During the Public Engagement Workshop two weeks ago, the MTA officials spent a fair amount of time speaking about the MTA’s plans for the future. The plans these officials presented were bold, necessary and, of course, expensive. In these plans is yet another reason why the MTA needs a fare hike more than most riders think.
Linda Kleinbaum, the MTA deputy executive director for administration, and Ernest Tollerson, the MTA director of policy and media relations, spoke during the session called The Future of our Transportation System: Capital Improvements. Kleinbaum discussed the current capital programs and the physical and investment plans for the next capital programs. Tollerson spoke more on the ever-expanding regional reach of the MTA and the technological and environmental challenges the MTA will face over the next 15 years.
To me, these 45 minutes were, at the same time, the most enlightening and most disheartening 45 minutes of the entire afternoon. They were enlightening because the MTA really opened up its planning to the public. The Authority has some very concrete plans concerning what they want to accomplish between now and 2020 when the Second Ave. Subway line should supposedly be complete. It was disheartening because the only subway expansion plans were for the Second Ave. Subway. In a time when the city could really use more subway lines, the MTA’s capital focus right now is on providing public transit access to the urban core for those living in the suburban sprawl of the Greater Metropolitan Area.
Right now, the MTA is working five major Capital Construction projects, four of which benefit New York City Transit. The East Side Access Project is a boon for the LIRR, but the Second Ave. Subway, the 7 Line Extension, the Fulton Street Transit Center and the South Ferry Terminal will all impact subway riders in the five boroughs. In addition to these projects, the MTA also has to maintain its visible aspects — railcars, buses and stations — and its invisible aspects — pumps, power substations, tracks, switches, etc.
With a price tag of $21.3 billion from 2005 to 2009, these projects and regular maintenance all cost a large chunk of change. Right now, the city and state are kicking in just 19 percent of that funding while the feds are throwing in 31 percent and the MTA through bonds and other funds sources is generating the rest. That 19 percent is up from 2 percent during the early years of this decade. No wonder the MTA is skeptical that the state and city will deliver on Spitzer’s promise of money.
The next found of capital improvements are due to the state by March 31, 2008, and the MTA has a good sense of what they want to do. Outside of the Second Ave. Subway and 7 Line Extension — still the biggest fiscal parts of the new capital plan — the MTA wants a third track on the main line of the LIRR, Metro-North tracks on the Tappan Zee Bridge, Penn Station Access for Metro-North (and Moynihan Station), a Stewart Airport rail connection, and computer-based train controls to allow for a higher train frequency. These proposals are estimated to cost at least another $22.278 billion over a four-year span.
Meanwhile, the subways have to keep up with the Jones’. MetroCard technology is woefully out of date, and touchcard entry systems are the wave of the present. Route signs with the times until the next trains are now standard in every other major subway system except ours, and as London and Paris, the MTA’s main competitors, if you will, invest in their systems, ours becomes more and more out of date.
All of this is to say that money does not grown on trees, and MTA CEO and Executive Director Lee Sander is well aware of the need to provide for the future of this city’s public transportation. As politicians continue to grandstand over the MTA’s fare hike, Sander has tried to go on the offensive with his justifications for a fare hike. Yesterday, speaking to the New York Building Congress, Sander discussed the billions of dollars required to ensure the MTA’s capital and fiscal future.
“That is how the MTA will be able to move the millions more that we expect in the region, and it’s critical we get the support from Albany to do that,” Sander said, referring to the plans I’ve detailed above. “I’m asking not just for the $600 million, but also billions of additional dollars that we have not asked from Albany before for our capital program.”
While Sander will indeed ask Albany for this money, he knows not to expect too much from the state or city. As long-time reader Julia noted a few days ago, how is the state, already facing multi-billion-dollar debt, going to find more money for the MTA? “I’m just not convinced that Albany, facing a $4.3 billion deficit, is supposedly going to find $350 million to use toward fares and tolls in the long-term as well as finding money for the capital program,” he said.
And that is why the fare hike is a necessary evil. The subways are cheap. For less than $2, riders can go anywhere in the city at any time and in a relatively timely fashion. A fare hike will provide a fiscal benefit to the MTA and a material benefit to the rider in the form of badly-needed capital improvements.
