In fact, as Hilary Ring, the authority’s director of government affairs told James Vacca’s Transportation Committee, the hundreds of millions generated by the fare hikes will likely go toward the MTA’s ever-increasing health care and pension benefits. It will not, as Ted Mann of The Wall Street Journal reported, “be sufficient to allow for new improvements in the system or to restore some of the bus and subway routes eliminated during the budget crunch of 2010.” Said Ring, “Essentially the fare increase and the toll increase is almost dollar-for-dollar being eaten up by our increase in pension and retiree health care costs.”

As Capital New York’s Dan Rosenblum noted, the MTA expects to see $900 million in revenue from the fare hike while it will be on the hook for over $800 million in increased pension and health care costs. And those figures are in advance of whatever contract the TWU eventually signs covering 2012-2014. The amounts could be greater.

Of course, city politicians were none too pleased with these statements. “It’s hard for me to believe that we’re going to have that type of an increase and we’re going to have no restoration and no improvements in services,” Vacca said. “I refuse to accept that those of us who call ourselves strap-hangers have to accept paying more and getting less.”

The Journal had more on the fallout from Ring’s statements:

Jim Gannon, a spokesman for TWU, characterized the testimony as “a cheap shot,” saying the MTA was trying to blame its financial struggles solely on labor.

Gene Russianoff of the Straphangers Campaign noted that the MTA’s debt-service costs will also rise sharply along the same timeline. “MTA’s spin is to make their work force responsible for the fare increase….Who’s responsible for the pressure on fares and operations—the work force or the borrowing? I think the answer is you probably could make a good case for either,” he said. Debt-service costs for the MTA are projected to top $3.1 billion annually by 2018, said Mr. Russianoff, who said tolls on the East River bridges are an inevitable if controversial solution to the authority’s funding woes.

Mr. Vacca said he will urge the MTA to avoid the 2013 fare hikes if possible. He said he would stress that a rising economic tide—and a possible boom in ridership if gasoline prices continue to rise—could mean more revenue, in the form of fares and an uptick in the tax revenues dedicated to the MTA.

The city plans to contribute $786 million in operating costs to the MTA for 2013 as the authority plans for a budget in excess of $13 billion. It is, in other words, one giant mess.

So what exactly is going on here? On the one hand, Ring isn’t incorrect when he lights the MTA’s increasing pension and health care obligations. The authority is turning into a retirement fund for its legions of employees at the expense of its mission to provide transportation services. The agency can barely consider improving transportation access because of a never-ending increase in its employee obligations.

On the other hand, these obligations are hardly the only costs the MTA must absorb over the next few years. Debt service will continue to remain a steady presence on the MTA’s ledge, and while the revenue generating by increased ridership for the Second Ave. Subway, the 7 line extension and East Side Access will help pay down some of that debt, it too will act as a drain on the MTA’s budget.

Ultimately, then, we’re left in a familiar position: The MTA’s expenditures pie is growing in leaps and bounds, and none of that money is going toward improving service for those who have to shoulder the service cuts. Somehow, we the riders always come out behind.

©2012 Second Ave. Sagas. All Rights Reserved.

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.

©2012 Second Ave. Sagas. All Rights Reserved.

The structure of the fare increases themselves are fairly straightforward; the reasons behind them are not. But first the former: For PATH riders, the base fare will increase from $1.75 to $2.75 with an aim toward raising the average fare from $1.30 to $2.10. The 30-day unlimited pass will go from $54 to a whopping $89. That’s a 65 percent increase in one felt swoop and would be the equivalent of raising the 30-Day MetroCard from $104 to $170.

Tolls too are going up up up. E-ZPass users will see trips increase from $6 to $10 for off-peak travel and from $8 to $12 for peak-hour trips. An additional $2 increase is planned for 2014. The PA will also implement a cash surcharge of $3, and this move is expected to push the E-ZPass market share from 75 to 85 percent while reducing congestion by 10-20 minutes. A variety of similar increases are planned for trucks.

So now for the tough part: Why the large increase? In its release touting the new tolls, the Port Authority pinpointed three factors. First, the recession has left revenue well below projections. Second, post-9/11 security costs have tripled while the World Trade Center rebuilding has been a drain on the authority. And third, the physical infrastructure is in dire need of upgrades. Without state support, the toll and fare increases then will fully fund a ten-year $33 billion capital plan.

So what do we get for $33 billion? On the subway side of things, the Port Authority has vowed to reinvest all of the funds raised from the PATH fare hikes back into the system. Projects to be funded include an order of 340 new cars, an overhaul of the 100-year-old signal system and duct bank network, new security measures and the rehabilitation of aging systems with an eye toward ensuring that 10-car trains can stop at every station.

