Archive for Fare Hikes

In order to keep up with inflation and to compensate for the fact that subway and bus fares, in adjusted dollars, are lower today than they were 18 years ago, the MTA has put forward a plan for fare increases every other year for the foreseeable future. The original plan involved increases designed to raise revenue by 7.5 percent each time, but last November, the MTA lowered the 2015 and 2017 hikes to around four percent each. It was a risky move, relying heavily on the concept of net-zero labor spending increases, and one I thought the MTA made too hastily. Left unanswered, until now, is the big question: What happens if net-zeroes are unattainable?

In comments last week, MTA Chairman and CEO Tom Prendergast put forward a clear answer. Without net-zeroes, fare increases could balloon to 12 percent, far higher than originally anticipated and nearly three times as much as the hike promised last November. The Daily News had more:

Feeling pressure from its many unions, the MTA raised the possibility of a $2.75 subway ride and a $125 monthly unlimited MetroCard come 2015. Metropolitan Transportation Authority Chairman Tom Prendergast warned at a hearing in Albany Thursday that the authority’s labor problems could result in riders getting socked with a 12% fare hike next year — triple the percentage increase the authority already has in store.

Speaking at a joint legislative budget hearing — and delaying returning home following the death of his father to do so — Prendergast predicted “dire consequences” if a settlement to the MTA’s labor woes resulted in all of its workers getting raises along the lines of those that an independent mediator recently suggested be paid to Long Island Railroad employees…

The only other option Prendergast mentioned in that case would be for the MTA to slash $6.5 billion from its capital construction and maintenance program. That would translate into a loss of about one-quarter of the funding now planned for purchasing new buses and trains, replacing rails, fixing signals and overhauling stations. And even with those cuts, a fare hike of 5.25% would be needed in 2015. “This would be a terrible choice for our riders and our region,” he said of the alternative.

The 12 percent increase is a worst-case scenario, and there is an element of, as union officials noted, pitting riders against employees here. But the union has never been on the riders’ side; it’s always been on its own side, for better or worse. Furthermore, Prendergast has ever reason to put forward the most dramatic number possible in an effort to draw sympathy and negotiate through the press. After years without any contract and bitter back-and-forths between management and labor, what does he have to lose?

We shouldn’t be surprised either about the power struggle. The MTA has seen its economic forecast improve with the increase in tax revenues a healthier economy has produced, and surpluses always generate power struggles. Should the union get the money? Should the riders through the form of deferred fare hikes and better service? Ultimately, the MTA and the riding public will need the union to agree to work rule reform and other concessions if they want higher salaries, and somehow, riders shouldn’t be the ones bilked out of dollars by this fight.

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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
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With an improving economy, record high ridership and internal cost-cutting buoying the MTA’s bottom line, the transit agency announced that planned fare hikes for 2015 and 2017 would be less than expected. In budget documents presented to the Board today, the MTA noted that the biennial fare and toll increases will be reduced to produce an increase in revenue of around four percent, down from initial estimates of a 7.5 percent jump. Still, the budget rests on shaky assumptions, and as other interested parties make a move to claim some of the pie, these numbers could still shift before the hikes are implemented.

According to agency documents, an aggressive effort to limit the growth of expenses to keep pace with inflation allows the MTA to realize savings that can be reinvested in the system. The MTA has already announced service increases on eight lines set for June, and even though constant price increases are tough to swallow, the fare hike reduction is good news for the straphanging public.

“We try to keep costs down in order to minimize the financial burden on our customers, and as this financial plan shows, we are succeeding in that effort,” MTA Chairman and CEO Thomas F. Prendergast said. “Our customers want value, which is quality and quantity of service, and that service has to be reliable and safe. Through this financial plan, that’s what we work to provide.”

In addition to these giveaways, the MTA has other plans for its financial flexibility. The MTA plans to invest approximately $80 million in the unfunded pension liabilities for the LIRR and make addition investments in other unfunded post-employment benefit obligations, thus realizing savings in the long-term as well.