While Straphangers guru Gene Russianoff feels that the MTA is simply throwing flashy projects out there to justify a fare hike — “It’s not real,” he said. “It’s a plan. It’s an idea.” — we need to consider this fare hike in the larger picture of New York City. Instead of grandstanding for populist support, our politicians should recognize this reality too.
Mayor Bloomberg, one of New York’s most fiscally responsible citizens, hasn’t come out against the fare hike. He knows that the MTA needs this money, and he knows what they want to do with it. Others should follow his lead. Those capital improvements don’t fund themselves.
15 comments
Excellent reporting. I would reluctantly support a fare increase for unlimited Metrocard users if even half of the items above are put into place in the NYC subway system. I would love to know when the next train is coming or have Smartcard technology. Anything. . .
I agree, this is an excellent piece.
I’m not opposed to a fare hike if I feel like my money is actually going somewhere. Unfortunately, right now I pay a good portion of my tiny salary to ride a subway that tends to screw me over quite often. It might be a good idea for the MTA to start advertising these kinds of projects that they need to fund. A sign here and there saying where my money is going would make me feel better about spending it.
And seriously, the city and state need to step up.
These comments reflect a misunderstanding of the MTA’s finances. Farebox revenue doesn’t fund capital investments. In fact, farebox revenue, on its own, is less than labor and operating costs; government subsidies make up the rest.
Capital improvements are funded entirely by government subsidies and debt issuance. The problem is that we don’t even have solid commitments to fund the capital projects that have already been announced (e.g., the full S.A.S.), to say nothing of projects beyond that.
I don’t feel that these comments are, Marc, a misunderstanding of the MTA’s finances. Let me explain.
The MTA asks the government for money for capital projects. The government, as was the norm during the Pataki Administration and prior, says, “No. We’re not giving you that. Figure out another way.” So the MTA slides further into debt until they can’t really borrow any more money.
The Authority instead turns to revenue sources to fund routine maintenance, and those revenue sources include fares. Right now, the MTA is using more fare money than they wish to cover costs that should be covered by government subsidies. If the government isn’t going to come through – and really, how can they when they are also so in debt? – the MTA has to fund upkeep somewhere, and that’s what they are using some fare funds for. Those fare funds are used to support the bonds that pay for the capital construction.
This is, by the way, what MTA officials were saying at the Public Engagement Workshop, and it’s what they’ve been saying for years. It’s not a misunderstanding of the MTA finances. It’s just the reality. I could be reading it wrong but I’m sticking by what I said in the post. The fare hike won’t, of course, cover all of their proposed capital expenditures, but they need this money to maintain and upgrade the system.
One quibble, Ben. Bloomberg is not quite the hero. NYC had a massive surplus this year, Bloomberg knows full well the economy is going into the tank, and yet he still handed half (IIRC) of that surplus back in refunds . . . ensuring that money stays tight. Again, IIRC, the surplus was more than $4 billion, and Bloomberg made a big show of kicking about $250M to transit.
Bloomberg has played the press masterfully, and has made some terrific changes over the past year. But he could have done much, much better, and that is the yardstick he should be measured by.
Imagine if he had the courage to say, New York’s transit infrastructure has reached a crisis point, and this surplus must be invested for the future of our city. Imagine he had the courage to say, our transit system is not ADA compliant, and we can use this money to end that shameful legacy.
Instead, once again, when money gets tight, transit improvements will again be delayed or cut.
Raising fares unfairly drops the burden on the little guy, it should be the last resort, and the fact that we’re talking about it results from an abject failure of leadership in both City Hall and Albany. This is largely the legacy of Pataki and Giuliani, but Bloomberg also shoulders a share of the blame.
Ben, to be clear, the misunderstanding wasn’t yours, but the commenters above me. Your post did state the situation accurately.
People just need to understand the pools of money these things come from. Even if all capital projects were cancelled and the existing debt load miraculously paid off, farebox revenue would be less than what it costs to operate the subway. In fact, farebox revenue isn’t even enough to cover labor costs alone.
Obviously, in an abstract sense, if fares go up, it narrows the operating gap, and therefore the government subsidies (already too low) are available for other purposes. But the projects mentioned in the post don’t even get the subway up to a state of good repair; there remain hundreds of stations that haven’t been renovated. There’s no foreseeable scenario, with or without increased subsidies, where this happens anytime before about 2025.
