A premature promise on fare policyBy
The Port Authority’s recent announcement of a steep fare hike has made New Yorkers in the region jittery. They worry about the precedent the PA might set. They worry that if one organization starts raising fares to cover the costs of badly-needed capital programs, another might follow suit. The MTA’s great discounted fares could perhaps go up.
The MTA, though, wants to head off this talk before it starts. As Newsday’s Alfonso Castillo writes today, the MTA has again proclaimed that it will not raise fares before 2013 — a condition it agreed to when Albany approved the payroll tax.
Playing off a report released this week by the American Public Transportation Association which explored how nearly 80 percent of transit agencies across the country had to turn to fare hikes or service cuts to fill budget gaps, Castillo asked the MTA of their upcoming plans. The authority pointed to its recent budget and said “no new fares” in no uncertain terms.
“The MTA has obviously been hit very hard, along with transit agencies all over the country, by the economic crisis. It had an impact on our funding in all sorts of different ways and led us to take some painful actions in the past,” agency spokesman Jeremy Soffin said to Newsday. “I think the important point for the MTA now is that, because of an unprecedented cost-cutting effort that began in 2010, we last month put forward a financial plan that shows stability.”
It’s all very well and good that the MTA has found some semblance of financial responsibility as it inches toward stability, but I’m not convinced it should discard the idea of a fare hike so quickly or prematurely. Despite the fact that straphangers complain about, well, everything, the MTA’s current fares simply aren’t that high. I don’t like paying $104 for my 30-day MetroCard, but I recognize that, if I ride a lot as I usually do, it’s a very good deal. According to recent data from the MTA, while the base fare is $2.25, the average fare after bulk discounts has been around $1.62 lately. In constant 1996 dollars, that’s an average of $1.09 while we paid $1.38 15 years ago before the advent of the unlimited ride card.
Essentially, then, the MTA is undercharging for its services. While it should try to keep fares low in order to encourage higher ridership, it’s also sitting on a veritable gold mine. As recent fare hikes have shown, the MTA doesn’t lose riders when it raises the fares. It’s popularity is seemingly based solely on the city’s employment rates, and it likely wouldn’t see a revenue loss even in the event of a steep fare hike.
So now, we come to the denouement of this whole thing. The MTA needs money to fill its capital budget hole, and it also knows that its current budget proposals rest on a shaky set of assumptions. Instead of promising to keep fares low, it could put more pressure on politicians by threatening a fare increase. If the agency says inaction from Albany has left it no choice, it will be tough for politicians to use the MTA as a whipping boy as they so often do during fare hike debates. Maybe some politicians will even be held accountable for eschewing sensible transit policies.
Ultimately, the PA’s ongoing budget debate can serve as a bellwether for the MTA. If one agency can get away with raising its tools and fares so steeply, why can’t the other? After all, fares are the one source of revenue the MTA truly controls, and if it needs more money, it can just up the price of its services as every other business does.