliable than letter lines, which were built in the 20s and 30s. They are the oldest, but the bestest. Lieber was officially confirmed as MTA chair and CEO in January 2022, when New York was still emerging from the COVID pandemic, and transit systems across the country were dealing with historic ridership declines.

2:43Today, ridership on New York City subways is back to around 75 % of pre-COVID rates. But even as New Yorkers return to public transit, the MTA has a long list of other challenges to address. There are rider concerns about safety, reliability, and affordability. And now, Lieber can add new funding threats from Washington to that list. On October 1st, the first day of the government shutdown, the Trump administration said it was withholding$18 billion in funding that would go towards two of the MTA's long-awaited transit projects, extending the 2nd Avenue subway into East Harlem and building a commuter rail tunnel under the Hudson River to connect New York and New Jersey.

3:29In a press conference a few weeks ago, President Trump called out New York's tunnel project and New York Senator Chuck Schumer by name. Billions and billions of dollars that Schumer has worked 20 years to get, it's terminated. Meanwhile, U.S. Department of Transportation Secretary Sean Duffy has sparred with the city over its congestion pricing program, which charges drivers for entering parts of Manhattan in an effort to reduce traffic. Duffy has threatened to cut off other transportation aid if it's not rolled back. The Department of Transportation didn't reply to requests for comment on specific funding threats.

4:08New York isn't the only American city where public transit projects are facing an uncertain future. But the city, its leaders, and its nearly 5 million weekday bus and subway riders have found themselves a repeated target of the administration's transit attacks. Obviously, there is a pattern of picking on New York. They've made it pretty clear that it is intended, I think mistakenly, to put pressure on the Democratic leaders in the Senate and the House who happen to be New Yorkers.

4:44I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, we're talking about the future of public transit with MTA CEO and Chairman Janno Lieber. How the head of the MTA is trying to expand service and preserve hard-won financial stability, while the federal government threatens to derail some of the system's key transit projects. Our conversation has been edited for length and clarity.

5:16The MTA has big plans for the next few years. It desperately needs to update its geriatric signal system, upgrade rail cars, and install more elevators at stations. It has new train lines it wants to build, like the Interboro Express or IBX, which would use an old freight railway to connect parts of Brooklyn to areas in Queens that are currently underserved by public transit. MTA CEO Jano Lieber believes all these changes will put the MTA on the right track. So good stuff is going on. We've got the safety situation in a much better place and riders are coming back like crazy. But many of the MTA's plans come with big price tags.

6:00And the MTA's finances haven't always been pretty. It's been struggling to bring in enough revenue to cover its expenses since the 70s. And since the 80s, the agency's debt has ballooned. COVID brought it to a tipping point. But a bailout from the state in 2023 helped put the MTA on more stable ground. This year, New York State approved an over$68 billion five-year capital plan for the MTA, meant to cover many of the system's needed upgrades. We are fortunate in the sense that our capital program is mostly state and locally funded. 80 % state and locally funded. So unlike a lot of other cities and other transit systems, we're not as dependent on the federal government.

6:46But that leaves about 20 % that does rely on federal funding. When I sat down with Lieber in New York, I wanted to understand how he's adapting to the federal government's shift in priorities, starting with the threat to withhold$18 billion from two of the agency's key transit projects. The DOT says it's holding on to these funds as they assess whether any, quote, unconstitutional practices related to DEI were used by contractors on those projects. Listen, I'm hoping and expecting that this is a temporary and political moment that I believe in the end will have nothing to do with the progress on these projects.

7:27Number one, we are advancing the projects even as these somewhat head-scratching messages come from Washington. Number two, what they're doing is saying that because they've changed the rules about what is considered a disadvantaged business enterprise, that we have to recertify all the companies who are in that program and that they're going to not give money to the project. The answer is we will comply with whatever the federal rules are, but there's no reason to slow the projects down because we have contracts underway. Contractors are working. They need to get paid. But could this lead to more delays?

8:01I'm hopeful that it won't. Right now, the project, as I said, is continuing to progress. And so far, the litigation is messaging that these may not stand, even if they wanted them to. But I'm very hopeful that this is just a temporary political thing. These are great projects. The Second Avenue subway is going to add 100 ,000 riders, more than almost every transit system in the rest of the United States, just that one project. And it is, even though it is by no means cheap to build in New York, we've got crazy stuff underground, we have communities, we're dense, it's hard to build in the middle of the densely populated city.

8:39But it is the cheapest major rail project per rider in the country. Per rider is one way to measure the cost. But on a per-mile basis, it looks a little different. Construction costs for the first phase of the 2nd Avenue subway reached$2.5 billion per mile, according to a report by New York University's Marin Institute of Urban Management. That made it one of the most expensive subway lines in the world. Its second phase is budgeted to cost another$7 billion. dollars. We owe East Harlem a subway since the 1940s when they started knocking down the elevated trains. It's a fairness thing, but it's also an economic development thing.

