Nov
18

Too quickly embracing a smaller fare hike

By

Over the years, the MTA has not always used its best judgment when giving away money. In December of 2005, for instance, facing a variety of unfunded obligations — many of which still exist today — the agency reduced fares to $1 for the month as a way to give back. Some board members wanted to bank the surplus, but it passed anyway. A few weeks into the the discount program, the TWU went on strike, and eight years later, we’ve all but forgotten that brief fare blip.

Today, in 2013, the MTA has, in a sense, announced a different sort of giveaway. With various economic indicators on the rise and internal restructuring identifying perennial savings in excess of projections, the agency may not need to rely on fare hikes to cover large gaps, as originally projected. With the TWU’s contract situation outstanding, the agency’s current forecasts rely on a net-zero wage increase, but still, the MTA is confident enough to announce that out-year fare hikes will be lower than originally planned. Instead of increases every two years of 7.5 percent, the agency is looking to generate a pair of four percent hikes.

Many observers feel this is the right move. The 7.5 percent jumps were aggressive. Fares are still lowering in adjusted dollars today than they were before the onset of unlimited ride MetroCards in 1996, but the planned increases far outpaced inflation. It seemed too tough to ask passengers to continue to foot these bills every other year with no end in sight, and the IBO predicted $168 30-day cards by 2023. It was, some say, too much to ask of riders.

In today’s amNew York, the editorial board of the free daily makes that argument. Noting that fares went up, in some sense, by nearly 25 percent during an economic downturn, the paper politely applauds the MTA for showing some restraint:

While the MTA’s smaller projected fare hikes are plenty welcome now, they’re still not what we’d call a great leap forward. They’re just a smaller step backward. The plan — which the MTA board still must vote on — would slap riders with separate 4 percent increases in 2015 and 2017 instead of 7.5 percent increases. That’s roughly in line with inflation.

We’re pleased that the MTA — in its own tough-love way — does seem sensitive to recent sacrifices by riders. There are other ways it might have chosen to spend this windfall, which comes from internal belt-tightening and a pickup in real estate and ridership revenues. T

he agency — more than 68,000 employees strong — must hammer out a labor contract with the Transport Workers Union soon, and the TWU has had its eye on this money for awhile. There’s also the eternal imperative for upkeep — stations that need rebuilding, signal systems that need updating, track that needs replacing — an agenda made all the more urgent after the devastation of Sandy. So, while everyone has a hand out, the MTA wants to give its customers a break. It’s a smart move, and a good way to build a stronger base of customer support.

Allow me to play Devil’s advocate for a second, and question the smart move. Right now, the MTA can maybe promise a smaller fare hike, but what if everything collapses around it? If the TWU wins a big wage increase and if tax revenue drops, if the state raids its coffers, if another disaster strikes, that money is now gone. The MTA would have to swallow its pride and suffer at the hands of indignant riders and politicians if they roll back the decreased fare hikes, and it’s just impossible to predict the economics in a few years.

So instead the MTA has given up a few hundred million dollars of guaranteed money. Fare hikes remain the only way the agency can control its fate, and now, four years away, they’ve been reduced. I’m happy not to pay even more in 2015 and again in 2017, but if anything goes wrong, that’s a tough pill to swallow.



Categories : Fare Hikes

10 Responses to “Too quickly embracing a smaller fare hike”

  1. Larry Littlefield says:

    Why are the city, state and MTA always facing ongoing budget crises regardless of the state of the economy, and why do they always have “gap closing” programs.

    Because before a fiscal year arrives, someone has already stolen the money that might show up. As with the fare cuts of the mid-1990s, the pension deals of 2000, etc. If the money doesn’t show up, the winners have already left for Florida.

    This is just another case of it. If they MTA didn’t grab the money that wouldn’t be there for lower fare increases, it would be used for higher wages increases, increased pension benefits, and “dedicated” taxes used for other things.

    The announcement, in fact, was timed to coincide with Cuomo’s veto of the MTA lockbock bill. This is what Pendergast had to do to get appointed. That and financed the next capital plan entirely with debt, or announce that it isn’t necessary.

    When the transit system collapses, there may be no one still around to lynch. I think what they are counting on is the collaose of the transit system getting lost in the broader institutional collapse.

    • Jeff says:

      Doom and gloom much? Come on, the MTA is running on a $2 billion surplus. As long as the economy is growing there will by no financial problems for transit, and vice versa. Every government agency is in the same boat.

      • Brandon says:

        There are huge financial problems for transit, or have you not noticed what 50 years of deferred station maintenance looks like?

        No transit system in the world is this poorly maintained, though at least the MTA is taking care of the rolling stock and the tracks themselves now, which is more than we could say in the 70s.

      • Larry Littlefield says:

        People who understand and remember the past have every reason to be worried about the future.

        http://www.nydailynews.com/opi.....-1.1517742

        From Sam Schartz: “I knew there’d come a day when the past would be forgotten. I can already hear the response from the city: “We have no money. First, we need to fund education, hospitals, police and so on.” But if we fail to invest what’s necessary in infrastructure, we will saddle future generations unnecessarily with massive costs.”

        What Schwartz seems not to realize is that the infrastucture wasn’t allowed to collapse to pay for education, hospitals, and police. Those services collapsed too. They were allowed to collapse to pay for the debts and retroactive pension deals of the late 1950s through the early 1970s. And we have repeated that run-up in debt and pension increases.

        There are only two real differences. Because everyone else is going down too, there may be no place to run to. But for that same reason, there will be no help — and likely more harm — from the state and federal governments.

        It’s 1972 people.

      • Chris C says:

        A $2 BILLION surplus?

        come on what is your source for that.

        If you meant something like this
        http://blogs.villagevoice.com/.....urplus.php

        then all I’d say is (a) that savings DO NOT mean a surplus; (b) not to rely on sensational reporting and (c) get with reality

  2. George says:

    Reading this is a waste of time.

    • VLM says:

      Invaluable feedback. Constructive criticism. I’m sorry someone put a gun to your head and forced you to read free, thought-provoking content on the Internet, jerk.

  3. Dan says:

    Although obviously the MTA board has to finalize budgets and the Capital Plan down the road, I do not think the current higher ups would okay publicly lowering the planned fare hike if they weren’t VERY comfortable with what income/subsidies and expenses are going to look like for the next couple of years. Many of them have been around long enough to remember the consequences of bad budgeting and/or unexpected revenue drops in the very recent past.

    JMO of course.

  4. Peter A. says:

    Honestly, the MTA can raise the fare as much as they please. The subway is still the cheapest option for getting around the city and its not gonna stop anyone from riding.

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