Home PANYNJ Paying for it now, later or not at all

Paying for it now, later or not at all

by Benjamin Kabak

When the MTA starts operating trains to 11th and 34th Street in a few years, it will be doing so to a station paid for by the City of New York and over tracks paid for by the same. It’s all well and good that someone else decided to foot the bill for this transit extension, but once construction wraps up, that’s all she wrote. For the rest of its existence, the MTA will have to pay the operating and maintenance costs for this extension of the subway system.

The same thing, of course, happens all around town. Phase 1 of the Second Ave. Subway will increase operating costs as the MTA will have to run trains to the Upper East Side while maintaining levels of service to Astoria and Brooklyn along the BMT lines. The East Side Access project will require more rolling stock, more personnel and more long-term upkeep for the LIRR as well. Even as the capital dollars stop, these projects still cost the MTA money.

Meanwhile, politicians are often arguing for an increase in the MTA’s expenditures without even realizing. Constantly, elected officials and community boards call upon the authority to increase bus frequency or add new routes to better serve neighborhoods. But who is going to pay? In an ideal world, any new fares generated by the increased service would cover its operating costs, but since we live in a world in which transit fares are kept artificially low to stimulate ridership while direct subsidies are eliminated, no one ends up paying the operating costs. The MTA’s expenses mount, and they have to cut from somewhere else in the budget.

Recently, we’ve seen a somewhat similar drama play out with the Port Authority. A few weeks ago, the PA proposed a massive increase in tolls and fares, and the proceeds were to go toward an ambitious ten-year capital plan that would have improved rivers airports, roads and rails throughout the region. After a faux-political uproar, the PA approved a reduced fare and toll hike package but had to scale back some upgrade projects as well. For example, upgrades described by the authority as “critically” at Newark and LaGuardia Airports will be delayed.

Earlier this week, Port Authority head Chris Ward lashed out at politicians who refused to accept the Port Authority’s budget on the one hand and want fancy new projects on the other. “The reality,” he said to the New York Building Congress, “is that you cannot always do more with less. Sometimes you simply must do more, and we’ll be playing catchup with the rest of the world until that reality becomes a part of our political conversation.”

During his speech, Ward also praised Governors Chris Christie and Andrew Cuomo for ultimately accepting the Port Authority’s budget. “We live in the reality of practical decision making and decisions were made for what can in fact be a level of tolls that work within this region, and the governors showed their leadership,” he said. (For more on Ward’s speech, check out Transportation Nation’s coverage.)

Now, of course, Ward has to strike a conciliatory tone toward the two state executives, but his first statement bears a closer look. For years, we’ve heard a lot about doing more with less. The MTA is trying to make every dollar count, as they remind us frequently, and Albany is still pushing for a forensic audit. Some politicians want to roll back the payroll tax; others balk at tolling the East River; and everyone wants more, more, more.

At a certain time, though, more is going to cost something. If we want more reliable service, better airports or even a smoother ride into the Lincoln Tunnel, we’ll have to pay for it. As I wrote last week, decisions we make now burden the future and that includes decisions made to avoid funding a project. If we can’t stomach the costs now and the infrastructure falls into further disrepair, it’s just going to be more costly to fix it in the future. Chris Ward knows what he’s talking about, but does anyone controlling the purse strings see it that way too?

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13 comments

John-2 September 1, 2011 - 11:03 am

From the city’s angle, the advantage of 34th-and-11th on the No. 7 train is that in time it is supposed to sharply increase both the ad valorem and sales tax revenues from the Hudson Yards area. Ideally, at least on this project, X amount of that increase would be designated towards mass transit infrastructure maintenance and operations, since the area doesn’t become attractive as a commercial office/retail zone until the new station opens.

Given all the other more lavish (and vote-getting) ways city pols can figure out to spend property and sales tax funds, I doubt they’re going to be foresighted enough to designate anything from the far west side’s growth towards infrastructure maintenance. But now would be the time to put something like that it, before a single new tower is built and the tax revenues aren’t already consigned to some other project(s).

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Alon Levy September 2, 2011 - 11:44 am

That’s the idea, but are property value projections from the bubble era really applicable today?

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Bolwerk September 1, 2011 - 12:04 pm

For the rest of its existence, the MTA will have to pay the operating and maintenance costs for this extension of the subway system.

That doesn’t necessarily speak to a problem. I don’t know the numbers, or even where to get them, but it is possible that the extension can operate at a loss and still save the MTA money over where it is today – particularly if it improves coverage of fixed and capital costs of the system, or even reduces average variable costs (e.g., number of trains operating). In roughly descending order of likelihood, I guess the same is true for SAS, ESA, and new bus services.

That said, there really is no excuse for politicians to keep putting cost overruns on the credit card.

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ajedrez September 1, 2011 - 1:29 pm

Exactly. For example, the SAS can allow service on the Lexington Avenue Line to be cut slightly, as well as service on the crosstown buses (people might not want to walk 1/2 mile to Lexington Avenue, but they may be willing to walk 1/4 mile to Second Avenue), and of course the M15.

Plus the additional ridership generated can give them some revenue to offset some of the operating costs.

