Just a few weeks ago, the Rudin Center released a report on the future of the Port Authority that cast the PATH train’s fate into question. PATH, you see, is a drag on the PA’s finances as fares don’t come close to covering the exceedingly high operating costs and, unlike in New York with the MTA, there are no dedicated taxes or fees that support the popular trans-Hudson rail connection. The money for the system comes from the rest of the Port Authority’s user fees, and as more and more projects demand PA resources, PATH is starting to drag down everything else.
Yet, PATH is an important part of the New York-New Jersey transit picture. Despite recessions, terrorist attacks and massive hurricanes, ridership has increased by nearly 50,000 passengers per day since 1994, and as Jersey City and Hoboken continue to grow, PATH remains a vital connection to the region’s job centers. So how do you solve this problem? According to a new report released tonight by the Citizens Budget Commission, one solution could involve transferring control of PATH to New Jersey Transit to better align rail operations, raising fares and instituting a series of fees and taxes that would put the railroad on a more sound fiscal path.
“All other U.S. transit systems rely on tax subsidies,” Charles Brecher, CBC’s Consulting Research Director said. “PATH is the only outlier. The burden of funding PATH should not fall only on passengers and the Port Authority. A broader region benefits from PATH and should pay a fair share.”
The report — available here as a PDF — offers up a succinct summary of the current structure and the inherent problems facing PATH. It mentions that the cost per ride of operating the train system is over $8.40, third highest among U.S. transit agencies, and it doesn’t delve into ways to cut down these costs. To me, that’s a significant red flag. But still, the budget deficit of $387 million for 2014 is projected to reach nearly half a billion dollars in four years, and that’s a problem.
So what’s the CBC solution? As the nonpartisan agency notes, PATH is the only transit system in the U.S. that receives no state or local tax subsidies (while NYC Transit, for instance, relies on those fees for 52 percent of its revenue). Tax subsidies, the report says, “is appropriate because of the benefit the general public, including employers, derives from an efficient mass transit system and the broad labor market it supports.”
Meanwhile, the Commission recommends a steep fare hike in line with their 50-25-25 funding model. The idea is that the agency should draw 50 of its revenue from fares and 25 each from taxes and motor vehicle users. The taxes could come from a small bump of around .32 percentage points to the sales tax or a steeper increase to property taxes. The fares would likely climb to a single-ride price of $4.50 and an average cost of around $3.78. I worry that this amount is too high for a mass transit option and could lead to severe sticker shock that encourages more driving. An equal-shares approach would lead to higher taxes but only a $3 single ride.
Finally, the CBC recommends removing PATH from the purview of the Port Authority and transferring operations to New Jersey Transit. Notes the report’s summery, “New Jersey Transit trains and buses already account for 60 percent of the weekday commuters from New Jersey directly to the Manhattan central business district, and adding PATH would bring the share to 87 percent. New Jersey Transit could more effectively coordinate transit operations across the state while continuing to receive a guaranteed toll cross-subsidy from the Port Authority.” (Though we could debate for hours whether New Jersey Transit successfully runs its own transit operations and can effectively coordinate anything.)
No matter the outcome, though, as the report notes, something has to give” “Whether PATH stays in PANYNJ’s portfolio or is transferred to NJT, a rethinking of the system’s financing policy is appropriate. More equitably financing PATH’s significant annual deficits would enhance its long-term fiscal sustainability. Adopting one of the recommended guidelines ensures that no one group—PATH riders, toll payers, residents, or employers—pays a disproportionate share of the cost.”