9:21If you can't get people to jobs and education and everything that New York has to offer, you're actually hurting your economy. Are you playing any role in negotiating with Transportation Secretary Duffy? Or what kinds of conversations are you having with the federal government when they make these kinds of threats? We tend to learn about them, not directly from the federal government, but from the New York Post, who has the letters or the things that are allegedly being communicated to us before we do. But the leadership in this administration of the Federal Transit Administration, which is the sub-entity within U.S.

9:55DOT that deals with transit funding, is led by a guy who is from New York State, who gets the importance of these investments. And I'm optimistic that over time we're going to have a great working relationship. The U.S. DOT didn't respond to a request for comment about their communications with the MTA. I also want to talk about congestion pricing. You know, the MTA is the first U.S. transit agency to really roll this out at scale. Now we're 10 months in. Obviously, there are local and national critics of the program, and we'll get into the questions swirling about its future in a moment. But how are you assessing the impact of congestion pricing so far, almost a year?

10:34It is the rare initiative of government where a huge policy initiative is implemented and almost immediately demonstrates unqualified success. We cut the commute times by 25 % for people who are coming into Manhattan from Jersey or from Long Island or the boroughs. and all of a sudden the drivers who people thought were going to be the biggest opponents of congestion pricing are telling pollsters that they actually like it and they want to keep it because they value their time. They're saving a lot of time. And then we have all these other ancillary benefits that people have recognized. We have less air pollution.

11:16We have less injuries to pedestrians and cyclists from cars. We have a ton less honking. And lo and behold, all the stats about New York City Central Business District business activity are headed in a great direction. Well, there are various lawsuits challenging congestion pricing's legality, and the most significant attack is coming from the Trump administration. How do you explain the national uproar about this program? This is not a driver in New York who is criticizing this program. This is the president of the United States and the U.S. DOT secretary. I think it's just it's become mixed in with some of the culture wars that we've seen develop in national politics.

11:56Transit feels like a blue state thing. So people think, well, I'm against it if they're on the other side of the political schism. I actually said that I do think that Donald Trump secretly gets why transit is important because he owns a share in office buildings to this day, which are filled with people who couldn't get to work if they all drove at once and who depend on a mass transit. So, you know, so far, I think the rhetoric has diminished somewhat. And I'm hopeful that because of the success that it's shown, that even, you know, the people who came out against it at the outset, like some in the federal government, will make their peace with it and we can all move on.

12:35What are some of the capital improvements that the funding is supposed to cover over the next few years and that has already been covering? Well, you talked about one of them. Second Avenue subway is partially funded by the revenue from congestion pricing, which, by the way, is exactly at the numbers that we forecast. We're going to collect about$500 million a year. And this is a Bloomberg podcast, so I'll assume that everybody understands that we can bond that into multiples, up to$15 billion of actual bond revenue for the$500 million roughly a year. So what are we going to spend it on? We're spending it on new subway cars.

13:11We're spending it on the Second Avenue subway. To some degree, we're spending it on making all these almost 500 subway stations ADA accessible with elevators so that everybody can get in and out of the subway system, which is long overdue. We do have the Second Avenue subway and the Interboro Express, but 90 % of our capital program is just fixing signals and physical structure, both the elevated structure and the tunnels and the power systems, which are, you know, something from the land that time forgot, and just the basics. I was shocked to learn just how old some of the technology that underpins the New York subway is.

13:51For example, the signaling system that dates back to the founding of the subway itself. How did this technology get so outdated? Well, I grew up in New York in the 70s when the subway system was really, really falling apart. It's the era when And, you know, everybody remembers when the cars had recovered in graffiti and they broke down every 5 ,000 miles. My predecessors made the case for a capital program, which hadn't existed before. And they bought new subway cars, which was a huge step. And they kept them from being covered with graffiti. And they fixed the track because trains were derailing all the time.

14:25But they were never given enough money to deal with a lot of the stuff that, you know, you and I are just talking about. the signal system, the basic tunnel structures, making the system ready for the era of climate change, moving a lot of equipment out of harm's way because of rising sea levels and torrential rainfall out of harm that could be done by water. Those were lower level priorities at the time. And now they're just the money didn't exist because, you know, literally when the capital program started in the 80s, they were just trying to keep the system from literally falling apart. You know, this is a trillion and a half dollar valued system, according to financial professionals.

15:04And what they're telling us is you ought to be investing like 120, 130 billion dollars over five years if you are following basic kind of business school principles. We got more than half of that. And that is a lot more than the subway system and mass transit ever got before. We're thrilled. Coming up, should New York City buses be free? and why Lieber doesn't have a corporate iPad anymore.

