One of the key issues in last month’s debate over the MTA rescue plan centered around source of revenue for a widely-used mass transit system. Should the state and city be subsidizing transit or should the MTA, through farebox revenue, be largely self-sufficient?
Similar to many political economic debates, this one gets to the root of government’s role in society. Those who support government funding of transit recognize that it is a social and public good. The city and state need transit to exist, and transit should turn to the state for money. Those who believe the MTA should survive on farebox revenue trend toward a privatized model of public transportation. Private entities set fares to run a profitable or net-zero operation. The government carries a small percentage — generally close to zero — of the costs but forfeits the rights to any profit.
Outside of a few key examples, the privatization of mass transit systems has been unsuccessful, and the vast majority of the world’s transit authorities rely on significant state contributions. New York, in a sense, is an outlier. It relies on farebox revenue for a majority of its operating expenses. In fact, New York City Transit’s 2009 adopted budget calls for a 60 percent farebox operations ratio. With so few government contributions on the table, no wonder the MTA’s finances are maxed out.
Even within the MTA, the numbers aren’t consistent. A piece by Mitchell Pally, the Suffolk County representative to the MTA, lays it out. In 2008, the MTA’s farebox operations ratios ranged from 16 percent on the Staten Island Railway to 44 percent on the LRR to 53 percent for New York City Transit. That hardly makes sense.
In his call for a dialogue, Pally makes a few good points. He writes:
For the past 44 years, under Democratic and Republican administrations, the state’s policy has been that mass transit riders should not pay the full cost of their ride. Instead, they pay a percentage – with the remainder of the cost coming from taxpayers. This fundamental policy extends to riders across the state, whether they take the LIRR, the city subways and buses, or the buses in Syracuse, Buffalo or Dutchess County…
The operating and capital costs to safely and effectively operate these complex but socially beneficial systems are simply too great to be borne by riders alone – that has been and continues to be the view of governmental decision-makers…
Under the original “doomsday” budget adopted by the MTA, riders would have paid more than 50 percent of the cost of their LIRR ride, and 61 percent of the cost of their subway trip. With the State Legislature’s rescue and this month’s increases, these percentages will be about 44 for the LIRR and 52 for New York City Transit. Are these numbers too high, too low or just right?
The answer can only be found in a public policy argument that must take place as part of the entire MTA financing discussion. Without a real answer, the region will just continue to move from one dramatic fare discussion to another without a real understanding of what is actually being discussed.
Right now, though, Pally is preaching to empty church. Our state representatives in Albany are too busy bickering over leadership issues to focus on anything important that might actually be plaguing New York state. While 62 Senate members fight it out, the rest of us are left to weather a bad economic storm on our own.
In closing, Pally issues a challenge to lawmakers and transit experts a like. “So policy-makers need to adopt an agreed-upon fare-box ratio for each of the mass transit systems in New York State, including the various MTA entities,” he writes. “With such an agreement on the table, the MTA and the public can engage in a reasonable discussion about fare adjustments that will be tied to an inflation-sensitive series of funding sources to cover the rest of the cost of the ride.”
Pally gets it. We need a steadier funded MTA that knows what to expect from its farebox operations ratio and the city and state which it supports. When we will get that is anyone’s guess.