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Bolwerk September 1, 2011 - 2:14 pm

Yes, good point. Additionally, SAS might bring further savings by allowing the number of east side avenue buses, at least from First to Third Aves., to be reduced. The labor overhead on bus drivers hauling a fraction of what a BMT/IND train can haul must be staggering, and that’s before looking at time, energy, and maintenance inefficiencies of buses.

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Justin September 2, 2011 - 4:33 pm

I agree with you, even as the first phase of the second avenue subway reduces crowding on the Lexington Avenue line, it also reduces the need for East Side buses. Lets hope somehow they put together a package for the other three phases sometime soon. if the national government did something about the overall national economy, improved tax collection could provide the funds for the other three phases, but that might not happen under the current President. Then again with it so close to election time he is now proposing new stimulus measures.

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lawhawk September 1, 2011 - 12:26 pm

This is a problem shared by other mass transit agencies, including NJ Transit. NJ Transit built new infrastructure that they didn’t have the funds to cover because of massive cost overruns (Secaucus), and then they don’t have the funds to cover the operations down the road.

It’s one of my criticisms over the ARC tunnel – NJ taxpayers would have been on the hook for that misguided project’s overruns as it was envisioned when cancelled (Gateway is actually closer to the original ARC proposal for thru train traffic/HSR/increased capacity). The agency simply doesn’t have the funds to operate the infrastructure it proposed to build.

One of the rationales for the ARC/Gateway was to bring 1-seat rides into Manhattan from North Jersey, but NJ Transit doesn’t have the operating budget to increase train traffic. It reduced train schedules and cited a lack of funds and lack of riders when it hiked fares last year. In other words, it can barely operate on the infrastructure it has at present and its service is limping along but it was claiming it would have the ability to run 1-seat rides into Manhattan? Dubious at best unless it was simply going to eliminate service to Hoboken.

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Bolwerk September 1, 2011 - 2:31 pm

For all the flaws with ARC, NJ taxpayers probably traded a short end of one stick for the shorter end of another. Political will to build Gateway seems depleted for now, and very likely it won’t be built soon. As more than a few people in various transit forums (Larry Littlefield, for instance?) have said, better transit and real estate deals exist east of the Hudson nowadays, and Christie made sure of it.

As for eliminating service to Hoboken, I don’t see how Hoboken Terminal is itself a major destination anymore. Correct me if I’m wrong, but don’t most people going there transfer to PATH, HBLR, or a ferry? If there is a better route to Manhattan, I imagine people would take it. (That said, PATH and/or HBLR from Hoboken to Secaucus could be a worthy project.)

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lawhawk September 1, 2011 - 3:56 pm

Hoboken is a major hub for NJ Transit and half of its lines have termination points there with transfers to PATH or HBLR. It’s a more direct routing to Lower Manhattan and the financial district than going to Midtown and taking transit to downtown. For commuters, it’s also cheaper to travel to Hoboken than to transfer and go to NY Penn.

But if you’re going to argue that NJ Transit should cease service to Hoboken, why did NJ Transit spend $1 billion Secaucus Transfer that was intended to make it easy for people to transfer between the lines heading to Hoboken or Northern NJ from the NEC lines.

The 1-seat ride argument completely undermines the necessity for having built Secaucus and the billion spent on capital budget and the ongoing operating costs for the underutilized facility (it’s never lived up to its usage estimates, even after they finally built a park and ride lot). But NJ Transit wanted something to link together all its rail lines (except the AC/Philly line) and were willing to spend to do it.

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Bolwerk September 1, 2011 - 4:34 pm

Hmm, if more reliable midtown service materialized, it could easily be competitive with PATH service to downtown, particularly if your destination is not near the WTC area.

I definitely wouldn’t argue that they could/should cease service to Hoboken, but I can see why they might want to reduce or re-prioritize service to Hoboken. Seems to me more midtown service would reduce, but not eliminate, the need for Hoboken.

As for Secaucus, no arguments here. I’m not convinced it was a good idea anyway – clearly the promised development never materialized.

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Alon Levy September 2, 2011 - 11:48 am

Yes, ARC was going to eliminate service to Hoboken, where practically nobody wants to go. The Major Investment Study projected that Alt G would see zero change in operating cost, offsetting the increased trip volume with efficiency improvements coming from limited through-running, and Alts P and S would see small increases in operating costs.

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Spendmore Wastemore September 1, 2011 - 12:42 pm

China and Brazil seem to have their systems running just fine, while increasing private car ownership at the same time.

Obviously we need to borrow more money from China and Brazil.

Huh… you mean you have to pay back the principle on a bond years later? Well, Reagan proved that deficits don’t matter so it must be true. If we *really* have to pay for those bonds then just sell that copper torchy-thingy in New York harbor. It was from France and we all know how the French conspired against us with the Soviet Union during the Revolutionary War.

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Alex C September 1, 2011 - 9:14 pm

Abraham Lincoln almost died in the Civil War fighting the Chinese!

But yeah, it’s almost sad seeing actual planning and funding for infrastructure being made available in developing countries while here we look for ways to pinch every cent out of funding.

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