Free Buses: Who Pays as the MTA Projects Wider Budget Gaps?

Reported fact

The promise and the new fiscal context

Mayor Zohran Mamdani still wants New York City buses to be free. In an August city interview, he said his administration was working with Albany toward that goal. The city has expanded eligibility for its discounted Fair Fares program while pursuing faster bus service.

The state comptroller’s October 22 financial outlook did not evaluate fare-free buses. It did project widening Metropolitan Transportation Authority operating gaps. That new report raises a practical question for the separate free-bus proposal: who would fund it?

Sources: New York City Mayor’s Office · New York City Mayor’s Office · New York State Comptroller

Reported fact

What the MTA’s forecast actually says

The comptroller reports that the MTA’s $21.9 billion 2026 operating budget is balanced. Its projected annual gaps rise to $295 million in 2027, $507 million in 2028, $707 million in 2029 and $897 million in 2030. These are forecasts under the authority’s July financial plan, not losses already spent or costs caused by Mamdani’s bus proposal.

The plan already assumes 4% fare and toll increases in March 2027 and March 2029 that still require MTA Board approval. The comptroller attributes wider gaps to rising expenses, including labor, benefits, energy and other costs, despite stronger projected tax receipts and savings efforts.

Sources: New York State Comptroller · New York State Comptroller

Reported fact

What a separate free-bus model estimates

The city’s Independent Budget Office modeled the incremental annual cost of making NYC buses fare-free in a 2027 scenario at just over $1.1 billion in its central case, which includes express buses. Alternative scenarios run from roughly $900 million to $1.3 billion, depending on ridership growth and whether express buses are covered.

IBO considers lost bus fare revenue and effects on subway and paratransit revenue, added service needs, and savings in fare collection and enforcement. Its figures model a possible policy. They are neither an appropriation nor a record of taxpayer money already spent.

Sources: New York City Independent Budget Office

Analysis

Two forecasts cannot be added together

Who would replace fare revenue and cover added service, in which fiscal years, and through what enacted city or state funding? The MTA’s projected operating gap and IBO’s hypothetical program cost are different calculations. Adding them would create a false budget total: the forecasts use different assumptions and periods, and a future agreement could shift costs among city, state and MTA budgets.

The MTA forecast already counts on future fare and toll increases, while IBO models a fare-free scenario. Officials should reconcile those assumptions in one public financing plan before claiming the proposal is fully funded.

Sources: New York State Comptroller · New York City Independent Budget Office

Analysis

The benefit case and the limits of the pilot

There is a genuine benefit case. The MTA’s five-route pilot found higher ridership, which informed IBO’s assumed 25% ridership increase. Eliminating fares can reduce riders’ direct costs. The pilot’s small scale leaves uncertainty about how many additional citywide bus trips would be new journeys versus shifts from other routes or trains.

Faster bus corridors and reliability improvements address a real service problem. Expanded Fair Fares is a more targeted way to help lower-income riders, though it does not offer universal relief. The approaches deserve comparison on access, service and cost.

Sources: Metropolitan Transportation Authority · New York City Independent Budget Office · New York City Mayor’s Office

Analysis

Fare evasion cuts both ways

The comptroller’s report says the MTA estimated that 49% of bus riders did not pay in the second quarter of 2026. On one reading, that limits fares actually collected and at stake in a free-bus shift; IBO uses farebox data and counts collection and enforcement savings.

On another, the comptroller estimates that a 10 percentage point reduction in evasion during the first half of 2026 could have generated up to $75 million in extra fare revenue, or $150 million if sustained for a full year. That is a modeled opportunity under the existing fare system, not guaranteed collections or a substitute for a 2027 program appropriation.

Sources: New York State Comptroller · New York City Independent Budget Office

Open question

The answer New Yorkers need

Before a citywide change, the mayor, governor and MTA should publish a year-by-year agreement showing who pays, how buses and drivers will handle additional riders, and which performance measures would trigger revisions. Until then, the promise offers a plausible affordability gain with a material funding question unresolved.

Sources: New York State Comptroller · New York City Independent Budget Office · New York City Mayor’s Office