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16:42In September, the MTA announced that subway and bus fares would be increasing from$2.90 a trip to$3 a trip. MTA chairman and CEO Jano Lieber has called the increase modest, but it's still drawn groans from some New Yorkers, like this one, who was interviewed by ABC7. Today, the MTA voted to increase the fares to$3. More? More? Wow, not for that service that we get. The MTA is also phasing out physical metro carts and cracking down on toll and fare evasion, which, according to the Citizens Budget Commission, cost the agency about a billion dollars last year. About 40 % of the agency's operating budget comes from fares and tolls.

17:28I asked Lieber how the agency thinks about balancing the MTA's revenue needs with keeping public transit affordable. Number one, mass transit is already one of the very few things that makes New York affordable. We're not part of the affordability crisis. We're already an affordability solution. At 15 % or less the cost of owning a car, transit is really one of the good things from a cost standpoint about being a New Yorker. But we want to keep it affordable to everybody and make sure that fare evasion is never a crime of poverty. So together with the city of New York, we have a so-called fair fares program that gives people who are in really low income a half-price fare just like seniors get.

18:13and that gradually the eligibility threshold in terms of income has been increased. So we think it should continue to be increased so that you have people who are earning, have minimum wage jobs qualify. Right now, if you have minimum wage jobs and you earn 40 hours a week, you still wouldn't qualify. That doesn't seem right. The frontrunner to become the next mayor of New York City, State Assemblymember Zoran Mamdani, has another proposal for making transit more affordable. He wants to make bus service free for everyone. The MTA brought in$800 million from bus fares last year. Mamdani has proposed replacing that lost revenue with new corporate and income taxes, which would require state approval.

18:59The city piloted five fare-free bus routes from 2023 to 2024. The MTA found that ridership increased on the free routes, but the impact on service speeds was mixed. At the time, Lieber said that the pilot sent, quote, the wrong message while the city was pushing back on fare evasion. So more than a year later, I wanted to know if his opinion had changed. Well, you know, we're still in election season, so I'm going to respectfully decline to comment on the specific proposals because we are aggressively nonpartisan. But anytime you start throwing money universally, the danger is that you're throwing money at people who don't need the extra subsidy.

19:44Our general approach has been to try to make sure that the people who need a little help and a little leg up in paying transit fares get that. So taking Mamdani's name out of it, do you believe that buses in New York could be free? Listen, again, I'm not going to get into the specifics, but I think you get a flavor of what I'm concerned about, which is the MTA's financial situation is stable, but it was hard won. And you can lose ground very easily if we're going to spend money and it's going to have to come out of somebody else's coffers, not out of the MTA's. We generally would like to make sure that we're studying it in a really thorough way.

20:24It's the only way policies of that scale can be done. This is not Dr. Frankenstein's laboratory. This is the greatest city in the world. We ought to be very thorough in how we plan for major initiatives. A lot of our conversation, Chairman, has centered around the MTA budget, federal funding opportunities, the capital plan, revenue from fares. I'm wondering what you would say to critics who point to the MTA's deficit and budgetary problems in the past and say, What are you doing to shore up finances and internally to ensure the financial stability of the MTA? I'm always glad to be asked this question because, you know, the MTA, since I got there, is one of the very, very few agencies of government, maybe in the private sector as well, as we're actually providing a ton more service than we did before COVID.

21:14But our budget in real terms is actually lower. We actually, at our initiative, have cut$500 million out of our budget, our operating budget, that's repeating annual savings, by initiating kind of an internal consultant process. We went around and checked on who wasn't using the phones and the iPads that they've been issued. Well, they took my iPad away. I wasn't using it enough. So doing that, renegotiating our deals with the cell phone companies who we give a lot of money to. Simple stuff as well as more traditional consulting efficiencies have yielded$500 million in annual savings. I mean, you're talking about the scale of New York's ambitions.

21:57Obviously, the MTA is the largest transit system in North America. So many more people ride public transit here than they do in other parts of the country. But what advice would you have for other transit agencies who are trying to think bigger about where their transit systems can go? The success that we've had is in large part been based on the fact that there is a strong political coalition that favors transit, that people understand the benefits of transit. They don't regard it as a niche product that's only used by some people. And in a lot of places, it's considered to be only for poor people.

22:31Right. So you need to build. I'd say the most important thing is public understanding and coalition building. Build a political coalition, explain what you're going to deliver, and then show people success. Show people how transit supports enables the economy to prosper by building coalitions with the business community. And run the trains on time. And you got it. You have to provide good service and find ways to provide more service because there's a close relationship between rider satisfaction and the predictability and the level of service. And I think we've crossed into a good place by growing service.

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