Ravitch Commission Faces Difficult Task of Shoring Up MTA’s Future

The panel headed by former MTA chief Richard Ravitch held its first public hearing yesterday at NYU’s Kimmel Center. Representatives of advocacy groups, local government, think tanks, trade associations, and unions gave the commission a variety of proposals, including but certainly not limited to road pricing, to help the MTA navigate its funding crisis.

Streetsblog observed the afternoon session, which did not yield headline-grabbing ideas like the morning session (a media favorite: selling bridges to the MTA for a dollar and then tolling them) but did provide a good overview of which options the commission is likely to take seriously before making its recommendations in December.

It would be an exaggeration to say that a consensus emerged from the testimony. (The one thing everyone could agree on was that the collective well-being of the city and the region depends on the MTA.) However, several themes surfaced repeatedly over the course of the afternoon. Here’s a brief rundown:

Responsibility for adequately funding the MTA should fall on those who benefit from its services. This encompasses a fairly broad swath of people, including straphangers, the real estate industry, and car commuters (who get less traffic on the street when more people use transit). Many of these "stakeholders" already contribute something to the MTA in the form of fares or dedicated taxes, and could be asked to pay higher rates going forward. Several people testified that some form of road pricing or bridge tolling would be an additional stream of revenue consistent with this philosophy.

The MTA needs more consistent and reliable revenue streams. Congestion pricing fits the bill in this regard, too. The need for predictable revenue also led speakers to suggest more broad-based taxes, unlike the targeted taxes mentioned above. (Taxes collected from the real estate industry have proven especially fickle recently.) Kevin Corbett of the Empire State Transportation Alliance recommended both road pricing and a payroll tax, saying that "if you have multiple parties sharing in the pain, it’s easier to do a deal." He added, "Looking at the enormity of the task, we suspect it will be a combination of the various taxes [and] fees."

The city and state have been derelict in their contributions to the MTA, and debt financing has gone too far. These observations tended to go hand in hand. Pointing out that 13 percent of the MTA’s expenses now go toward debt payments, rising to 16.5 percent in the next few years, Bill Henderson of the Permanent Citizens Advisory Committee to the MTA slammed the city and state for not holding up their end of the bargain. "We should not always have to make a periodic visit to the brink of disaster," he told the panel. "The question is not whether debt should ever be used, but what is the level of debt that can reasonably be used without imperiling the agency’s financial well-being."

It is reasonable, even desirable, to institute regular and predictable fare increases, but straphangers are currently shouldering too much of the burden. Henderson noted that, through the farebox, MTA riders fund 55 percent of the agency’s operating costs, the highest share in the nation. (The figure is 44 percent in Chicago and 37 percent in Philadelphia, he said.) While several other participants echoed that number, the Kheel Plan would not have found a welcome reception among them. Corbett appeared to encapsulate the general sentiment when he called for "modest and regularly scheduled [fare increases], not more than once every other year."

The MTA must become more efficient and financially transparent. Many speakers praised the progress Lee Sander has made in streamlining the MTA, and just as many wanted to see further opportunities for efficiency identified. Two speakers, Gene Russianoff of the Straphangers Campaign and City Comptroller Bill Thompson, recommended creating an independent watchdog agency to monitor the MTA’s finances. When Ravitch questioned whether another level of bureaucracy would prove effective, Russianoff implied that it may be a matter of political necessity. "The legislature will come to you and say, ‘How will we know the money is well spent?’," he said. "You should have an answer."

Throughout the proceedings, Ravitch asked pointed questions but rarely betrayed his position on any single idea, giving the impression that he is genuinely open to all suggestions. The one question he posed again and again to those giving testimony was how to prioritize the potential solutions.

"How would you rank the various tax options available?" he asked Corbett. "Which would have the most deleterious effect on the economy, and which the least? No one likes any of them. The reason our task is difficult is that no one likes recommending charging anything to anybody. It’s only when you compare it with the deterioration of the transportation system that you conclude you have to make nasty choices."

  • Larry Littlefield

    (Responsibility for adequately funding the MTA should fall on those who benefit from its services.)

    How about all those who benefitted from its services in the past, but sucked too much out and didn’t pay enough in? Why should we accept that the heist is a done deal?

    They lied. Make them pay, or don’t ask me to.

  • Boris

    Larry,

    The responsibility point is the most problematic with me too. But I think the larger problem is not that some people got away with not paying their fare share, but that we subsidize others while they refuse to subsidize us. Roads and even public transit upstate get far more money per rider than roads and transit in New York City. If they want us to pay for our transit, they should pay for their own transit, too. How are we supposed to pay if all our money goes to Albany and doesn’t return?

    I always wonder- even considering the masses of urban poor in the city, citywide average income (and therefore, taxes) should be high enough to pay for good transportation. Just like the state underfunds city schools relative to out-of-city schools, we get the shaft when it comes to transportation funding.

  • Responsibility for adequately funding the MTA should fall on those who benefit from its services.

    I have no desire to shoulder that responsibility while I still bear responsibility for maintaining the “free” bridges and highways that I barely use. Let’s see the motorists – who on average make more than transit users – take on that responsibility first, shall we?