Still, risks remain as the budget is tenuously balanced on the back of an assumption of net-zero wage increases, a point hotly contested by the TWU. The MTA will look to achieve this net-zero goal through a combination of a wage freeze, staff reductions, workrule efficiency gains and benefit reductions, but union officials have already tried to lay claim to some of these dollars. “They’re tossing a few crumbs at the public and expect to be patted on the back. It’s pretty outrageous,” TWU Local 100 President John said to The Post. “Both the workers and the riders deserve better.”

Samuelsen claimed the MTA should use all of the financial flexibility to give workers a raise and avert the fare hikes. His statements essentially ignore the fact that doing either of those — let alone both at once — would effectively deplete whatever cash surplus and financial wiggle room the MTA has. For now, though, the news is good, but as with all things MTA, the economics could change in a flash.

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News that the MTA plans to raise fares every two years by an amount that exceeds the rate of inflation set off some alarm bells amongst the city’s transit advocates this week, and today, the Straphangers Campaign released some back-of-the-envelope calculations that show transit fares could rise to $3.75 a ride by 2023. It’s a sobering picture — perhaps one that relies a bit too much on sticker shock — but it should serve as a wake-up call to Albany.

“Constant fare hikes will overburden riders, discourage use of mass transit, and cannot be sustained over time,” Gene Russianoff, head of Straphangers Campaign, said in a statement. “Without more financial support from Albany, the MTA might as well start making announcements that “there is a fare hike right behind this one.’”

At the behest of the Straphangers, New York’s Independent Budget Office analyzed the fare history since the introduction of the Metrocard in 1996 and the MTA’s fare hike plans for the next ten. Noting that fares generally have to increase by around 8.4 percent to generate a 7.5 percent bump in revenue for the MTA, the IBO anticipates the possibility of a $168 30-day transit pass and a $3.75 per-swipe cost by 2023. Fares, they say, would increase a rate that exceeds inflation, and in constant 2013 dollars, the fares in 10 years would be approximately 15 percent higher than they are now.

In its defense, the MTA notes that the average fare is still lower today in inflation-adjusted dollars than it was in 1996 when Metrocards came onto the scene, but I am again left wondering if these constant increases that outpace inflation are sustainable. As I said yesterday, at some point, New Yorkers will stop begrudgingly accepted fare hikes and will start loudly protesting. What’s the breaking point though? A $3 fare? A $150 30-day card? Or are these figures and expectations simply the ever-increasing costs of life in New York City?

Categories : Asides, Fare Hikes
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The MTA budget documents released yesterday show how aggressive cost cutting and fare hikes could eliminate nearly all potential deficits through 2017. [pdf]

The MTA will rely more and more on fare hikes to close its budget gaps in the coming years. [pdf]

It wasn’t a big surprise when the MTA last week revealed a budget that relies on biennial fare hikes for the foreseeable future. Richard Ravitch put forth a plan in 2009 to rescue the MTA’s budget that would have spread the fiscal pain around equitably, and in it, he called for fare hikes every two years that aligned with inflation. The MTA is simply following through on their end of the bargain, but how long will the public be accepting of such hikes?

By the time mid-2017 rolls around, when the 7 line extension reaches the Far West Side and Phase 1 of the Second Ave. Subway is in revenue service, New Yorkers will have lived through two more fare hikes. The MTA anticipates that each hike will be around 7.5 percent and will generate, by 2017, nearly $1 billion in added revenue. The MTA needs this money because rising paratransit costs and health and pension obligations along with a never-ending stream of debt service payments will continue to tax their budget. When the new subway lines are ready for passengers, operating costs will go up as well. It’s an expensive, vicious cycle.

I’ve been wondering for the last few days how long New Yorkers will stomach these fare hikes. Already, subway riders complain about everything, and many of their complaints are with merit. Sometimes, we’re paying more for less, and usually, we’re paying more for the same. As complaints continue and fares go up, ridership increases as well. May, for instance, witnessed one of the most popular month’s in New York City subway history. At some point, though, the grumbling will grow louder, and New Yorkers may be able to make enough noise to get politicians to do something about the constant increases. That day hasn’t yet come.

I’m not the only one who’s noticed the ever-rising fares. In their Sunday editorial, the Daily News cast a wary eye on the MTA’s fiscal future. The planned fare hikes, they noted, far exceed the measure set forth in the Ravitch plan, and it’s time for something — whatever that may be — to be done.

