Home MTA EconomicsDoomsday Budget Mythbusting the MTA fare hike

Mythbusting the MTA fare hike

by Benjamin Kabak

Friend-of-SAS Chris O’Leary, better know as the East Village Idiot, also happens to be a fellow transit advocate. Today, in advance of the MTA Board’s approval of the 23 percent fare hike, he penned an excellent piece disputing some common misconceptions about the state of the MTA’s finances. I was getting set to write a very similar post, and Chris offered to allow me to reproduce his.

So below is a guide to popular myths about the MTA’s budget problem. City Room comments certainly could use this primer. Be sure to check out East Village Idiot for a mostly humorous and sometimes serious look at life in New York City.

Today, the MTA will vote to raise fares again… this time to the tune of 23%. Your monthly Metrocard that cost you $81 this month will cost you $103 in June.

Yes, it’s outrageous. Yes, it’s unfair. But no, it’s not entirely the MTA’s fault. In fact, this fare hike could have been easily prevented by Albany in the past and present, but everyone finds it easy to blame the MTA for this. Stop blaming the MTA, and blame the people who deserve to be blamed.

Myth: The MTA can find the money, somewhere, to stop this hike

When people say this, I ask, how? Nobody has an answer, they just have a feeling. Well, I invite anyone who wants to make this claim to go into the MTA’s financial statements and find enough money to fill their $1.3 billion deficit. It’s not possible. They are out of money. And there’s a good explanation, which brings me to my next myth.

Myth: The MTA got into this deficit by spending too much on big projects

First off, let’s start by explaining how the MTA actually got into this mess. One of its biggest sources of revenue is real estate transaction taxes. Look at what real estate has done in the past two years. That revenue has barely topped 50% of its projection. If the real estate market was booming, we might not be in as big a mess. Secondly, one of the MTA’s biggest expenses is paying down debt on bonds it took out during the Pataki administration, when the MTA was terribly underfunded and MTA money was diverted to road maintenance. These are two key reasons the MTA has such a huge deficit right now. Neither of those are within the control of the MTA, and especially not the MTA’s current management.

But, onto the “spending on big projects.” Yes, there are several major projects in the construction phase right now: the Second Avenue Subway, the 7 Line Extension, and the East Side Access Project. But let’s say that we stopped work on those projects right now. We would lay off thousands of construction workers, and we’d sit around with empty tunnels for another 30 years. But also, we wouldn’t have an extra dime to spend on the operation of the subway system. Why? Because the construction budget – the MTA’s Capital Budget – is different from its Operating Budget. The Capital Budget gets funding from the federal government and the like, but the Operating Budget is reliant mostly on passenger fares, tax revenue, and any state and local funding it can get its hands on.

So, yes, they’re spending a lot on big projects, but they can’t spend that money on anything else.

Myth: $103 is still a good deal for riders

Okay, in the scheme of things, compared to driving a car, $103 is a good bargain for getting around the city. But we shouldn’t have to pay that much, because nobody else does.

Does that sound whiny and self-righteous? Probably, but let me explain. The New York City subway has the highest farebox recovery ratio of any public transit system in the United States. That is, the MTA relies on our passenger fares for over 67% of its revenue for the subway. As a basis for comparison, Chicago’s CTA has a ratio of 44%, LA County’s Metro has a ratio of 30%, and the lowly Staten Island Railroad’s passenger fares account for just 15% of its revenue. Where does the rest of its revenue come from? Mostly from state subsidies. And as we’ve already addressed, Albany gutted the MTA’s funding years ago.

Now, the state is making us pay more instead of adopting a system that would find a reasonable alternate revenue stream for the MTA: East River Bridge Tolls.

Myth: Putting a $2 toll on the East River bridges would be unfair to the poor and would hinder open access to the city

This is the stance that politicians who opposed these tolls have taken, and it’s absurd. I could make plenty of arguments about drivers paying their fair share, cars contributing to pollution and congestion, and the fact that my tax dollars subsidize the maintenance of the roads that drivers use even though I don’t own a car. But let’s just cut to the chase: those who opposed adding a $2 toll to the East River bridges would rather see transit riders pay an additional 23% for their commute while car drivers get off scot-free.

Tell me, who do you think can afford to spend more money: a car owner who drives to their job in Manhattan, or someone who rides the subway every day? Nine times out of ten, it’s the former. Car owners make more money than subway riders, plain and simple.

The second part of this myth is a new point that has surfaced recently. The newest argument against East River tolls has been that it would cut off Manhattan from the rest of the city, and would keep the five boroughs from being “open and accessible.”

