In a sense, the MTA is broke. It currently has a $10 billion gap in its capital plan, and it can’t bond out anymore. Without state intervention and funding, the authority’s revenue sources have run dry, and by all accounts, it will have no money for another five-year capital plan when the current one expires after 2014.
On the bright side, the MTA’s megaprojects are in no danger of being canceled. The 7 line extension has been funded solely through city dollars while enough federal money has been pumped into the Second Ave. Subway to keep it afloat. The Fulton St. Transit Center is being powered by stimulus dollars while East Side Access is simply too far along to cancel. But what of the future?
At Streetsblog yesterday, Noah Kazis pondered the MTA’s next few years, and the picture is not a pretty one. He writes:
Albany has twice passed up the chance to plug a major part of this gap by enacting bridge tolls or congestion pricing. Increasingly, it’s time to ask what happens to transit riders if legislators just don’t do anything. The options aren’t appealing: a $3.00 base fare or 1970s-style breakdowns and delays.
In one scenario, the MTA could decide that everything in the capital plan, from basic repairs to the system to megaprojects like the Second Avenue Subway, has to happen. In this case, they’d have to borrow the money to pay for the improvements up front. If the MTA borrowed all $10 billion, according to the state comptroller’s office [PDF], the MTA’s yearly debt service obligations would soar even higher than they are already projected to. In 2010, debt service cost the MTA $1.9 billion. If the capital plan is paid for by borrowing, by 2019 debt service would total $3.9 billion.
To pay for all that extra debt, the MTA would have to increase its yearly revenues the only way it can, by raising fares and tolls. According to Neysa Pranger of the Regional Plan Association, the MTA would need between $1 billion and $1.5 billion in new annual revenues to pay for $10 billion in bonds. The 7.5 percent fare hike scheduled for 2013 — that’s on top of this year’s equivalently sized hike — is predicted to raise around $460 million a year, according to the comptroller’s report. Based on that number, it will take roughly a 24 percent fare hike to get $1 billion in new revenue and a 32.25 percent hike to reach $1.5 billion.
Kazis sees a world in which 30-day unlimited cards cost nearly $140. It was bad enough a few days ago when I had to buy a new triple-digit MetroCard. If the prices go up even more, it simply becomes a greater drain on the wallet.
Of course, this analysis isn’t new to anyone who’s followed along over the past few years. City and state politicians have routinely ignored the MTA’s fiscal pleas. It may be tough to take seriously an organization with four decades of financial ineptitude behind it, but the State Senate approved Jay Walder with the understanding that he knew what he was doing. Now that the true picture has emerged, it’s not a pretty one for a state nearly bankrupt.
So what’s the answer here? As always, we have two choices. Either New Yorkers — the five million who take the subway every day — will see their annual commuter costs increase drastically over the next four years or the city begins to levy a fare on those who choose to eschew mass transit. We can charge drivers for their bridge usage; we can bump up on-street parking rates to better reflect market prices; we can levy fees on congestion-causing activities that drag down the region’s economy.
Ultimately, the debate sounds the same after a while, but as city politicians argue over a 17-block bike lane on Prospect Park West, the mass transit system that powers New York slides ever backwards. Streetsblog says they will soon look at a system plagued by deferred maintenance and unreliable service. Anyone old enough to have lived through the 1970s and early 1980s knows what that means, and what that means is higher costs for everyone, congestion pricing or not.
52 comments
Nobody likes the idea of a sharp spike in Metrocard prices, but there’s a good argument to be made that New Yorkers pay far too little in transit fares. A one-month Travelcard in London costs £104 — more than $160 — and that’s only good for “Zone 1”, which is more or less London’s equivalent of Manhattan. A Londoner friend of mine accuses New Yorkers of still being “addicted to the nickel fare”. Berliners pay around $110/mo for a pass that covers a much smaller city. Of course, most European systems are zoned — something that will never happen here — but they’re also cleaner and less prone to breakdown….
I don’t think that’s really a good argument. New York is not London, and exchange rates alone don’t tell you much about costs. I don’t know about sterling, but the purchasing power of a dollar and a euro are similar. $1 in the USA gets you about what €1 gets you in the euro zone. (That may be true of £1 too.) A lot of the cost pressure in New York in the Pataki/Spitzer/Paterson era has been needless rising labor costs, at least until Walder came along. Fares in New York could theoretically be stabilized more by shedding extra labor costs, at least on the trains.