Since 2008, the cost of a 30-day MetroCard has risen from $81 to $112. This represented a 38% leap at a time when inflation ran at 8%. Had fares tracked inflation, the 30-day card would cost $88…[Under the Ravitch plan], assuming the state fulfilled its obligation to provide adequate funding, riders would suffer hikes every two years. But how much would those increases be?

Here’s exactly what the Ravitch report stated: “The Commission’s view is that the MTA Board, as part of its normal, public budget making process should be empowered to increase fares and tolls no greater than the change in the Regional Consumer Price Index and no more frequently than bi-annually.”

…Since then, the MTA has kept to the every-other-year schedule and plans to do so again in 2015 and 2017. But each time it has factored in hikes of 3.75% a year, almost double the inflation rate. Asked why and how the MTA set the raises at 3.75% annually, or 7.5% for two years, the agency’s spokesman replied, in effect, that no one had any idea. MTA Chairman Tom Predergast must change the basic assumption as to how much the riders will be asked to pay. He needs to abide by the bargain struck with the MTA’s financial rescue five years ago. The riders will do their part by ponying up for inflation — and no more.

On the one hand, the News raises a very good point about the Faustian bargain Ravitch had proposed. The fare hikes were supposed to be tied to the rate of the inflation, and that would have been a rather livable solution for many New Yorkers. But on the other hand, the editorial relies on a few assumptions — one that didn’t come true and one that’s highly problematic. The first is that the state did not fulfill its obligations. It torpedoed a congestion pricing plan that would have helped alleviate the fare hikes, and the state hasn’t developed a new significant source of regular and reliable transit funding.

More fundamentally, though, concerns the question of who should pay and for what. The MTA can raise revenue without state action only through fare hikes, and there is a very valid argument to be made that riders should be expected to pay for the service they need and want. Thus, if the MTA’s costs and budget demand more revenue, higher fares — to the tune of a 7.5 percent fare hike every other year — are the way to go. The problem here concerns costs. The fare hikes aren’t paying for more service for riders; rather, the money from the hikes is going to uncontrollable pension costs for former employees no longer working. Whether that’s fair for everyone is a question I’m in no position to answer right now.

So the fares will go up, and they will go up far more than we’d like. Until New Yorkers get so fed up with cost increases that they appeal to their representatives to do something, we’ll be left with 7.5 percent fare hikes every other year. The subways and buses aren’t getting cheaper, and the people who ride will be the ones footing more and more of the bill, for better or for worse.

Categories : Fare Hikes
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The MTA budget documents released yesterday show how aggressive cost cutting and fare hikes could eliminate nearly all potential deficits through 2017. [pdf]

The MTA budget documents released yesterday show how aggressive cost cutting and fare hikes could eliminate nearly all potential deficits through 2017. [pdf]

The MTA unveiled a revised draf of its four-year financial plan on Wednesday, and while budgets are not particularly sexy, fare hikes are. This plan is chock full of fare hikes as the MTA’s fragile financial outlook relies on fare hikes every two years for the duration of the plan. Just how long, I have to wonder, will New York’s transit riders begrudgingly accept these fare hikes before it becomes a major political issue?

In plans released yesterday, the MTA still projects some deficits through 2017, but as February’s numbers showed alarming negative balance sheets, the July numbers are significant better. By 2017, the MTA expects to face a deficit of just $100 million — down from over $300 million — but these projections are based on a series of assumptions that may not come true. Riders are going to shoulder a significant amount of costs as fares continue to increase, and anything that rocks the MTA’s financial boat could be disastrous for the agency.

For the public, the fare hikes are the bad news, and they rightly dominate the media coverage. After fits and starts of raising the fares only when the budget looked dire, the MTA has instituted a policy of biennial fare hikes ideally tied to inflation. After a fare increase in 2011, the MTA jumped their prices by around 7.5 percent this year and plan to do the same in 2015 and 2017. Both hikes will be for around 7.5 percent as well, and without these fare increases, the MTA’s financial outlook is a negative one indeed.