Roadwork includes the following:

• The first replacement of all 592 suspender ropes at the 80-year old George Washington Bridge, the world’s busiest crossing, joining other suspension bridges like the Golden Gate and RFK, which have already replaced theirs. ($1 billion)
• The replacement of the Lincoln Tunnel Helix. It will require major lane closures and load restrictions if not replaced. ($1.5 billion)
• The raising of the Bayonne Bridge, which will solve the current clearance problem, preventing post-PANAMAX ships from accessing key ports. ($1 billion)
• A new bus garage connected to the Port Authority Bus Terminal, which will serve as a traffic reliever to the Lincoln Tunnel and midtown Manhattan streets, saving two-thirds of the empty bus trips that must make two extra trips through the tunnel each day. ($800 million)
• Significant security investments at the region’s airports, including the installation of security barriers. ($360 million)

The Port Authority will vote on this plan on August 19 with public hearings set for nine locations on August 16.

Reactions have been swift. The Tri-State Transportation Campaign has called upon the PA to scale back the steep PATH fare increases, and the Campaign has laid the blame on the feet of political leaders in New Jersey and New York. Even as the agency has delivered zero-growth budgets in recent years, governors in both states are using the Port Authority as a piggy bank. Says TSTC:

The recent pressures from both New York and New Jersey put the Authority’s finances in a precarious situation. Governor Christie is relying on the Port to contribute $1.8 billion to pay for road and bridge projects that should be paid for by the state’s bankrupt transportation capital program. The Governor canceled one of the country’s most worthy transit projects, the ARC commuter rail tunnel, so he could redirect Port Authority’s monies for that project to his state’s transportation program. Governor Cuomo is banking on $380 million in Port Authority funds to help pay for the remaining three years (2012-2014) of the MTA’s capital program. The MTA has been struggling financially for years in the absence of a sustainable, reliable revenue source such as congestion pricing for the Manhattan core.

Transportation Alternatives, meanwhile, tried to find the silver lining. “Infrastructure forms the bones of a healthy economy,” Paul Steely White, TA’s executive director, said in a statement. “This is a tough but necessary step to get New York City’s crumbling infrastructure back in good repair and invest in a vigorous economy. The Port Authority does not rely on state or local taxes from New York or New Jersey. So these fees – a significant source of the Authority’s revenue – are crucial to the upkeep of the rails, bridges and ports that New Yorkers rely on every day.”

Without investment and the right balance of subsidies and reliance on fare revenue, this budget plan is the outcome. If New York doesn’t learn its lesson, MTA riders could one day be greeted by a similar plan which calls for a one-time fare increase of nearly 65 percent. That’s not a comforting thought for a Friday afternoon.

©2012 Second Ave. Sagas. All Rights Reserved.

To remind customers of this sunset date, the MTA sent out a press release yesterday with information on refunds. The authority says that customers still holding 30-day cards can get a pro-rated refund by mailing cards along with a questionnaire back to New York City Transit. The forms are available at subway station booths — if you can find one with a station agent — and on buses throughout the city. They’re also available as a PDF right here. For those who want to take care of their return in person, head to the MetroCard Customer Service Center at 3 Stone Street in Manhattan. I wonder how many people will find their remaining fare cards inactive tomorrow morning.

In other fare hike-related news, Long Island State Senators are upset with the MTA over its new refund policy. When the fares went up, the MTA changed its refund policy. It now charges a $10 processing fee and offers refunds only within 30 days of purchase. Oftentimes, the fee is more than the price of the ticket.

So State Senator Jack Martins from Mineola has called upon the MTA to end this practice. In his press release, he slammed the MTA for the Senate-approved payroll package as well. Calling it an “injustice,” he said, “This processing fee is yet one more gimmick by the MTA to pass on costs to the customers who have already had to bear the burden of increased tickets prices and service cuts. If that wasn’t enough, local businesses, municipalities and school districts have also been hit with a payroll tax to support the MTA. The MTA has showed that it has no problem taking money but refuses to refund it when the service is not used.”

During a hearing today in front of the Senate Transportation Committee, Walder defended the refund fee. He said that it isn’t free for the MTA to process refunds, but that’s almost besides the point. Martins is yet another Senator who is content to take money from the MTA with one hand while bashing them with the other. He doesn’t explain why the MTA shouldn’t institute a processing fee or why they should even bother to accept returns in the first place. It might be a steep fee, but the state’s inability to find creative funding solutions for transit comes with political repercussions.

