Illustration: Sarah Grillo/Axios

Cities have been trying to persuade residents to return to buses and trains, as transit systems face a financial challenge of a lifetime in the middle of the pandemic. Now state officials are pleading for Washington to act on a stimulus that would help the biggest mass transit systems.

Why it matters: As more people stay put, transit systems are seeing lower levels of fares and tax revenues — blowing a hole in budgets across the country.

Driving the news: "The MTA desperately needs an influx of federal funds or unheard of service cuts and workforce reductions will happen," said New York state's comptroller Thomas DiNapoli said this week.

  • It's the latest renewed call for additional aid, as funds allocated to transit systems in the federal bill passed in March dry up. Congress remains deadlocked over another stimulus.
  • Massachusetts is threatening service cuts for its Boston-area transit system, while officials there nudged Congress last month to step-in to help.
  • The Washington, D.C. Metro system is mulling employee cuts and shortened hours "as hopes for a coronavirus relief bill dim," the Washington Post reported.

Between the lines: The MTA is the poster child for struggling transit systems. It's the largest in the country and saddled with the most debt: $35.4 billion, as of the end of last year.

  • That figure is projected to surge.

The state of play: Fares were already on the decline before the pandemic — a setback for transit systems in New York, San Francisco and Chicago, which are among the most reliant on ridership for funds, according to Moody’s.

  • Direct taxes make up the primary source of funding for other transit systems.

There is another option: a facility set up by the Federal Reserve that allows mass transit systems to borrow money. But they have largely resisted this route.

  • The MTA is the only transit agency that's taken advantage of it.
  • Fed officials have defended the facility as a last-resort option, particularly when it's cheaper to borrow from the public markets.
  • MTA officials have said that they will draw on the facility again before the program ends Dec. 31.

Yes, but: Transit analysts warn that borrowing money may help with cash now, but it will make transit's financial scenarios that much more dire down the line.

  • Baye Larson, a transit analyst at Moody's, compared it to "paying rent with your credit card."
  • The MTA is allowed by law to borrow up to $10 billion. If it did that, one quarter of every dollar the transit system gets would go toward paying down that debt.

What they're saying: "The pandemic has simply wiped out farebox revenue and that won't be replaced by future ridership,” Patrick Luby, a senior municipal strategist at CreditSights, tells Axios.

  • “Borrowing, whether it's from the Fed or anywhere else, to make up for revenues that will never come back just adds to the future debt burden."

Go deeper

Updated 16 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Politics: The swing states where the pandemic is raging — Pence no longer expected to attend Barrett confirmation vote after COVID exposure.
  2. Health: 13 states set single-day case records last week — U.S. reports over 80,000 new cases for second consecutive day.
  3. Business: Where stimulus is needed most.
  4. Education: The dangerous instability of school re-openings.
  5. World: Restrictions grow across Europe.
  6. Media: Fox News president and several hosts advised to quarantine.
Dave Lawler, author of World
42 mins ago - World

U.S.-brokered ceasefire collapses in Nagorno-Karabakh

Volunteer fighters in Stepanakert, the capital of Nagorno-Karabakh. Photo: Aris Messinis/AFP via Getty Images

A U.S.-brokered ceasefire between Armenia and Azerbaijan in the disputed territory of Nagorno-Karabakh crumbled within hours on Monday, leaving the month-old war rumbling on.

Why it matters: Nearly 5,000 people have been killed, according to Vladimir Putin’s rough estimate, including more than 100 civilians. Between 70,000 and 100,000 more are believed to have fled the fighting.

Ben Geman, author of Generate
3 hours ago - Energy & Environment

Japan's big new climate goal

Climate protest in Tokyo in November 2019. Photo: Carl Court/Getty Images

Japan's new prime minister said on Monday the nation will seek to become carbon neutral by 2050, a move that will require huge changes in its fossil fuel-heavy energy mix in order to succeed.

Why it matters: Japan is the world's fifth-largest source of carbon emissions. The new goal announced by Prime Minister Yoshihide Suga is stronger than the country's previous target of becoming carbon neutral as early as possible in the latter half of the century.