The Fare Hike, the Service Cuts, and the Ballot Box

This afternoon the MTA officially unveiled the fare and toll increases it’s proposing to help close the agency’s remaining $400 million budget gap. The dailies had already reported many of the measures on the table, and it looks like the burden is going to fall mainly on New Yorkers who use subways and buses the most. The price of a monthly unlimited Metrocard is either going up to $99 with a 90-ride cap, or it’ll go up to $104 and stay truly unlimited.

MTA_money.pngWill legislators pledge not to steal dedicated transit revenues again?

So that’s either a 12 or 17 percent hike for people who rely on the transit system for commuting and other daily trips, compared to the overall 7.5 increase in fare and toll revenue. Right after the biggest service cut in a generation. And there’s more pain coming.

All this is happening in an election year after the state legislature stole $143 million from the MTA and TWICE failed to put road pricing to a vote, passing up the chance to direct the revenue toward transit. With the primaries for State Senate and Assembly seats coming up in less than two months, now would be the appropriate time to hold legislators accountable for allowing this slow-motion train wreck to unfold.

A lot of attention will be focused on bridge toll obstructionist Pedro Espada’s high-profile campaign to hold on to his Bronx State Senate seat. Espada is facing a group of challengers — including one with backing from the Working Families Party — in the September 14 primary, where the outcome of most New York City races is really decided.

Espada is far from the only elected official who owes transit riders some answers. Most other incumbents haven’t become such magnets for public scorn, but hardly any of them can say they did all they could to prevent the fiscal catastrophe that transit advocates saw coming from a mile away. No one in the Senate or Assembly, after all, ever had to vote on congestion pricing or bridge tolls.

A glance at Gotham Gazette’s indispensable candidate database reveals that some incumbents won’t get to coast to the general election without facing any competition. Yes, the challengers may be longshots, and many aren’t focusing on transit funding, but they’re keeping the incumbents honest. Congestion pricing foes, like Denny Farrell in Upper Manhattan, and legislators who should have led on the issue but didn’t, like Joan Millman in northwest Brooklyn, will have to defend their records.

With the public circus of fare hike proceedings about to ramp up, we’re going to hear a lot of teeth-gnashing about the MTA (the WFP, whose party line many incumbents will be running on, is already on the case). But a lot more is riding on those primary elections than on the fare hike hearings. The next month and a half is no time to lose sight of that. It’s our chance to get elected officials on
the record about how they’ll turn around the finances of our transit
system.

  • In any sane society, a state legislature grabbing two-thirds of a dedicated transit tax for non-transit purposes would be a heads-will-roll scandal with outraged editorials, pols doing the perp walk as TV reporters shove mics in their faces, and metaphorical blood running in the gutters. Oh, wait, I don’t live in a sane society. I live in New York State.

  • Larry Littlefield

    Is Weiner facing a primary? I’d like to see him confronted with his assertion that congestion pricing was a right wing Bush conspiracy, and that if it were defeated transit would be fairly funded with a federal gas tax increase.

    Not only did Weiner get his congestion pricing defeat, but also a fully Democratic congress with 60 votes in the Senate, and a Democratic President.

    How, precisely, have transit riders benefitted from him getting his way?

  • J:Lai

    I’m beginning to think that it might be better if the MTA re-definied its scope as providing transit service.
    Perhaps fares should double, and service should be increased instead of cut.
    If we as a society believe there are certain classes of people who should ride for cheaper (e.g. the poor, elderly, students, etc) that would be the responsibility of the city, state, or federal government to provide subsidies funded by general tax revenue.

    Also, I don’t get the rationale behind increasing the cost of the unlimited card but leaving the base fare the same.

    From a revenue standpoint, it seems questionable, as it now takes one additional ride to break even vs. buying prepaid cards (assuming $99 unlimited) and will push the marginal unlimited rider to the prepaid card. I would guess that a large portion of unlimited users barely use enough rides to make it a good value vs. the prepaid card, thus the marginal impact may be significant. The revenue impact would be more predictable, and possibly larger, if the base fare were increased (possibly with a proportional increase in unlimited prices.)

    In terms of fairness, most people paying per-ride are either poor, or only occasional users of transit. The occasional users group includes many different people, but it certainly includes tourists and visitors. I think the vast majority of unlimited card users commute to work at least 5 days a week on a subway or bus, and represent the “middle class”, such as it is. keeping prices down for socio-economically barbelled pay per ride users at the expense of the unlimited card users seems strange and questionable as a social policy.