©2012 Second Ave. Sagas. All Rights Reserved.

©2012 Second Ave. Sagas. All Rights Reserved.

The Wall Street Journal's chart shows how our MetroCard fares are going up today. (Via)

By the time you read this post, a 30-day MetroCard, just $63 ten years ago, will now set you back a Benjamin and four Georges. The MTA’s pay-per-ride discount will dip to just seven percent on purchases over $10, and the one- and 14-day unlimited ride cards are going the way of the dodo. The MTA says the average fare hike is in line with promises it made to Albany to raise fares by 7.5 percent and generate nearly $400 million in added revenue, but that’s little consolation for everyone who has to, for the third time in three years, pay more and more just to maintain services constantly under attack.

When I started this site back in 2006, the MTA fares were downright cheap compared to their prices today. A swipe of a pay-per-ride card cost just $2, and the bonus was 20 percent on purchases over $10. Today, that bonus has been reduced to just seven percent, and it’s only a matter of time before the MTA eliminates it entirely. A seven-day card cost $24, and a 30-day card set you back just $76. Today, those cards will cost $29 and $104 respectively, and they are the only remaining unlimited ride offerings available. Even worse, today’s fare hike is the third in three years.

As Andrew Grossman of the Wall Street Journal noted in his brief run-down of the fare hikes, the authority has “tried to limit the increase for their lowest-income customers.” Thus, as those of us who buy the 30-day cards “tend to be wealthier commuters with stable jobs,” we’ll be saddled with a 16.9 percent hike while the seven-day card increase is under 10 percent.

But this fare hike is about more than just the numbers. We will indeed be paying more for our cards, and we’ve now scaled the triple-digit point. But the MTA’s new fare-related policies could be just as important as the higher rates. In a press release yesterday, the Metro-North and Long Island Rail Road Commuter Councils highlighted the hidden aspects of the fare hikes. These two organizations are “strenuously opposed” to the MTA’s new measures and for good reason.

Essentially, the MTA is making it harder not to plan ahead. One-way and round trip commuter rail tickets will be good only for 14 days from the date of purchase instead of six months. Ten-trip tickets will be good for only six months instead of one year. Meanwhile, these tickets will be refundable for only 30 days after purchase and now come with a $10 refund transaction fee. As the Commuter Councils note, “in many cases,” the refund with the transaction fee now “equals or exceeds the cost of a ticket.” On-board ticket sales will now come with a fee of at least $5.75. Public transit should be easy, simple and affordable. With more and more policies and higher fares in place, it’s becoming a burden.

Ultimately, the fare hike represents something of a devil’s choice for the MTA. Without it, the authority would be facing a massive $400 million deficit, and it can’t cut services by that much while still providing adequate public transportation. But as the MTA’s budget documents make exceedingly clear, the authority is not out of the financial woods yet. It projects razor thin surpluses for 2011, and odds are good that state tax revenues will come in below expectations again. In out years, the MTA expects to alternate between deficits and surpluses, but good times are not on the horizon.

For now, the fares go up. The break-even point on the unlimited cards — now set to 50 rides — creeps higher, and the pay-per-ride discount drops lower. Both moves are part of the MTA’s attempt to raise the average fare, which is still lower today in inflation-adjusted dollars than it was in 1996. That’s hardly going to make anyone feel better about the higher prices though.

As the city’s economy is slow to rebound, people — the middle class — will have to find $15 a month more for public transit. Without a better solution, without East River Bridge tolls, congestion pricing or more state subsidies, the MTA can only raise fares to generate revenue. Hopefully, in four more years, we won’t be paying $132 for a 30-day monthly, but at the current rate and without more state assistance, the MTA will continue to put more and more of its revenue burden on the shoulders of its riders. We’ll pay tomorrow. We always do.

For all the details on the MTA’s newest rates, check out the authority’s fare hike page. For more on the new break-even point for 30-day cards, check out this November SAS post.

©2012 Second Ave. Sagas. All Rights Reserved.

Today, then, is the last day to stock up on pre-hike cards. For pay-per-ride cards, the sky is the limit. Put as much as you can on as many pay-per-ride cards as you’d like to enjoy cheaper rates. But unlimited riders must be ware the sunset dates. The MTA is allowing a very short grace period on cards bought before the hike that remain unactivated. Essentially, you have to begin using your old cards by January 10 to get full value.

Take a glance at this chart:

Essentially, those who buy a card today but start using it after January 10 will not be able to use their cards until the end. Instead, straphangers will have to mail their cards back to the MTA for a refund. My advice is to start using those cards before January 10 to save the headaches of a refund process.