This is absurd for two reasons: first of all, to anyone who doesn’t own a car, New York is already not “open and accessible.” I have to pay a subway fare (coincidentally, $2) to get to any other borough. Secondly, access between boroughs is already tolled, thanks to the Henry Hudson, Triborough, Bronx-Whitestone, Throgs Neck, Verazanno Narrows, and Marine Parkway Bridges, and the Queens Midtown and Brooklyn Battery Tunnels… all of which are more expensive to cross than the proposed toll on the East River bridges.

Myth: Adding tolls to the East River bridges will impact the cost of goods in Manhattan

This is a simple mathematics equation. Let’s say you have a small box truck that’s carrying half of its payload in tomatoes (roughly two tons). That small box truck would pay a $10 toll in the current plan. Let’s assume that the entire toll will be passed on to the consumer. How much more would a pound of tomatoes cost? ONE QUARTER OF A CENT.

Of course, I forgot to mention that the tolls will likely take some cars off the road in Mahattan, making it easier for this truck to make its deliveries quickly without getting caught in traffic. So you might actually save close to $10 in labor costs for that truck driver.

Also, in March of 2008, the Port Authority raised the tolls on its Hudson River crossings by $2 for cars (more, naturally, for trucks). The inflationary change in the consumer cost of food between March and April in New York was 0.9%. This matched the national average. And by the way, a lot more of our food comes from New Jersey and west than from Long Island.

Myth: Adding tolls to the East River bridges will cause more congestion because of the addition of toll booths.

NO! NO, NO, NO, NO! I cannot believe the amount of times I’ve heard this argument, even from the most educated people. Have you ever heard of E-ZPass? Believe it or not, that technology can collect a toll at normal speeds, too. For those who do not have E-ZPass, cameras will capture their license plate numbers and they will be billed via mail. You may think that’s some pie-in-the-sky advanced technology, but it’s actually been around in North America for 12 years.


Myth: The MTA can just can all those employees who do absolutely nothing all day

In a perfect world, this wouldn’t be a myth. As transit riders, we all see the waste firsthand, as employees sleep on the job, stand around and do nothing, and sit in their little booths and ignore customers. Believe me, I can guarantee you that many of the MTA board members wish they could lay off 10-20% of the MTA’s workforce to turn up the revenue they need.

First of all, in a time like this, do you think it’s politically expedient to lay off thousands of people in this economy, even if they could? Probably not.

But more importantly, the Transport Workers Union (TWU) has such a stranglehold on the MTA that there’s virtually no way to end this waste unless the MTA went private. It’s a terrible situation, but being opposed to unions is so politically unpopular in this city that nobody would be willing to take that stand publicly. Do you remember the last time the MTA asked for concessions from the union? We ended up walking to work in the brutal cold for three days.

Myth: The MTA keeps “two sets of books”

On Monday, during the MTA’s finance committee meeting, MTA chairman Dale Hemmerdinger said, “we must get away from this notion that the MTA keeps two sets of books.” Why? Because it’s just not true. It was an accusation made of the MTA by Alan Hevesi six years ago – a charge that was resolved in court. And the board of the MTA should be offended by this accusation, since none of the members of the MTA’s leadership were in power back when this scandal broke in 2003. And in response to the scandal, the MTA became much more transparent, releasing all of their financial statements on their web site, and even holding webcasts about their finances.

But that’s not enough to satisfy the masses, apparently. Riders would rather get mad at the MTA for a six year-old scandal than blame Albany, who knew for a year that this crisis was coming, waited until the last minute to rush a proposal through the legislature, and then decide to do nothing and let the transit riding public suffer through massive fare hikes because educated politicians in Albany still believe that the MTA keeps two sets of books, no matter how many times they’re told otherwise.

Myth: Albany has the most corrupt, unopen, and incompetent state government in the entire country and voters need to clean house

Actually, yeah, that’s entirely true. Please, call your State Senator now and demand that the state fully fund transit.

Thanks again to Chris at East Village Idiot for this very comprehensive discussion of the public perceptions and misconceptions that have fueled the MTA into raising fares and the Senate into stunning inaction.

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Andy March 25, 2009 - 4:01 pm

This myth – Myth: The MTA got into this deficit by spending too much on big projects – is not a myth! Over $1B annual in capital debt service comes out of operations – in fact that is a big reason for the problems right now. Like everyone else – the MTA was over leveraged in its spending. Alot of blame to pass around but let’s be clear while capital and operations are separate the effect of capital spending do in fact affect operations.

