New York’s transit system is on a comeback, but the feds loom large.

For public transit in New York, it’s the best of times.

The Metropolitan Transportation Authority has a projected 2026 annual operating budget of $21.3 billion, bigger than the budgets of some U.S. states. The nation’s largest mass transit system moves millions of people daily, with ridership steadily rising in the wake of the COVID-19 pandemic. At the start of the year, a groundbreaking congestion pricing plan went into effect, generating an influx of new funds to fix aging infrastructure, implement upgrades and launch new projects.

At the end of the summer, total revenue generated from travel into Manhattan’s congestion pricing zone had reached $365 million, and projected revenue for the full year was estimated at half a billion dollars. Some congestion pricing lawsuits involving the U.S. Department of Transportation, New Jersey and other opponents are winding their way through the federal court system, but so far none have halted the program, while public support for it has markedly improved.

At the same time, MTA officials have ambitious expansion plans underway, from the second phase of the Second Avenue subway to a light rail link between Brooklyn and Queens, in addition to various signal upgrades and maintenance projects.

As the transit authority charts a course for the years ahead, it has also benefited from a stretch of stable leadership, with MTA Chair and CEO Janno Lieber at the helm since 2021. Sarah Kaufman, an MTA alum who’s now director of the NYU Rudin Center for Transportation, gave high marks to Lieber, saying that his political dealings have helped keep the MTA funded and that he works well with various personalities to ensure that the system is largely successful.

“When I was working there, there were several leaders who cycled out pretty quickly,” Kaufman said. “Now there’s consistency in leadership, which is great to see. When I was there, there was a prioritization every couple of years, which is obviously not helpful in a massive organization.”

Jamie Torres-Springer, who works under Lieber as the president of MTA Construction and Development, said that despite the various legal and political attacks, New Yorkers have rallied around the city’s subways and buses.

“The important thing is that there is a real consensus around making sure that we put the money into this mass transit system,” Torres-Springer told City & State. “We’re carrying 5 million people a day. We’re the lifeblood of New York City and the region. The region, it’s 10% of the nation’s overall economic activity. … Leave aside some of the short-term issues that you see in the press right now, and there’s a consensus around funding mass transit.”

It’s also the worst of times for mass transit in New York.

The consensus described by Torres-Springer certainly doesn’t include President Donald Trump, who in his second term has taken aim at some of the most important transportation initiatives in his former hometown. He has sought to cancel congestion pricing outright, an effort held up in court for the time being. During the federal government shutdown, the Trump administration announced it would freeze billions of dollars in funding for the Second Avenue subway and the Gateway commuter rail tunnel under the Hudson River. The federal government said it was withdrawing $300 million for the Second Avenue subway under new rules barring race- and sex-based contracting requirements from federal grants. U.S. Transportation Department Secretary Sean Duffy has likened the city’s subway system to a homeless shelter – although he said recently that the Gateway and Second Avenue subway projects were under review, not terminated. 

In an October report, state Comptroller Thomas DiNapoli highlighted the significant risks from federal funding cuts and other adverse factors, even as he concluded that the MTA’s finances were improving overall. A slowdown in the economy could cost the agency hundreds of millions of dollars in reduced revenue from ridership, the report found. Fare evasion remains a challenge on New York City buses, where some lines register as high as 50% noncompliance, and to a lesser degree on the subways.

MTA fare and toll evasion losses are expected to amount to $900 million for this year, according to the Citizens Budget Commission, about a quarter of the fares that will actually  be collected.

Many experts also say that the system is woefully unprepared for climate change. The increasing frequency and severity of storms and rising sea levels are a dangerous threat, with Superstorm Sandy demonstrating how damaging seawater is to subway infrastructure and flash floods endangering commuters in recent years.

Still others argue that the transit system is its own worst enemy. State Sen. Steven Rhoads, a Republican lawmaker whose Long Island state Senate district covers most of eastern Nassau County, raised concerns about the MTA’s finances and service on the Long Island Rail Road, which has two of its major lines running through his district.

“The primary source of my frustration with the MTA overall is what appears to be the lack of accountability,” Rhoads said. “They are running projected deficits, anticipated, according to the comptroller, between $300 million and $400 million in 2027 and 2028. I think the projected deficit for 2029 is almost $450 billion. Continually, the MTA is coming back to the state for money every single year, both in capital and operating funds. They continue to try and find new ways to fund the MTA without asking for any accountability with respect to where the money actually goes, and that’s one of the reasons why my colleagues and I have continuously called for a forensic audit of the MTA by an outside agency.”