For the authority, the timing of the fare hike could not be worse. The snow storm has left riders stranded and disgruntled, and the MTA has to repair its public image while upping the fares at the same time. I guess the higher fares are better than crippling service cuts, which are, in essence, the alternative, but that $104 price tag certainly looks steep today.

©2012 Second Ave. Sagas. All Rights Reserved.

There are enough words on this sign to make Polonius proud.

In eight days, the MTA is going to raise fares. They’re not eliminated the unlimited cards or capping the number of rides one may take in a seven- or 30-day period, and although you and I know this, not everyone in New York is aware of the impending change.

For a piece in amNew York, Theresa Juva tracked down straphangers who had no idea of the structure of the impending fare hike or, in some cases, that the fares were even going to go up. One person she interviewed still believed the rides would be capped. While it’s likely that Juva interviewed more than a few people who knew about the fare hike, that she found so many uninformed or misinformed New Yorkers speaks volumes. But about what?

On the one hand, it speaks volumes about the attention New Yorkers pay to the subways. By and large, they don’t pay any. They still think the MTA had two sets of books, and they’re largely ignorant and willfully so of the goings-on underground. Even though we all feel the effect of subway cuts and fare hikes, too many people fail to educate themselves. Furthermore, when the MTA tries to use its own signage space to communicate with writers, newspaper editorial boards turn those efforts into absurdly stupid controversies that shouldn’t be controversial at all.

But on the other hand, the failure is one of signage. Look at that fare hike sign. I found that one in Rockefeller Center as thousands of harried commuters rushed past, and it’s enough to make a graphics designer cry. The MTA has hung up signs that are chock full o’ words, and it’s impossible to discern info quickly and easily from the signs. The fare hike might be coming, but the inability to decipher signs on the go is a failure not of the public but of customer service.

©2012 Second Ave. Sagas. All Rights Reserved.

When the MTA raises the fares on December 30, the math remains obtuse. The base fare will be $2.25 with a seven percent bonus on purchases above $10, and as amNew York details this morning, it’s tough for riders on the fly to figure out that a purchase of $35.75 will lead to a total of $38.25 or 17 rides or that $39.95 will get you $42.75, the equivalent of 19 rides. “It’s was hard before to come up with an even number when using the bonus, and it’s harder now,” Gene Russianoff said to the free daily.

The solutions are simple. First, folks planning ahead can always use the MetroCard Bonus Calculator already updated with the new fare info. But for those who arrive at a MetroCard Vending Machine without a number in mind, the MTA should provide a cheat sheet. The MVMs offer an option to purchase even dollar amounts, but I’d rather buy an even amount of rides with the appropriate bonus. That would be a step in the right direction for customer service relations.

©2012 Second Ave. Sagas. All Rights Reserved.

What the fare hike means for Unlimited ride MetroCards. (Via Capn Design)

I’ve touched briefly upon the new MetroCard math that will go into effect when the fares go up on December 30, but this chart does the job in an easy-to-understand form. Presented by Matt Jacobs at Capn Design, this chart shows how the change in pay-per-ride discount and the steep increase in the price of a 30-day card should change straphangers’ purchasing and riding patterns.

In essence, the change boils down as thus: Currently, pay-per-ride users enjoy a 15 percent bonus on purchases above $8. This led to a true cost per swipe of $1.96 instead of $2.25. In 2011, the bonus drops to seven percent on purchases above $10, and the cost per swipe rises to $2.10. Under these figures, the 30-day MetroCard currently pays for itself on the 46th swipe, but after the fare hike, riders will have to swipe in an additional four times before the card becomes a good value. On the 50th swipe, the cost-per-ride of a $104 MetroCard drops to $2.08.

Jacobs’ chart, available at this site, is a handy tool to help subway riders navigate this confusing math. The final line allows users to input any number to see the cost savings. For instance, I could easily see that those people who swipe 80 times a month now save $67.80 over a pay-per-ride plan and will still save $64 under the new fare scheme. As always, the 30-day card rewards frequent users even as the break-even point rises.

It’s also worth revisiting briefly a post from October that explores how many riders do not reach the break-even point on their unlimited MetroCards. Based on internal MTA numbers, it appeared as though 25 percent of monthly purchasers do not use their cards 46 times or more. The same chart showed that this figure jumps to 36 if we set the cut-off point at 50 swipes. Thus, as the fares go up, either fewer people will be buying cards or more will be wasting money on unlimited ride cards. I bet the truth will lie somewhere in the middle.

©2012 Second Ave. Sagas. All Rights Reserved.