Benjamin Kabak March 25, 2009 - 4:04 pm

Let me clarify that point a bit for Chris: Basically, current spending, as many people allege, is not to blame for the MTA’s budget woes. In other words, they can’t just move $1.2 billion from the SAS project to cover the operating expenses. Past spending — on credit due to Pataki’s policies — are to blame, and in that sense, Chris’ mythbusting is correct.

Alon Levy March 25, 2009 - 4:21 pm

Car owners make more money than subway riders, plain and simple.

You need to do a lot more than assert you’re right if you want to convince anyone.

Chris March 25, 2009 - 4:26 pm

Sure, I’ll bite. Take a look at these factsheets.

In Brooklyn, the average car owner makes more than twice as much as the average transit rider. The same holds true for the Bronx and Manhattan. In Staten Island, the average car owner earns nearly three times as much.

I don’t think it’s a difficult assertion to grasp. But there’s your proof.

Uly March 25, 2009 - 6:40 pm

The public transport situation on Staten Island is so abysmal (the North Shore of the island has fairly dense bus routes, but that’s only because they all lead to the ferry. The rest of the island has pretty much nothing) that I can’t imagine anybody taking a bus to get anywhere on the Island unless they absolutely have to. (And I *do* take the bus everywhere, or shell out for car service.) Unless you live close to the boat (in which case you might as well walk, honestly) the buses just aren’t there, and for sure the train isn’t worth the effort. No wonder bus riders here are earning a third of what their driving counterparts are! If they could afford to drive, believe me, they would.

On the plus side, the buses mostly run on time, being tied as they are to the ferry schedule.

dee March 25, 2009 - 7:04 pm

How many out-of-state plates do you see around NYC streets? I think the data only reflects those who can afford to pay NYC car insurance. Nobody’s going to tell the government that they’re cheating on their car insurance by registering their car in South Carolina.

Gil March 25, 2009 - 4:34 pm

“Car owners make more money than subway riders, plain and simple.”

It’s not about the owning a car, it’s about the ability to afford parking. You can be low-income and own a car, but if you’re going to pay for a Monday-Friday 9-5 parking spot in Manhattan plus gas, you’re probably going to be able to afford more than the person who, owns a car but takes public transportation anyway because it’s cheaper.

Chris March 25, 2009 - 4:42 pm

Well, it’s still true that car owners earn more, but car owners who commute into Manhattan earn even more than that, further proving my point that these politicians are looking out for the people who need a break the least.

Adam March 25, 2009 - 4:35 pm

Albany is the most corrupt, unopen, incompetent state government? Illinois begs to differ. Heh.

Emily March 25, 2009 - 4:51 pm

As for the item about the unions, you say this:

“In a perfect world, this wouldn’t be a myth.”

Don’t you mean, in a perfect world, it would be a myth? Because it’s not a myth now, it’s true, according to the paragraph that follows. So didn’t you mean that we’d hope it was a myth but, really, it’s not.


Chris March 25, 2009 - 5:06 pm

I was saying that I wish the MTA could can the useless employees who suck the system dry. It’s a myth that they can do that now, but in a perfect world, they’d be able to lay off employees who work for 2 hours of their 8-hour shift.

Many people believe that the MTA has the power to reduce the workforce, improve employee productivity, and cut waste in the ranks. But the TWU would never let them, no matter how big their deficit.

Mr. Eric March 25, 2009 - 5:54 pm

This is complete nonsense!!! The TWU is by far the weakest of all of the large unions in this city. And you leave out all of the other unions!!!

The TWU has members in the TA NOT in the LIRR or MNR. They have different unions who are much more powerful which is proven by the huge pay disparity for the same jobs. And in the TA the supervisors have a seperate union too!

The MTA is alot more than the TA!!!

Chris March 25, 2009 - 7:11 pm

Oh boy, we have the union apologist on our hands again. No surprise there.

Go ahead, make more excuses for MTA employees who sleep on the job, go grocery shopping on company time, and purposely sloth through their workday.

We riders see it happen every day, and it’s inexcusable.

Mr. Eric March 25, 2009 - 9:56 pm

You’re a complete idiot. First I am a rider who rides the system on both the LIRR and Subway everyday so don’t tell me what the riders see everyday!!

Second I pointed out some FACTS about the many unions in the MTA so you attack because your theory was proven stupid and wrong.

In the worst economic crisis in generations that was caused in no part by blue collar workers laying off even more would be the worst thing for this country and especially this state where a huge majority of the total lost jobs have been lost!

