Specter of the 5¢ fare haunts the current fare hike debate

The news flew fast and furious yesterday following the Spitzer press conference and the MTA’s announcement that they would be scaling back the fare hike. When the dust settled, Elizabeth Benjamin at The Daily News’ Daily Politics blog came away with steller coverage. She had three posts — here, here and here — with reaction from, respectively, those praising Sptizer, those who think he didn’t go far enough and Mayor Bloomberg.

With all of this information flowing our way, it’s easy to lose sight of what mattered in the day’s news. The bottom line is that the public came away with something of a victory as the MTA announced it would keep the base fare at $2; scale back increases on Unlimited Ride Metrocards and toll increases; and probably throw out plans to implement peak and off-peak fares on New York City Transit-controlled buses and subways. I see three things wrong with this outcome, and the last culminates in an analogy to the five-cent fare, a historical era in New York transit that still reverberates today.

Who benefits from this decreased fare hike proposal?

Not as many people as you would think. As Chris noted, this fare hike announcement is basically a political gambit. Only about 10-15 percent of riders pay a full fare of $2, and the vast majority of those riders are tourists in from out of town who don’t know any better. The average subway rider, after pay-per-ride discounts and Unlimited Ride Metrocards, pay a fare of about $1.31, and that’s about to go up.

The MTA is still going to raise fares on everything but the base fare. So the rest of us will be saddled with a fare hike. And you know what? That’s not a bad thing. You’ll see why soon.

Where did this extra money come from?

Over at NY1’s The Call Blog, New Yorkers are mocking the MTA for magically “finding” $220 million that can be used to stave off this fare hike. The writers and those folks who got through to the show this evening make it sound as if MTA CEO Lee Sander found the money in bundles under his mattress. If only it were that simple.

As the MTA noted earlier today, this additional money came from four sources: higher-than-expected ridership ($60 million); a real estate tax windfall ($60 million); underspending ($60 million); debt service costs ($40 million). The debt service costs went down because the U.S. economy is tanking. Thus, the real estate tax windfall is going to disappear at some point in the not-too-distant future.

So now all of those folks at NY1 should be able to understand how the MTA came to possess $220 million more than they originally anticipated. It doesn’t take Alan Greenspan to understand that an agency looking to grow and provide for a healthy economic future cannot be left in the position of relying on end-of-the-year windfalls that may not always materialized. But that’s just where the MTA has been left today.

So what does all this have to do with the 5¢ fare?

Well, it starts with a statement from New York Assembly Speaker Sheldon Silver. “Governor Spitzer and I, along with my Assembly Majority colleagues from the metropolitan area, agree that the $2 fare should be saved. The Governor this morning also acknowledged something that I have been saying all along – that there is a need for additional state resources for the MTA,” he said. “I will continue to fight for those additional resources, so that there is no added burden on straphangers.”

The emphasis there is mine because, once again, we’re hearing history repeat itself. When the subways first opened in New York, the five-cent fare allowed the Interborough Rapid Transit Company to operate the subways at cost in 1904, but soon, New Yorkers became convinced that the five-cent fare was a God-given right. Mayoral races (such as this one in 1928) were won and lost on support of planned fare hikes, and when unification of the subway lines under the control of the city cropped up in the 1930s, the five-cent fare was front and center in The Times’ coverage.

As the five-cent fare lingered and politicians abused this low fare to gain popular support, the subways slipped further into debt and disrepair. By 1948, when the subway fare finally went up to 10 cents (and, yes, the public protested), the subways were operating at monumental losses that would eventually send the system spiraling into the depths of the 1970s and 1980s. Have we learned any listens from that five-decade mistake? Apparently not.

Once again, politicians are grandstanding on the fare issue at the cost of our subway system. In fact, Sheldon’s talk of saving the $2 fare is, to a word, what politicians had been saying about the five-cent fare for fifty years, and we all know where that led us.

For all of the MTA’s problems, the people running the show right now — Lee Sander and his staff, in particular — are top-notch public transportation experts. They know the economics of the MTA inside and out. When they say the potential exists for a $6 billion deficit by 2011, I may raise an eyebrow or two, but in the end, their projections aren’t going to be off by $6 billion. Even if they again “magically” find $220 million every year, that still leaves the subways facing a $5 billion deficit if the fare hike isn’t implemented or another solution isn’t presented to the MTA.

In the end, the man I consider to be one of the preeminent economic minds in New York right now, Mayor Bloomberg, issued the wisest statement. While Spitzer and Sheldon claim they will fight for more funds for the MTA from the state, the reality is much more complex. Upstate Republicans will be loathe to fork over those funds and the windfall from congestion pricing (a potential casualty in any upstate-downstate battle) aren’t due to reach the MTA for at least two more years. Bloomberg, our billionaire mayor, knows this much.

“We need to know how the MTA is going to dedicate the money needed to expand service to communities that currently aren’t being served by public transit and to improve service to communities that are. The $354 million in federal funding we’ll get if we adopt a congestion pricing system will provide some of the money the MTA needs, but we don’t yet know where the rest of the money will come from,” he said.

We need to know how the MTA is going to dedicate that money, and as the Mayor said, we need to know where the rest of the money will come from. While Gov. Spitzer claims the state and city will fork over an addition $600 million per year starting in 2010, this theoretical money is no sure bet, especially when compared to the revenue from a potential fare hike.

Until those questions are answered and the proper legislative bodies stamp their seals of approval on the $600 million package, I can’t help but fear that we’re re-entering a period where the populist politics of a fare hike will overrule the economic reality of the situation. And that is not a pleasant future to contemplate.