    It wasn’t clear to me whether there will actually be 2 optional for unlimited cards (the $99 card with 90 uses in a 30 day period, and the $104 card which is truly unlimited) or if the MTA will select only one of the two. I predict the $104 card will have minimal support since only a tiny minority of riders are “power users” who routinely take more than 90 rides in a month.

  • J. Mork

    The base fare isn’t really staying the same because the pay-per-ride bonus is being cut from 15% to 7%.

  • Larry Littlefield

    “In terms of fairness, most people paying per-ride are either poor, or only occasional users of transit. The occasional users group includes many different people, but it certainly includes tourists and visitors.”

    And bike commuters.

    The MTA never got credit for how much the fare was cut due to the unlimited ride cards and other discounts. Not from the pols. Not from the Staphangers. Not from the riders.

    Now all the MTA has is the resulting debts, along with the debts from pension enhancements, the debts from cuts in non-dedicated revenues, the debts from the theft of dedicated transit revenues, the debts from excessive cost increases on capital projects, and the debts from excessive cost increases in health insurance by the health care industry.

    So since most refused to acknowledge the fares had been cut, the logical route is to take away the discounts and claim that “the fare” isn’t really going up much.

  • I agree with J:Lai, restore/increase transit service and raise fares as needed; then provide government subsidies to the poor that make transit accessible to them. New York benefits when transit is attractive and convenient and all classes of people are taking it, not just the down and out.

    I am very concerned that the more transit service is degraded in New York, the more people will stop using it, the worse it will get, the further our environment and streets will be degraded by automobiles, the harder it will be to live car-free, etc.

  • Oh, and I’d rather have the $104 fare in exchange for keeping unlimited passes unlimited.

  • It’s in the MTA’s best interest to provide unlimited passes. Unlimited passes encourage people to make extra trips during off peak hours, when the MTA runs trains way below capacity.

  • lee

    I don’t find a $2.25 base fare so objectionable. Figure 22 working days per month, two trips per day, 44 trips costs $99, you need one more trip to make the unlimited worth it.

    eliminate all %discounts on the pay-per-ride cards and institute a $0.50 fine or bonus (not sure which would be preferable) for refilling a card.

    sue the state legislature for theft.
    or something.
    there has to be an ironclad way to secure mta funding from the State.

  • Mike

    You’re making a depressingly common math mistake by forgetting to account for the pay-per-ride bonus. In reality, the breakeven point for a $99 monthly would be 47.1 rides, up from the current 45.5 rides.

  • JK

    Couple things. The MTA thinks it will get around $4.9B from dedicated taxes this year. So, Albany has stolen only a little bit (about $120m.) Bad news is that nothing short of a state constitutional amendment can truly “lock” the dedicated transit fund box. Though, there is a work around. The next governor can promise to veto any budget which takes MTA dedicated funds away from the MTA. Thing is, Albany is plundering over a billion a year in dedicated taxes from the Environmental Protection Fund and Highway and Bridge Trust Fund. So, the stealing from the MTA is just the newest (and smallest) of an ongoing theft of dedicated funds. Incidentally, between ten and fifteen cents of the next fare hike will be due to Albany stealing MTA dedicated funds.

  • The cap on the unlimited doesn’t really affect me – I’m moving to be within walking distance of work – but is still stupid. Beyond the off-peak incentive, there’s one huge advantage to unlimited cards: they interact with proof of payment to allow swipe-free bus rides. This means that most of the benefits of off-board fare collection could be realized without putting an expensive swipe machine at every bus stop.

    Also, most first-world systems have a breakeven point far lower than 47 rides. In Berlin and Tokyo, it’s about 30. In Paris it’s 47, but that’s relative to a very cheap 10-ticket bundle; relative to a single-ride, it’s 34.

  • J:Lai

    Mike:
    “You’re making a depressingly common math mistake by forgetting to account for the pay-per-ride bonus. In reality, the breakeven point for a $99 monthly would be 47.1 rides, up from the current 45.5 rides.”

    If you assume that substitution occurs between ulimited and prepaid cards with enough rides to qualify for the bonus, which indeed seems reasonable, then I stand by my figure that the breakeven point increases by 1 ride under the new plan.