I’m not sure what makes London’s fare prices so high, but the Germans tend to expect things to work well and more or less pay for themselves. This value is less common in the Anglo-Saxon world!
Thanks for pointing this out. After a recent trip to London, I don’t believe anyone in New York should complain about the fares (unless you’re well below area median income and adjust appropriately for household size). Fares here are cheap!! And that’s after taking into account the purchasing power of a pound. Seriously, a pound gets you nowhere.
In PPP terms, Berliners pay $92-94 a month, for a pass that covers both the subway and commuter rail. A pass that covers the entire city plus the inner suburbs costs $114. And you can buy an annual pass for the price of 9.5 monthly passes, paying for it in monthly installments.
Ive wondered for years what the fare would have to be in order for it to cover its actual cost.
I suppose that could be parsed, to ask what it would cost to cover strictly Operating expenses, or Operating & Captial, and – egad – Operating, Capital & Debt, but let’s just say for the sake of argument we wanted our fare to cover the cost of operating the train & tracks – or the bus & driver – we were on this morning, and have a few cents left over, what would the Bas Fare have to be?
http://www.mta.info/mta/ind-fi.....ratios.htm
2.25/.55=$4.09, you’d pay $4 on pay per ride, for all the other things, just use the formula
What pete said.
Also, buses are much more expensive to operate than trains, so in theory different fares could exist to cover such costs. American transit agencies seem to tend to prefer to charge more for the less costly mode I guess because it happens to be the faster and more comfortable mode.
Right. Subways are a premium service in terms of quality, speed, and comfort and should be charged accordingly. Buses are not a premium service and should be priced lower. The sorting of class already happens in part because of this difference.
Buses are more expensive though. If a mode is expected to cover a minimum of its own costs, buses should be charged more.
The cost to operate a bus versus a subway is not a fair comparison. Subways require a tremendous investment by the MTA in infrastructure for tunnels, track, etc. Buses basically only require a bus and a couple of “Bus stop” signs. You can’t look at the ongoing costs without considering the up-front costs.
Who said I wasn’t considering upfront costs? Farebox recovery is better on trains than buses.
Anyway, if this is what you mean, amortized capital construction costs aren’t likely to exceed the system’s labor costs. When it takes more than 10 buses to haul as many people as one train can (at least 5x the labor/vehicle train does use, and 10x the labor the train should use), buses just aren’t going to perform very well.
Besides, it’s not like buses don’t have maintenance costs, like the wear and tear they cause on streets. It’s more than just a bus, a driver, and some signs.
I don’t think the MTA even publishes separate farebox recovery numbers for buses and the subway. There’s a combined NYCT farebox recovery ratio, and the NTD has separate operating ratios, but to my knowledge there’s no place that splits depreciation by mode.
Hmm, seems you’re right. A Google result I found compared NYC farebox revenue/expenses with farebox for other entities.
Still, the equipment costs seem roughly in proportion to capacity. Labor costs are significantly lower on trains. I would guess ROW maintenance (track, signals, etc.) is included in the operating budget as something with no serious direct parallel on the bus system. Major capital improvements are the only thing that could skew the result to look “better” for buses — no surprise here, because once you’re at the point where you need major capital investment, you’re probably past the point where buses make sense anymore. Unless the system is amortizing a massive new project, it’s probably quite safe to say farebox recovery is far better on the trains.
Operating costs per revenue-hour are a wash between subway cars and buses. Per passenger, the subway has a factor-of-2 advantage, which is reflected in operating ratios.
It’s capital costs that are hugely different. It’s not just new subway extensions, but also state of good repair and normal replacement, which are capital expenses.
Cost per vehicle-hour is a fairly misleading metric, and should not be crazy far apart between each mode. It says nothing about what the vehicle or its driver do; you could pay each bus driver to drive a Volkswagen microbus, save a bit on vehicle costs, and make cost recovery worse. But the MTA seems to drive per-vehicle costs through the roof anyway – it just sounds like they do it less than everyone else when it comes to trains, and some of that is NYC has trains with more cars to split over-the-top MTA labor costs between. As you probably noticed, this CBO report is crediting the natural efficiencies of rail, urban density, and high ridership to good management!
