When details of the 2011 fare hike got out on Friday, to many New Yorkers, threats of increased unlimited ride fares and a MetroCard surcharge came as no great surprise. The MTA had, after all, raised fares in both 2008 and 2009, and the authority has spent nearly all of 2010 pleading poverty. That the fares aren’t going up in 2010 is only a matter of semantics; due to the payroll tax funding package, the MTA can and will raise fares on January 1, 2011.
Yet, life wasn’t always all about fare hikes for New York City subway riders. Although the MTA raised the fares regularly throughout the 1990s and early 2000s, straphangers could take solace in the fact that these hikes were often little more than cost-of-living adjustments. The MTA then didn’t have to live fare hike-to-fare hike as it does today, and once upon a not-so-long-ago time, the authority had enough money in its coffers to grant its riders a holiday reprieve from the full fare.
Our story starts on October 18, 2005. On that day, the MTA announced plans to offer a fare discount between Thanksgiving and New Year’s Day. Since the MTA had a balance sheet that was, at the time, projected a surplus that could have reached $900 million, the authority wanted to give something back to its riders. “It’s unprecedented,” Gene Russianoff said at the time. “I’ve never seen any holiday-related discounts for riders. I think it will encourage people to use transit during the holiday season at a time when gas prices are going through the roof. It’s a smart way to reward customers.”
The discounts included relief for everyone. The base fare was to be $1 while bonus days were to be added to unlimited ride MetroCards and commuter rail passes. The MTA estimated that the giveaway would cost $50 million overall with an expected increase in ridership covering from the lost fare revenue. The rest of the budget surplus was to go pension relief, security projects and service improvements, and because the MTA had to have a $0 balance at the end of the year, the money had to be spent.
The next day, the headlines were decidedly less friendly. New York’s liberal and conservative political groups called the fare giveaway an irresponsible marketing gimmick. Because the MTA had been anticipated budget deficits in both 2007 and 2008 — deficits that came to pass — for some time, fiscal experts, such as James A. Parrott of the liberal Fiscal Policy Institute, wanted the authority to plan for long-term budget stability and a source of revenue flow for capital projects. Others, such as the Manhattan Institute’s Ed McMahon, wanted the dollars to cover the MTA’s pension obligations. Then-Governor George Pataki called for the MTA to use the money to cover construction costs at South Ferry or the Fulton St. transit center.
Most commentators figured the good will earned by the temporary fare relief would be short lived. “Whom does this actually benefit?” Preston Niblack, from the city’s Independent Budget Office, said. “It does not really solve any structural issues. It’s great from a public relations point of view, but it does not address long-term needs.”
When the MTA Board held its October meeting, the fare holiday garnered approval amidst a contentious debate. A vocal minority of board members paid heed to the looming financial crisis, and they urged the MTA to, in the words of Andrew Saul, “bank the money” to lessen the pain of future deficits. “I’m not sure in the long term that this is really in the interest of the riders,” Saul said. “This agency is facing tremendous financial stress going forward.”
In November, as the MTA’s surplus ballooned to $1 billion, the discount December was a foregone conclusion. Even as the MTA tried to pare down its future debt, the authority went forward with a plan that many figured was nothing less than bribery and nothing more than a public relations move gone bad. If New Yorkers saw the discount fares and assumed the MTA could afford such a program, these New Yorkers would forever be skeptical of the MTA’s claims of poverty and deficits.
In the end, the program was neither a success nor a failure. The MTA lost approximately $46 million in lost revenue, but few people had changed their fare-buying or ticket-purchasing behavior. As 77 percent of customers said the program saved them money, the MTA even budgeted $50 million for another fare holiday in 2006, but it was not to be as the MTA canceled the 2006 discount in order to postpone an impending fare hike.
Today, the fare discount lives on in memory only. Instead of a holiday reprieve this year, we’ll be preparing for another fare hike as the MTA looks to close a budget deficit nearly as large as the surplus from five years ago. The $46 million the MTA gave up to provide that discount fare wouldn’t have made a huge discount today, but it served as a portent of bad times to come. From now until the real estate market recovers, we’ll be suffering through fare hikes and not holidays.