Chris March 25, 2009 - 10:56 pm

Wait, so you don’t see the things I mentioned above? That’s funny, because in my own experience and when talking with other riders, it’s incredibly hard to miss.

You seem to think I’m directing my anger at the workers. I’m not. Blue-collar workers deserve every place in the MTA. But when they don’t do what they’re paid to do, they should be punished – not defended. When nearly every day, we see workers lounging around on the clock, how can we not feel like the unions are bilking us as the MTA’s paying customers?

Chris March 25, 2009 - 10:58 pm

And, by the way, I never mentioned Metro-North or LIRR in anything I said above. I was directing almost all of my points specifically to NYCT. I had no “theory,” so I don’t know how what you said “disproved” my post above. Enlighten me.

Mr. Eric March 26, 2009 - 7:54 am

That’s correct you ONLY mentioned the TWU when the MTA has many unions most of which are much stronger like the brotherhood of locomotive engineers who NEVER bend over the way the TWU does for managment.

My main point was that by blaming the TWU is ridiculous UNLESS every other union is mentioned and there are many. The TWU is a weak union that has made concessions that NO other major unions in NYC have made all without getting anything in return.

The MTA consists of more than the TA. The TA moves the majority of the people but doesn’t get the majority of the funding.

Chris March 26, 2009 - 9:14 am

I was simply making an example of the TWU. Yes, there are other unions involved, but the TWU is the largest. And if you’re saying that they’re the only ones who bend over backwards for management, then this situation is even worse than we ever could have imagined.

Eric Paul LaRue March 26, 2009 - 9:25 am

Okay, I’ve got my own opinions on the validity of unions, and in particular, the TWU. But I’m not going to go there, because if our objective is to ensure that we continue to receive good service for a fair price, the other points Chris has brought up are much more relevant. For example, opposing a bridge toll because you’re concerned about the “poor” really is absurd – as has been stated, the poor don’t drive into and park in Manhattan – the rich do. Therefore, raising subway fares would hinder access for the poor much more than a toll on the East River Bridge would. Plus it might encourage more drivers to take the subway, reducing pollution on our streets, and improving air quality in our city, which isn’t that one of Bloomberg’s goals? As for lawmakers in Albany being corrupt, I don’t know enough about them to say one way or another, but I have to wonder if arguments against funding the MTA aren’t something like Washington lawmakers saying we can’t spend money on Universal Health Care because we have to fund a war.

RC March 25, 2009 - 6:13 pm

Some of the comments on the Cityroom blog are absolutely apalling. They should read this blog more.

Ariel March 25, 2009 - 9:54 pm

Now, if only we could get the general public to realize this, we’d be good money $$$

Our politicians care only about votes and not about doing the right thing. They’re aware that the general public isn’t well educated on the topic so they go along with the ignorance in order to gain popularity.

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[…] the MTA. As Chris O’Leary noted here yesterday, the myths about the MTA’s finances are largely media-driven, and Brodsky and Perkins are doing nothing to end the misconceptions that have allowed the State […]

Adam March 31, 2009 - 7:29 am

One thing that is missing at the terminus of a lot of the subway lines is low cost municipal parking. I live in Yonkers, 18 blocks from the Bronx border. If it cost $3 or $5 to park in order to take the subway at a terminus– I bet a lot of people would do it. Of course, people always try for street parking, but the convenience of parking and taking the subway (vs. taking the bus to the subway) would work for a lot of people.

Houndentenor March 31, 2009 - 2:15 pm

Bullshit. They can’t make cuts? Really? Yes the state needs to pony up more money. But this is always going to be a tough sell to the legislators upstate whose constituents never ride a NYC Metro bus or train.

But most offensive is the idea that the system could not be run more efficiently. How can anyone say that with a straight face. The system has been mismanaged all along. We need to demand an audit. Not “transparency” but a full audit of where all this money goes and to whom.

uSkyscraper April 4, 2009 - 3:08 pm

You think New York has it bad, try living in poor Toronto, where riders have to fork over 80%+ of the revenue through their fares.

I’m surprised that no one has mentioned a resident discount for areas that are outside the CBD but within the tolled zone. (i.e. Inwood, and maybe Wash Heights and Harlem) This would smooth opposition from local businesses and car-owning residents who are used to not paying a toll to drive a 5 min errand. The MTA already has many resident discounts for zones near some toll crossings, and London has a 90% discount for residents on the border of the congestion zone.

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