I know how capital expenses work (at least mostly), but I’m still not clear how capital costs factor into farebox recovery. I was guessing they’d be amortized somehow. But wouldn’t “state of good repair” (ongoing maintenance) be an operating expense? I would think replacing the odd fried signal circuit or station light bulb would come from an operating budget; replacing a series of signals or a section of track (“normal,” I would assume depreciated, replacement) would probably come from a capital budget.
Excessive concern about raising fares is one of the biggest problems for transit agencies in the US, certainly. Even $140 represents a pretty minimal long-term rate of inflation (vs. the 1970s/80s), and a not-too-expensive ticket compared to comparable systems globally. Assuming your expansion plans are well considered, completing their funding is far more important than avoiding fare increases.
I’d agree that things like an end to free parking are admirable initiatives, but that’s because those markets are not fairly structured. All these systems – roads and mass transit – would be stronger if they generated more of their own revenue to offset their costs. In an ideal world, they would pay for themselves like normal products.
I wouldn’t compare subsidized transit to subsidized car use/parking. With transit, the marginal cost of an additional ride is usually close to nil, and the marginal benefit is most of the net revenue of the fare or MetroCard swipe. With subsidized car use/parking, the marginal cost of an additional car on the road is higher, and the marginal benefit could be close to nothing (no additional revenue is really paid by the additional car, typically, except perhaps under-priced gas tax).
The marginal cost of an additional car on the road vs. an additional transit passenger are both quite small – more or less dominated by the cost of congestion, which may be high or low in any case depending on conditions. Beyond congestion, additional passengers or additional cars add little to the operating or maintenance costs of the respective facilities.
Overall, as economic goods they are almost identical – large fixed pieces of infrastructure which have strong network effects and very high entry costs, often function as non-rivalrous club goods, and therefore tend to be natural monopolies. Natural monopolies require regulation, but shouldn’t particularly require public subsidy. The only reason mass transit needs subsidies, after all, is to make it competitive after the effects of subsidies for automobiles. A $300 monthly MTA card would seem cheap if the alternative was paying the full cost of automobile use
Beyond congestion? Auto congestion is kind of the 800 lbs gorilla, and probably accounts for much of the high marginal cost of an additional road vehicle – a cost largely not borne by the driver individually. Crowds need not slow down transit nearly as much. Crowds can grind roadways to a near halt, slowing down every car behind them, and causing more pollution per user (as opposed to less per additional transit trip).
They are certainly not identical in terms of marginal cost and benefit. The importance of the trip might be similar from the user’s perspective, of course, but that’s another story.
Roads are usually more congested (not always), but that’s just a product of the levels of demand, pricing, and capacity that exist at the present moment. They don’t change the fundamental economic similarity of the two modes. The lack of congestion pricing is inexcusable – but this is true of transit as well. Building the SAS because the Lexington Avenue line is congested (a primary argument), is the same as widening the NJ turnpike because it’s currently got a lot of traffic – a bad reason in each case. Both forms of infrastructure should raise prices at times when capacity utilization is high enough that riders will impede each other’s progress. If the price on the Lex then becomes so high that additional capacity can pay for itself, THEN build the SAS.
On pollution, of course both autos and transit produce it and need to account for its cost. A national carbon tax is the way to do this. If that existed, the prices would filter through – the MTA would need to pass it on to customers and drivers would pay for it directly and individually. Local infrastructure managers shouldn’t have to worry about pollution in any more detail than that.
Yes, both transit and roads involve congestion and, yes, that congestion has costs; and yes, both create pollution. However, it’s rather difficult to ignore that these problems are all much more severe as car usage increase and increase only slightly as transit use increases. Just because the “fundamental economic similarity” of those problems is analogous (and comparable) doesn’t mean that encouraging the auto usage is not significantly more bad (and nets significantly less good) than encouraging transit use. I prefer the modes recover their own costs too, but I’d still rather have a smart(er) subsidization model than a dumb(er) one.
Oh of course the auto problem is much worse. My point was simply that the difference is only one of scale, not one of nature. The unjustified subsidy to automobile use is multiple orders of magnitude bigger than the subsidies to rail transit. But those rail subsidies are just as hard to defend in and of themselves, and if we do manage to reduce the auto subsidy by congestion pricing/parking fees, we shouldn’t plow that money back into the MTA.