Yet Kaufman countered that what the MTA truly needs is more consistent investments from both the state and the federal governments to adequately meet the region’s needs. “I think the MTA is in a precarious position and needs additional funding,” she said. “Much of the new capital plan is just bringing infrastructure up to a state of good repair. Without additional funding, the MTA cannot modernize their infrastructure. We shouldn’t be just bringing our infrastructure up to date in 2025, we should be planning ahead for 2040 – we should be doing those things.”

As New Yorkers turn the page on a topsy-turvy year, what’s next for the MTA? The immensity of the $1.5 trillion asset-valued transit system will see next year rife with questions and challenges.

Across-the-board MTA fare increases will occur in January, in part to combat the loss of revenue from fare evasion. The base New York City Transit local bus and subway fares will see a 10-cent increase, along with a 25-cent increase on express buses and an up to 4.5% increase on all LIRR and Metro-North tickets east of the Hudson River. MTA Bridges and Tunnels tolls will see a 7.5% increase.

Rhoads, whose district’s LIRR riders will be part of that fare increase, argued that revenue inefficiencies need to be addressed prior to raising ticket prices or increasing taxes. “The ancillary justification for congestion pricing is that they’re trying to encourage people to take mass transit. At the same time … we now turn around and raise fares on mass transit, making it a less affordable option.”

MTA leadership will be facing political pressure from the other end of the political spectrum as well going into 2026. While the MTA has focused on using congestion pricing to fund capital improvements, there has been sharp debate over offering free buses – one of the key campaign planks proposed by New York City Mayor-elect Zohran Mamdani. Mamdani, a democratic socialist, also wants to add more bus lanes with larger loading zones and discourage double parking along the more than 300 city bus routes.

At the recent Somos conference in Puerto Rico, Gov. Kathy Hochul, who has significant control over the MTA, told reporters she wasn’t ready for free buses, and that reduced fares for low-income riders would be her preference. “I cannot set forth a plan right now that takes money out of a system that relies on the fares of the buses and the subways,” Hochul said.

Hochul has been paying more attention to other transit matters lately, including the loss of some Amtrak service to Albany from Penn Station due to the ongoing LIRR East River remediation reconstruction. This total project has slashed rail capacity through the tunnels by 25% for the LIRR, Amtrak and New Jersey Transit. Until 2027, Amtrak will be unable to maintain a full Penn Station schedule, leaving upstate trains crowded and more expensive. Hochul’s solution, announced in October, was to add an additional Metro-North commuter train between Grand Central Terminal to Albany. This new service is slated to begin in the spring with a fare that will be lower than Amtrak’s.

In October, the governor signed off on the Interborough Express, allowing the environmental review process to begin for the proposed outer borough light rail line between Brooklyn and Queens. The idea, first raised three decades ago, was revived after the COVID-19 pandemic. Operating between Bay Ridge and Jackson Heights, it will be 14 miles long, expecting 115,000 riders a day, three-quarters of whom would be people of color. The new line will use LIRR and CSX freight trackage through Fresh Pond in Queens. There will be two new tracks on existing rail routes and 19 stations, and it will connect with 17 subway lines, 51 bus routes and the LIRR. This will afford the almost 1 million people living within a half mile of it a better way to get to work and a faster means of travel for daily life.

Environmental reviews and community hearings are currently ongoing. At the hearings, some local residents disparaged the plans, arguing that it is neither needed nor wanted while expressing fears of unchecked neighborhood population growth and gentrification.

Despite her pledges to fix Penn Station, Hochul has relinquished control of a long-delayed effort to overhaul the overcrowded transit hub in Manhattan. After suggesting that the federal government fund most of the project – and even have it renamed after Trump – the president decided to put Amtrak in charge, with former New York City Transit President Andy Byford at the helm. (Hochul subsequently withdrew pledges of financial support for the station redesign.) It’s now the rare New York transportation project the president has openly embraced, although some fear that by seizing control he’ll ultimately hinder it rather than help it along.

Meanwhile, there’s some uncertainty about whether the federal threats to other infrastructure projects will stick. “We have contracts with the federal government to support the Second Avenue subway and the project is proceeding,” Torres-Springer pointed out during his interview with City & State. “They wanted to conduct an administrative review related to some policy changes that they made to ensure that we’re complying with those policy changes. We’re fully complying with them, and we’re certain that that’s going to be the outcome of their review. We’re confident that the funding will remain in place.”

Kaufman argued that if the Trump administration doesn’t back off, it would undermine its broader goal of spurring economic growth. “I think it’s possible that the feds will come after MTA funding, but if they did, it would be really shooting themselves in the foot since the MTA is responsible for much of the country’s GDP from the New York area,” she said. “I think it would hurt the economy at large obviously.”