We’ve talked a lot about money this week, and with Richard Ravitch’s report due in less than three weeks, we’ll be hearing more about the MTA’s fiscal woes well into December.
We know that the MTA will soon be facing a $1.2 billion deficit. We know that the agency may cut service, services and excess bureaucracy. We also know that the Ravitch Commission is going to issue a series of recommendations focusing around tolling the East River bridges and a congestion pricing scheme. The fun is just beginning.
Both the East River toll plan and congestion pricing are fraught with political difficulties. City politicians — our so-called leaders — have already been railing against the calls to toll the river crossings while Albany has shot down congestion pricing once this year. Our state representatives aren’t going to be too shy about killing it again, Richard Ravitch’s imprimatur or not. Meanwhile, transit advocates have been couching this debate in either/or terms. Either the MTA enjoy the revenue benefits from congestion pricing or tolls or the MTA will jack up the fares well beyond their current levels.
The mathematical truth, it seems, is not quite that simple. To whit: East River tolls will probably draw in approximately $500 million annually. Ccongestion pricing could bring in another $400 million. A fare hike will bring in around $200 million next year and approximately $384 million annually.
What does that add up to? Well, if each plan were to go into effect on January 1, the MTA would be able to raise, optimistically, $1.284 billion next year. Funny; that’s the precise amount of money the MTA needs in 2009 to cover its deficit.
Do you see now where this is going? For the MTA to enjoy a balanced budget, the Ravitch Committee will have to recommend tolling the bridges and implementing a congestion charge and substantial fare hikes. If not this precise mix, then the report will contain some mix that adds up to a similar total. Otherwise, the MTA will not be able to cover the gap or look forward to its future capital plans and its $30 billion price tag.
Politicians won’t like it; some drivers won’t like; in fact, most New Yorkers probably won’t like it. But unless the government ponies up the dough, the rest of us are going to have to pay in more ways than we’d like to admit if we are to enjoy a healthy MTA.
12 comments
If tolls on the DOT E River bridges discriminate against people from Queens and Brooklyn who travel to Manhattan, isnt paying for the Subway unfair too?
No, people from Manhattan pay for the subway, too. Most Manhattanites don’t live within walking distance of where they work.
Congestion pricing and East River tolls are not quite exclusive of each other, so the income from both of them is not a simple arithmetic sum. If both are imposed, I suspect that during congestion hours the toll on the Queensboro Bridge, for example, will go up from $5 to $8, not to $13. Just like it was proposed in regards to the tunnel tolls (Brooklyn Battery, Holland, and Lincoln), the congestion pricing charge will remain the same for all travelers, so if they already pay for a tunnel they will simply pay the additional amount required, if any. The charges don’t sum up. So the revenue from tolls and congestion pricing can’t be simply summed up either.
True. But then if you believe the MTA can cut off a good amount of bureaucratic waste, then you can reach that $1.2 billion figure that way. The overall point remains the same: It’s going to take a combination of measures to fund the MTA. No single measure can fix the overall problem.
How big of a fare increase will generate $200 million next year?
East River tolls, and congestion pricing aren’t really under the MTA’s control, so it would seem that the only way for them to close this gap is through austerity and fare increases, so I’m wondering how big an increase in fares it would take to generate $1.2 billion.
I’m not sure. If the MTA gets reimbursed in full for every ride and if subway ridership is completely inelastic, then it needs to hike fares by ¢13 (roughly 8-9% of average fare) to generate $200 million per year. The problem is ridership has low elasticity, not no elasticity. With reasonable assumptions on elasticity, the MTA needs to hike fares by about 10%.
Well, I think mass transit ridership is generally more inelastic w/i Manhattan, and decreases as you go further out into the suburbs. B/c people who live in the outer boroughs have really no other inexpensive way to get to work.
I think you mean it’s more elastic in Manhattan… but I disagree. Most people in Manhattan can’t take anything except the subway to work. The buses crawl, cars are a luxury, and walking is impossible if you live Uptown and work Downtown.
East River tolls, and congestion pricing aren’t really under the MTA’s control, so it would seem that the only way for them to close this gap is through austerity and fare increases…
That’s a strawman, because the government created the MTA, so the government can choose to fill the gap however it pleases. The reason for the Ravitch commission was the recognition that fare increases and service cuts alone weren’t going to get it done.
But to answer your question, in round numbers it would require about a 25% fare and toll increase across the board to fill the gap. Of course, just like last time, they probably won’t raise every tariff by the same amount. Last time, they stupidly left the subway/bus base fare at $2, thereby giving tourists and occasional riders the biggest break. I don’t think you’ll see that dumb mistake again.
The 30 day unlimited card should go up to at least $80. At this point, those people who only ride the subway to and from work (i.e. 2xs per weekday) would not receive a price break and would essentially pay the $2 base fare. Those people who ride more than 40xs in a month would start to see some savings.
The 30 day unlimited card should go up to at least $80.
It’s $81 already.
At this point, those people who only ride the subway to and from work (i.e. 2xs per weekday) would not receive a price break and would essentially pay the $2 base fare.
The relevant comparison is $1.74 per ride, because that’s what you pay after the 15% discount. Commuters seldom pay $2, since almost every kind of MetroCard has some kind of discount.
[…] The MTA has a budget deficit of $1.2 BILLION dollars. Even after slashing costs, it’ll be around $600M. […]