If all goes according to plan, then, the MTA’s looming price increases will generate significant revenue for an agency looking at out-year projections that are very, very red. In 2015, the next fare bump will bring in over $400 million, and when the cost of a subway ride jumps up again in 2017, the total generated from the next two fare hikes will be a hair under $1 billion annually. Without the fare increases, the MTA’s deficit would be insurmountable. As such, the city’s riders — all 5.6 million of us daily — are the only thing keeping the subway system afloat.

Outside of these fare hikes, though, nearly all of the other assumptions are not sure things. The only sure thing is a concerted effort to cut internal costs. The MTA anticipates that, by 2017, it will have eliminated $1.3 billion in annual recurring costs, thus achieving internal cost-cutting projections first put forward in 2009. That’s a laudable goal for an agency that has long operated with much bloat, but more could be cut if operations were further streamlined.

Beyond these measures, though, the MTA is expecting a net-zero increase in labor costs over the next four years. While the MTA has realized such savings over the past few years, the TWU’s contract situation remains unresolved, and a net-zero reality saves just $300 million annually by 2017. Meanwhile, pension and healthcare costs are expected to jump by nearly 10 percent over the next four years and are among the biggest uncontrollable costs currently on the MTA’s books.

Beyond fares and labor savings, the MTA is relying on dollars largely outside of their control. Operating costs will increase as the 7 line extension and then Phase 1 of the Second Ave. Subway open, and the agency’s insurance rates took a huge hit after Sandy. Agency officials said yesterday that the MTA is getting half its previous coverage for twice the cost. Meanwhile, revenue from dedicated and federal contributions remain subject to the push and pull of the New York and U.S. economies.

Finally, the so-called “longer term vulnerabilities” come into play. The MTA will launch a new capital program in 2015, and it will likely be funded through bond issues and more debt. Pension, healthcare and paratransit costs are spiking upwards as New Yorkers live longer with less mobility, and weather mitigation and protection efforts will put a strain on the budget. It’s a never-ending scenario of investments.

So what does this all mean, you may ask. After all, budget forces and pure numbers are the ultimate in transit wonkery. The final picture, though, is a simple one: New York’s transit riders are going to be asked to shoulder an ever-increasing portion of the costs. Absent direct state investment, the best way for the MTA to raise money and increase its revenue is through fare hikes, and ridership, which recently reached an all-time high, has shown no signs of abating. People need the subways, and the MTA needs money. So we’ll get fare hikes in 2015 and 2017 and likely in 2019 and 2021 too. Until New Yorkers start agitating louder for an end to fare hikes, they are, for better or worse, the only route to budget stability.

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Long gone are the days and costs of the blue MetroCard. (Photo via Second Ave. Sagas on Instagram)

The cost of life in New York City will continue its inexorable march upward this weekend as the MTA raises transit fares and tolls this weekend. It’s the third time in the last four years that fares have gone up, and New Yorkers grumble about it each time. We’re paying more for the same service, and riding the subways has always been a bit of a grind. This won’t be the last fare hikes — the MTA has an increase on the books for 2015 — but this one introduces a few new concepts and bonus structures. Let’s dive in.

When do these new fares kick in?

That’s an easy one: The new fares for New York City Transit buses and subways commences at 12:01 a.m. on Sunday, March 3. Revelers stumbling home late after a Saturday night out will be the first ones greeted with higher transit costs. Nine-to-fivers will suffer their own sticker shock when the Monday morning commute kicks in.

What are the new fares?

For the first time since 2009, the MTA is jacking up the base fare. A cost of a swipe for pay-per-ride users will now check in at $2.50. Those who purchase $5 or more on pay-per-ride cards will enjoy a small bonus of 5 percent, but all new cards — pay-per-ride and unlimited — purchased via MetroCard Vending Machines will carry a $1 surcharge.

The price on unlimited cards is going up a bit as well. The 30-day cards will cost $112, and the 7-day cards will now cost $30. A 7-day express bus card will set a rider back $55. These unlimited increases are smaller, percentage-wise, than they had been in the past, and that’s a win for daily straphangers who have been shouldering more of the burden during prior fare hikes.

What should I be stockpiling?