    A current $89 card costs as much as 46.5 rides at $2.25 with a 15% bonus.
    A $99 card costs as much as 47.3 rides at $2.25 with the reduced bonus of 7%.
    If the card costs $104, the breakeven would be 49.7 rides.

    Given that you can’t take fractional rides, the number to exceed the breakeven goes from 47 to 48.

    Anyway, the unlimited card does not exist to help the MTA maximize revenues, it exists as a benefit for riders. If we have to move to a model where fare revenue is the main or sole source of operating funds, then unlimited cards may be a luxury we can’t afford. This would be too bad, as it would probably decrease ridership. I’d rather see the base fare increase but retain a relatively affordable monthly pass if possible.

    The only way I can think of that the pricing policy could help to save costs would be to distribute the peak loads across a longer time period to the extent that peak rush hour service could actually be reduced. It’s not clear this could happen even with variable time-dependent pricing, at least not without cooperation from the govt to provide large scale incentives for business to stagger work schedules, and for schools to stagger class times.

  • The unlimited card is not just for the riders. It’s also a way for a transit agency to reduce back-end costs: unlimited cards involve fewer transactions, and tend to be a more reliable source of income than pay-per-rides since they’re paid regularly every month. On this principle, in the German-speaking world and Japan they even go further and introduce six-month or annual unlimited cards.

    A fairly pain-free way of distributing the transit load well is to encourage TOD at the outer ends of the subway lines. Jamaica is already doing it, but more is required. If I were Walder, I’d work with Flushing on replacing parking-oriented development with TOD, and try to get more commercial upzoning in Rego Park and Forest Hills.

  • Jonathan

    A point of information re: “On this principle, in the German-speaking world and Japan they even go further and introduce six-month or annual unlimited cards.”

    No need to move. NYCT offers an EasyPayExpress 30 day MetroCard that refills itself automatically.

    See: http://www.mta.info/metrocard/EasyPayXpress.htm

  • Mike

    45.5, not 46.5. It’s a two-ride-per-month difference.

  • Jonathan, the MTA offers no incentive to use the EasyPayExpress rather than an ordinary unlimited monthly. This is different from German practice, which is to sell a self-refilling annual card for the price of ten monthly cards, or the Japanese practice, which is to sell a 6-month card for the price of about five monthly cards.

  • the WFP, whose party line many incumbents will be running on, is already on the case

    And I’m on the WFP’s case.

  • Boris

    ‘Bad news is that nothing short of a state constitutional amendment can truly “lock” the dedicated transit fund box.’

    I thought state borrowing without a referendum is unconstitutional, but it happens all the time anyway…

  • Ian Turner

    Boris,

    Debt issued by state agencies, such as the MTA, is usually “moral obligation debt”, in which the state pledges only to consider making payments in the event of a default. In other words, if the MTA were to default, the state would not be legally obligated to pay the debt. On the other hand, the bondholders could probably go after the MTA’s assets, including the subway system.

    See here for more information on NYS debt:
    http://www.osc.state.ny.us/press/debtfaq.htm
    http://www.osc.state.ny.us/debt/debtfacts.htm

  • Larry Littlefield

    “Debt issued by state agencies, such as the MTA, is usually “moral obligation debt.”

    1) Younger generations have no moral obligation to it.

    2) A state appeals court, way back in the day, ruled that state debts were not long-term obligations binding on future taxpayers and state legislators, because money to pay the debts is appropriated separately each year. The state subsquently passed a year seizing tax revenues automatically to pay debts, giving them first priority. Sounds unconstitutional, but then folks like Sheldon Silver appoint the judges.

    “On the other hand, the bondholders could probably go after the MTA’s assets, including the subway system.”

    1) Assuming the state would required a future private owner of the transit system to provide service, as it does other utilities such as Con Ed, then the transit system is a liability and not an asset.

    2) The subway is not owned by the MTA. It is owned by the City of New York, along with the TBTA. It was turned over the state at the MTA’s formation in return for a promise to make improvements, such as the Second Avenue Subway, and provide service.

    The MTA may own the subway cars. But since they cannot be used elsewhere, their value is as scrap metal.

    As part of any bankruptcy, the average age of the cars and major subway components should be compared with their condition as of 1968. The subway should and TBTA should be returned to the city in the same condition, with the city only paying for any improvement, and not at MTA contractor rates.

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