Assuming an ‘all you can eat’ MetroCard were to be $140, AND there hasn’t been a corresponding inflationary increase in the larger economy, MTA would need to offer a ‘capped’ MetroCard, similar to one of their original options, say $110. It’s just a simple fact of life that in this way of things, that the ‘same’ money buys less in the future.
[…] Sources: Streetsblog via SecondAveSagas […]
New York/London comparisons are almost always useful, and they’re appreciated by this writer. But in a U.S. context, compare how the city continues to plod along/plug along with rail transit capital programs compared to, oh, New Jersey. Don’t think such a difference might matter to the demographic mix in the next decade or so? Jerseyans eager for a No. 7 extension to New Jersey realize how steep a climb such a (weak?) possibility that is. But they also realize New York is doing something, incomplete or imperfect though the something might be.
Charge $10 per month for every car that is currently parked for free on public streets. Sidewalk kiosks and shops can sell stickers to locals and visitors. This will help cut down a bit on cars coming into the city.
Free parking should not and is not free.
Yes, fares could go up to the level of London (which has the highest fares in the world, at least among major systems), and even beyond. It looks really bad if you’re used to paying $104 a month, but hey – when I moved in, it was $76. And I’m sure that to Parisians, who pay 55 Euros, and Milanese and Romans, who pay 30, even New York’s current fare looks obscene.
At least in the short run, the vast majority of riders will grumble privately and fork over 150 bucks a month. And then in a few years the MTA will go broke again.
Man, I don’t even remember $76. When was that? Mid-2000s? It was $63 when I was an undergrad, and went up to $67 I think. I only started using unlimiteds again more recently, and they may already have been $89 by then.
I think I do about 120 rides a month, so I guess I’m not doing too badly even at $104.
It was in 2006.
I do at most 20-30 rides per month now that I live within walking distance of Columbia again. Before, I did about 50, with a sizable standard deviation, so that almost all but not all months I was above the breakeven point.
Just for some perspective from another US city, my transit pass in Seattle is $90/month for a vastly inferior bus system and one light rail line. The same pass was $63 in 2008 – fares have risen ~43% in less than 3 years.
The only solution is ZONE BASED FARES. Most peoople don’t know it, but when the MTA ordered the current turnstyles back in the 90s, they paid extra for a feature that would allow them to have zoe based faes. So obvivously management has had the idea of zone based fares on the table for a very long time, but won’t ever mention it in public out of fear of angering outer borough residents.
It would assuage outer borough residents if you made the zone system such that the priciest trips were those both starting and ending in Manhattan below 96th street, or something. There’s no reason longer trips need to be the more expensive ones, nor are they even necessarily the most costly.
Disagree. A zone-based system should charge based upon distance traveled and zone-lines traversed. Travel Bronx-to-Bronx? one zone, no boundary traversed. Travel Bronx-to-Brooklyn? three zones, two boundaries traversed. Travel Manhattan-to-Manhattan? one zone, no boundary traversed, same price, same as Bronx.
Ah but Manhattan as a rule is more transit-dependent, its residents have higher than average incomes and service is far more comprehensive than anywhere else. This could make a Manhattan “premium” work. Fare structure: IntraBorough fare for travel within BX, BK, Q & SI only. InterBorough fare for travel within Manhattan or between boroughs. Can’t say it will be politically popular but many of us here lobby for congestion pricing for Manhattan. Why not for transit too?
How can they do zone-based fares if there is no mechanism for swiping out of the system? It knows you’re entering at, say, Union Square, but you could be exiting anywhere in the system. How would they calculate this? By pricing based on the start location rather than end location (so entering at Union Square costs one amount and entering at Far Rockaway costs another amount?)
Charge everyone maximum fare and having some sort of swipe-out system to reduce costs.
Example: Say there’s an interborough fare of $3 and an intra-borough fare of $2. Charge everyone to enter full price and then if the person gets out in the same borough and exits the turnstiles, have them swipe the card again at some free standing scanner/card reader (hoping for contactless card technology here) to credit back $1 fare. With contactless technology, you could position quite a few of these outside the gates for quick crediting.
For unlimited, again same concept. Charge lets say $125 for All-borough transit and $85 for same. The all borough folks wouldnt need to swipe out but the same borough pass users would need to have at least $1 on their cards to swipe in. That way there is no incentive to game the system. For example my residence and most of my usual destinations are all in Manhattan so the $85 pass would make sense and $1 fare for the occasional interborough fare is pretty reasonable.