While hoarding tokens prior to a fare hike used to one of my parents’ pastimes, the MTA has largely limited that practice due to sunset dates and shorter grace periods. Cards purchased prior to the fare hike must be activated by March 11 in order to make use of the full time period. So, in other words, 7-day cards are valid through March 17 and 30-day cards are valid through April 9. Cards not in service by then must be returned to the MTA for a refund. The Times has a bit more on maximizing value.

On the other hand, pay-per-ride cards don’t run out until the expiration date on the back. Take advantage now of the seven percent bonus to load up those pay-per-ride cards. Plus, it’s not a bad idea to stockpile all MetroCards. Since riders can now put both time and money on their MetroCards and are assessed a $1 fee on new card purchases, it’s not a bad idea to hold onto those MetroCards will expiration dates far into the future. My current 30-day card, for example, runs out of time next week, but the card itself is valid through March 31, 2014.

I’m not very good at math. What are the various key purchase points for pay-per-ride and break-even levels for unlimited ride cards?

Fear not, arithmophobes: The Math is getting easier. The new 5 percent bonus means that a $50 purchase will net the straphanger one free ride. Pay for 20; get 21. No more complicated equations with odd-number purchases. (And yes, the MetroCard Vending Machines should be programmed to give this info to customers, but they aren’t.)

With the new pay-per-ride discount, the per-swipe fare is effectively $2.38, and at certain points, it becomes more cost efficient to use eliminated ride cards. For 7-day cards, that breakeven point is 13 rides, and for 30 days cards, the breakeven point is now 48 (down a few from the current value). In other words, if you plan to take 13 or more subway rides in a seven-day period or 48 or more in a 30-day period, buy an unlimited ride card. And needless to say, a 30-day card is always a better value for frequent riders than four 7-day cards.

What’s this new $1 surcharge and how can I avoid it?

For a few reasons — environmental, cost-savings, because they can — the MTA is instituting a $1 surcharge on all new MetroCards purchased at MetroCard Vending Machines, from a station booth or at a commuter rail station. To avoid the fee, keep refilling your cards, buy your cards out-of-system or enroll with a transit benefit organization, if available. Customers will not be charged to replace cards that are damaged or expired.

Along with this $1 fee comes innovation in MetroCard technology. Cards can now carry both time and money, but with a caveat: When both can be used, time will always be used ahead of money. Still, you can carry cash on an unlimited ride card and use that cash for PATH or the AirTrain. More details are available in my post here.

That’s all well and good, but why are the fares going up? What can we do to stop it?

Pick your poison: The MTA says ever-increasing pension and healthcare obligations are driving fares up, but the agency’s debt obligations and bond pricing deals carry the blame too. I’m not going to give you a full answer to this question but will instead urge you to check out my next Problem Solvers session on just this topic. Gene Russianoff and I will be talking up the ins and outs of MTA finances at the Transit Museum at 6:30 p.m. on Wednesday, March 13. Find out where your hard-earned dollars are going while learning if the city can possibly stave off future hikes.

Categories : Fare Hikes
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New MetroCards will soon come with a $1 surcharge.

With the March 3 fare hike rapidly approaching, the MTA today unveiled the mechanics of the fare hike. Can you stock up on unlimited ride cards as my parents used to do with tokens? And just how is that $1 surcharge the MTA has been threatening with since 2010 going to work? All of that – and more! – below.

To recap, the not-so-fun stuff first: With this fare hike, the base fare will jump to $2.50 with a pay-per-ride discount of just 5 percent on all purchases at or above $5. The 7-day unlimited will cost $30, and the 30-day unlimited will set back regular riders by $112. An express bus ride checks in at $6, and the single-ride cards available only through vending machines will clock in at $2.75.

With the fare hike, the $1 “new card” surcharge will be instituted as well. Each card purchased at a MetroCard Vending Machine, a station booth or at commuter rail stations will cost $1. The MTA says that to avoid the fee, riders should keep and refill current cards. Damaged or expired cards may be replaced at no cost, and those of us who receive pre-tax MetroCard in the mail through a transit benefit organization will not be assessed the $1 surcharge. Those who buy combo railroad/MetroCard tickets also will not be charged that dollar. As with any MTA project, it took the authority only three years since initial reports to implement this fee.