  • Can we get a “preview” button in the next upgrade? 😉

  • Dave

    Where is the link to today’s NYT article about the city’s bridges which mentions the $5 BILLION dollars that the city has spent and will spend under Bloomberg to maintain these bridges.

    TOLL THEM. Make those who cross them in their cars pay for their maintenance.

    Benefits:
    – Additional funds to be used for transit (how it’s allocated TBD)
    – Put all boroughs on a par with Staten Islanders who always pay a toll
    – Easy EZ-Pass installation. No EZ-Pass use the Triboro or QMT
    – Reduction in traffic

    The distortion caused by almost limitless free parking and no bridge tolls means it is easier and cheaper to drive around the city than it is to take mass transit. Let’s change this.

  • Niccolo Machiavelli

    Regarding farebox operating ratios:

    While it does seem by simple mathematics that NYC is getting screwed by 10% relative to Chicago and 20some% vis a vis Philidelphia (and Oshkosh for that matter) it is not all that simple, other factors must be considered. Our higher farebox operating ratio is actually a simple function of our density and a harvesting of productivities built into earlier capital investments, mostly in the subway system. We move more people a shorter distance on more grade-separated rail in bigger train consists with greater capacity utilization. Then there is the basic fare structure that yields this FOR, $2 in all three cities, yet there is no free bus-subway transfer in either Philly or Chi and the average fare is therefor higher. You can pick out one indicator, even a critical ones like FOR or FRR, and declare that the sine qua non of quantitative analysis but it doesn’t make it so, or even relevant. Our system runs 24 hours a day and that drives down the FOR substantially as well, ever see the empty buses out in the former two-fare zones at 1 AM, we are getting a lot more for our $1.45 average fare in terms of head times and off-peak service.

    But that is not my chief beef with this sort of perspective. My main problem is that it takes something that is a measure of the efficiency or our system, and a big justification for more Federal transit support for the capital budget and makes it look like we are getting screwed. And, it leads to the popular but incorrect view that our riders are somehow getting screwed by having access to what in effect is a more efficient system. High FOR and FRR are good reasons to invest in the system, ideally in ways that will maintain efficiency.

    A good FOR doesn’t mean the riders are getting screwed it means that the system is working. Constantly sneering at the MTA, even its successes, leads to a high level of social distrust in the agency. I’m glad they run buses in Suffolk County even if they only recover 25% of their operating costs from the farebox.

  • Larry Littlefield

    The farebox operating ratio is a false argument. Measured by non-fare revenues spent on transit, as a share of the income of area residents, New York’s subsidies are the highest. It is simply a function of the size of the system.

    Imagine if everyone rode transit? Then transit riders would have to pay for the whole thing, no?

    How about this instead? Eliminate the bus system. Eliminate the commuter railroads. Close half the subway stations. Shut the subway overnight. And make transit free. The tax cost of the transit system would go down, and the farebox operating ratio would be zero.

    In short, those who demanded deep fare cuts relative to inflation for 15 years helped to create that $40 billion debt (including unfunded retirement obligations), in addition to those who wanted tax cuts, those who wanted spending on other things, those who wanted richer pensions, and those who wanted to overcharge the capital budget.

    But now tt’s too late. The more we put in, the more others will take out.

  • Larry Littlefield

    “Where is the link to today’s NYT article about the city’s bridges which mentions the $5 BILLION dollars that the city has spent and will spend under Bloomberg to maintain these bridges.”

    Exactly (not exactly — it isn’t quite that much and it is under several administration — but close). And just think that under the congestion pricing plan as proposed by the legislature’s commission (not Bloomberg), the debt service on that money would have been for by city residents, while all the revenues would have gone to the MTA for use on the LIRR.

  • Interesting that “the one thing that everyone could agree on was that the collective well-being of the city and the region depends on the MTA,” since our Mayor and now three Governors and counting appear to think it’s just fine to sell the MTA’s Vanderbilt Yard for less than half of the MTA’s own appraisal in order to grease the skids for Bruce Ratner’s Atlantic Yards.

  • Larry Littlefield

    “The one thing that everyone could agree on was that the collective well-being of the city and the region depends on the MTA.”

    Add “future” to “collective” and you see why it has been milked, and why it is doomed. Slash normal replacement (as has already happened) and the deterioration is gradual (already started). Why stop future harm to everyone when I can get more for me now?

    Too late. It’s gone. What effect will a reversion to normal stock prices have on the pensions, and how much will have to be diverted from transportation to the retired as a result.

    Ravitch — DECLARE BANKRUPTCY. STOP PAYING DEBTS AND PENSIONS. TAX THE INCOME OF THE RETIRED. Then talk to me about what I owe.

  • Madam_S

    As a former short-term resident of NY, I always wondered why there was no movement for NYC to secede from the state. What does the City get from the state except meddling and tax bills? Think of what Bloomberg (for one) could have achieved if not for the various blockades put up by Albany!

    As for MTA, it’s a mess, but it’s the only game in town. New York must find a way to make it work, despite people like our Negative Nancy here. Tolling all the E. River bridges is a great way to start. And why, except for pride, must the subway run all night? Use those operating funds to clean up the stations!

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