Would take some getting used to but this way by charging full price upfront and crediting back you can differentiate fares without trying to squish in-and-out turnstiles into what are generally quite cramped station configurations. A contactless system would make it especially appealing.
The current turnstyles have NO problems requiring you to swipe in both directions. Goto St George Ferry SIR station, there the stainless steel with 2 pipes over your head turnstyles (not fancy next gen PATH/airtrain metrocard “faregates”) have a mag card reader on both sides. You swipe to get out. You swipe to get in.
I’m not saying you cant have existing turnstiles do this. I’m saying many of the stations are too cramped to handle a crowd of passengers waiting to swipe out of the system with a mass waiting to swipe in. Better to just let them out of the system as fast as possible and credit back the lower fare they should have paid for their journey
In principle, you can remove the turnstiles and go POP.
In practice, some of the lines may be too crowded for it. How do you POP-inspect the 4/5 at rush hour?
Pick a door or stairway and get everybody who uses it: random, racially neutral enforcement! All you need for POP to work is to balance a high enough fine and a high enough fare evasion rate (the sweet spot: an evasion rate high enough so the inspectors pay for themselves).
Even inspecting the stations is a problem – there’s a mass of people exiting the major stations.
But why do you need to inspect the whole station? Pick a car and inspect everyone who comes out of it. That should be possible even at Union Square with 3-4 inspectors. Pick a stairway somewhere else. It’s not a huge deal if you miss someone.
Not saying it’s the best thing for the NYC Subway, but it should be doable.
Actually, that would probably only work for (maybe?) the bus lines. I believe that in Hong Kong, they use a sort of system where the highest fares are paid at the start of the line and slowly decrease as the bus reaches its destination (using something similar to a taxi meter)
As for the trains, I believe that a zone-based system would work IF people going the shortest distances paid the highest (per-mile, of course) fares. After all, they’re making the system even more congested in the central sections, which are already congested.
There’s no reason why Manhattan prices couldnt be higher. A fare scheme that charged more for Manhattan trips could be effective if every subway rider was charged that up front and then had the difference credited back if they never entered the island.
The reason is local politics. The poorest people are often the ones furthest out on the system, and they’d be hit the hardest. And the “middle class” in places like Maspeth would probably bitch and moan too (which is basically all the “middle class” is good for these days).
If the current test to eliminate toll gates on the Henry Hudson Bridge by replacing it with EZ Pass and photo license plate enforcement is successful, I’d expect similar systems to be set up for the Brooklyn, Manny B, Willie B, Queensborough and the free Harlem River crossings. A large part of the current lack of toll collection is due to the lack of space for toll plazas and the added pollution they’d create. That’s no longer an issue if the tolls can be collected without forcing any drivers to stop and wait in line.
Toll those bridges and eliminate the free access to Manhattan from north and east of the borough and you’d both create more revenue for mass transit (subways, express buses and commuter rail) and encourage people to use those options over their cars in a far less complicated way than congestion pricing would require for all of Midtown and Lower Manhattan.
The technology is mature; the first test was in the 1980s, in Hong Kong, and was technically successful, though the toll gates were removed due to popular opposition. And electronic road pricing has been used continuously since 1998 in Singapore.
[…] money is under assault. As I noted on Friday, the worst-case scenario could include 33-percent fare hikes. For New Yorkers who need transit, that’s a scary […]
This may sound sadistic, but perhaps what we need to get the political emphasis off bike lanes is attention to the forthcoming fiscal crisis impacting the MTA, and WHY the difficulty increasing its revenue to improve service and make needed repairs MANDATES that the NYC DOT develop and promote bike lanes as an alternative transportation method.
Despite all the hoopla over whether bike lanes are working right now, if you take a step back and let current trends play out over the next 5+ years it makes sense, especially when you throw in the re-escalating price of oil.
Good luck. The bike lane thing is almost entirely driven by a small portion of the press that sees it as a threat to the mythical mass upper middle class, backed by the Moses-era liberal reformer that is offended by people enjoying themselves in public.
[…] on SAS, as I discussed how high the fares could go, those who comment on the site wondered about a zone-based fare system. Our system’s […]
[…] Friday, in this space, I examined how the MTA could close the gap in its capital budget through fare increases, and my conclusion wasn’t an optimistic one. The MTA would have to raise fares significantly […]