Now what of the question of hoarding? The short of it is that straphangers pretty much cannot hoard cards. According to the MTA, all cards purchased before Monday, March 3 must be activated by March 11 for users to receive the full value. So seven-day cards are valid through March 17, 2013, and 30-day cards are valid through April 9, 2013. What happens if you activate your card after the March 11 date? Glad you asked. So says the MTA:

For unused Unlimited Ride MetroCards purchased prior to the March 3, 2013 fare change, refunds will be made at the purchase price. For partially used Unlimited Ride MetroCards purchased prior to the March 3 fare increase, refunds will be made on a pro-rated basis. Ask for a postage-paid envelope from your bus operator, at the station booth, or download the form at mta.info and mail it to us with your card.

That refund process can be a bit of a pain. So I’d say start using that card by or before March 11 or find someone willing to pay you for that unused card you have lying around your house.

And that’s that. The breakeven point for a 7-day card will be 13 rides and for a 30-day card 48 rides. In that inexorable march of time, the fares will go up. They always do. After all, someone has to pay for this whole thing.

Categories : Fare Hikes
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It’s been two years since the last MTA fare hike, but the holiday is over. In a unanimous vote this morning, the MTA Board has approved a fare hike bringing the base fare of a subway ride up to $2.50 and the cost of a 30-day unlimited card to $112. Originally scheduled for January 1, the fare hike will instead go into effect on March 1 due to some favorable MTA financial returns from mid-2012.

The details of the fare hike remain as I reported them last Thursday. In addition to the base fare and 30-day increases, the MTA will raise the cost of a seven-day card from $29 to $30, and the pay-per-ride discount level will move to just five percent but will be effective for all purchases of $5 or more. The MTA has also approved a $1 surcharge on new cards purchased in-system. Such a fee is projected to generate $20 million annually.

While realizing annual savings of nearly $1 billion on the operations ledger, this fare hike is expected to generate $450 million in increased revenue for the MTA. Much of that will go toward funding pension obligations. The next MTA fare hike is on the table for early 2015. And so in one of his last actions as MTA Chair, Joe Lhota saw through a fare hike. How’s that for a mayoral platform?

Categories : Asides, Fare Hikes
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After a series of public hearings last month, MTA Chairman and CEO Joe Lhota has unveiled his recommended fare hike proposal ahead of Wednesday’s board vote. The package of fare hikes across all MTA properties resembles the one discussed Monday and will generate $450 million in additional annual revenue for the agency.

When the dust settled from the public debate, Lhota had determined that across-the-board increases — instead of the usual steep spike in the cost of unlimited ride cards — would be preferable. The base fare will go up to $2.50 with a 5% bonus on all purchase above $5. The 7- and 30-day cards will increase to $30 and $112, a jump of $1 and $8 respectively. “Customers asked us to minimize increases to the passes and maintain some level of bonus,” Lhota explained in a letter to the MTA Board. “They did not want to see another double-digit percentage increase in the 30-day pass.”

In addition to the fare increases, Lhota has also urged the MTA to adopt the $1 surcharge for new MetroCards. The MTA first announced plans to explore such a surcharge back in 2010, but implementation has been delayed due to some technical hurdles. “By encouraging customers to refill their cards,” Lhota wrote, “this fee will realize an estimated $20 million per year, both from savings from card production and new revenue from the fee.” The fee will not apply to out-of-system MetroCard purchases.

Under the new fare structure, the MTA is lowering the break-even point for unlimited ride cards. Currently at 14 rides for a 7-day card and 50 rides fr a 30-day card, the breakeven point will now be at 13 rides and 48 rides, respectively. Even as riders across the board are being asked to shoulder more of the MTA’s fiscal load, unlimited users are not being asked to take on a disproportionate amount of the increase this time around.

The MTA Board will vote on the fare hikes on Wednesday, and we’ll do it all over again in two years when the next schedule rate increases cross our paths.

For more on the fare hikes, check out this comprehensive PDF. Changes to tolls charged by MTA Bridges & Tunnels are documented here.

Categories : Fare Hikes
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