Gary, I have to disagree with your comment that “Raising fares unfairly drops the burden on the little guy, it should be the last resort.”
Raising the unlimited metrocard price ten dollars a month (the equivalent of 33 1/3 cents a day) is not a burden on any little guy, regardless of the income. I don’t know if you’ve been paying attention, but gasoline prices have skyrocketed recently*. If the subways weren’t an option, we’d be looking at far more then a 13.15% increase in travel expenditures. As it stands right now, the unlimited metrocard is a tremendous bargain. If funds need to be raised to pay for capital improvements, the fares should be raised. The “little guy” is more then capable of skipping one beer a week ($2.33) to help pay for the needed improvements.
*(Also of note, back in 1997 gas prices averaged $1.15 per gallon. Ten years later a gallon costs $3.30. Have subway fares doubled in the past ten years? No. The single ride fare has risen from $1.50 in 1995 to $2.00 through today. We’re way overdue for a fare increase.)
[…] some friends of mine and sitting next to me where the documents I used yesterday in my post on the Capital future of the MTA. Those documents happen to have charts detailing the levels of state and city investment in the […]
Todd, you’re comparing apples and oranges. Gas prices have skyrocketed, but what about CPI inflation? And getting people onto transit is good policy, for a million reasons, but just to name one, reducing our dependence on gasoline. people in Europe pay far more for gas, because their governments recognize the costs associated with oil-based energy, and tax it appropriately . . . which we need to do here. So far, we’ve failed at that, largely because of the huge lobbying expenditures of the oil and gas industry.
Raising the fare $10 isn’t going to kill me, but I’m a lawyer. What about the dishwashers, the cleaning people, the store clerks, and everybody else that comprise the working poor?
The question isn’t whether we need to fund, it’s how. Higher gas taxes is one way. Using income taxes is another. We have had a progressive tax system in this country (though that’s been substantially chipped down under Reagan and Bush, and the Patakis and Giulianis of the world). They cut taxes disproportionately for the rich, and raise fees equally for everybody . . . thus shifting the burden down the scale to those who can least afford it.
That’s bad policy in my book, and I will fight against it tooth and nail.
By the way, Todd, you are wrong about the fare hike history.
The last hike to $2.00 was in 2003; in 1995 we had a hike from 1.25 to 1.50 . . . and in 1989, the fare was only 1.00.
http://en.wikipedia.org/wiki/N.....nsit_fares
Gary,
– Sorry about the fare error, I missed the 1995 hike and used that year as the starting date with the $1.50 fare. But still, an increase from $1.00 to $2.00 from 1989 through 2007 is very small. I know that you could argue that it’s gone up 200%, but I’m speaking strictly of dollars spent.
– You said that I was comparing apples to oranges with my comparison of gasoline and mass transit prices, but then you made the argument that gasoline should be taxed (more then it already is) to fund mass transit. Unless that tax is levied strictly in the area served by the mass transit system, it would be completely unfair. Other areas would correctly argue that they need that hypothetical extra gasoline tax money for their infrastructure construction and repair, which is currently under funded. Besides, gas is already taxed quite a bit. Increased gas prices directly increases consumer prices, which would also hurt the working poor. I don’t think a gas tax is the answer.
– An income tax is a different story. I would support a small income tax increase to support the MTA. But again, only if it were strictly levied against those areas served by the transit system. I’d even go so far as to agree that it should be a graduated tax levied heaviest against the wealthy. Combine that with a small fare increase and we might actually have an economically healthy mass transit system that could efficiently service everyone.
– Lastly, I still don’t agree that 34 cents a day is too much for the working poor, but we’re going to have to agree to disagree on this one.
Thanks for keeping this discussion civil; I’m really enjoying it!
[…] Gene, I say, you can’t have it both ways. Either the MTA is fiscally responsible and trims service to free up money for needed expansion and […]
Excellent piece. While a low fare is desirable, it is far more important that the subway system expand.
[…] a Stewart Airport rail connection and the long-delayed computer-based train management system. My thoughts on this suburban-centric plan remain as they do in November; I would rather see more of an […]