Home MTA Politics Subway operations: one for the city or one for the state?

Subway operations: one for the city or one for the state?

by Benjamin Kabak

Since earning an appointment to the MTA, Joseph Lhota hasn’t said anything at all to the press. He co-signed a letter to New York City district attorneys concerning assaults on MTA employees, but he won’t be giving one-on-one interviews to the press until after his State Senate confirmation hearing. Instead, we’re left with the public record of a one-time Giuiliani official who has little transit experience and has spent the bulk of the past decade in the private sector.

Today in The Times, Michael Grynbaum unearths a gem. During the 1999 brouhaha over a controversial art exhibit at the Brooklyn Museum, then-Deputy Mayor Lhota discussed his views on MTA control in a sworn deposition. As Grynbaum reports, Lhota espoused a view that has generated some debate over the years:

In 1999, while serving as Rudolph W. Giuliani’s deputy mayor, Mr. Lhota stated in a deposition that if he had his way, the responsibility for New York’s subways and buses would lie fully with City Hall, not with the state. “I do wish we controlled the transit authority,” Mr. Lhota said at the time. “I have gone to Albany constantly in my capacity as budget director, because I don’t think the way the transit authority works with the City of New York is very appropriate.”

Reminded of his comments in a brief interview on Tuesday, Mr. Lhota laughed, groaned and then said emphatically that he no longer held the same position. “I believed it then,” he said. “I don’t believe it now.”

…On Tuesday, Mr. Lhota cheerfully conceded that under the Giuliani administration, he was occasionally frustrated by the city’s lack of oversight of the transit system. “It is a matter of perspective,” he said. “I think that statement was consistent with what most budget directors in New York would have said.” But he added, “I do believe the management of the M.T.A. is in much better shape today than it was then, and I do not subscribe to the same thoughts.”

The context and Lhota’s comments are nearly incidental to the idea that has long since plagued New York: Who should be in control of the New York City subway system? For the first half of subway history, New York City was responsible for the subways. Mayor La Guardia oversaw an ambitious reunification plan that brought the IRT and BMT under direct city control, and the Board of Estimates set budgets and fare policies.

Although it made sense for the city to oversee its transit network, the bureaucratic and political structure was rife with problems. Candidates for office turned the subway’s nickel fare into a campaign issue, and from 1904-1948, the fare remained five cents even as inflation devalued that nickel. Eventually, thanks to overly ambitious plans to build out the IND lines and the declining fare revenue, overseeing the subways nearly drove the city to bankruptcy.

When the state assumed control of the subway system and eventually created the MTA, it did so for purposes of financing. Surplus from the Triborough Bridge and Tunnel Authority helped cover the subway operating deficit, and eventually the state folded the regional transit network — including buses and commuter rail — into the MTA in an attempt to streamline operations. Without proper legislative support and authorization, it hasn’t always succeeded.

At this point in time, we know of the problems with the MTA. The state legislature refuses to own the problems; New York City disclaims as much interest as possible. It is at once everyone’s and no one’s problem. If the city were to assume control of the subway, as Lhota proposed in 1999, the state would quickly roll back a lot of funding, and the city would have to find those dollars. On the other hand, any such rollback could come with an expansive home rule grant that could allow the city to toll bridges or institute congestion pricing without Albany approval.

For now, of course, nothing will happen with MTA control. The state will continue to maintain its oversight, and the city, which isn’t interested, won’t be arguing for a larger role in subway management. It’s been that way for nearly six decades, and it won’t change any time soon.

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Larry Littlefield November 16, 2011 - 7:04 am

At this point, if the MTA were to break up all the TBTA surplus and state revenues would end up with the suburbs, and the city would face a devastating blow. Of course, the city controlled its own revenues, as it did before Lindsey, city residents would come out ahead.

I say again — turn the payroll tax revenues and responsibility for the buses over to both the city and the suburban counties. With Nassau dropping out of the MTA, the number of counties without bus service who therefore resent the payroll tax keeps growing. After all, buses run on city streets, whereas trains run on their own rails. Buses require skills widely available in the private sector, whereas trains require specialized skills that now reside primarily in the MTA.

With local governments getting payroll tax revenues, whatever state funds are now made available could be diverted to the MTA capital plan.

John-2 November 16, 2011 - 9:04 am

The success/failure of Nassau County’s contracting out bus service will go a ways towards showing if any hypothetical return of subway service to city-only control would work. Subway service has the highest percentage of self-funding of any mass transit system in the country; it’s the maintenance of the city’s extensive bus surface transit system that’s the big cash sinkhole for the MTA.

We’re the Nassau privatization to actually work, you could possibly look at going back to the situation as it existed between 1940 and about 1960, where the city owned and operated the subway while private operators handled the main bus lines. You’d still have to work out a lot of details — you wouldn’t be goong back to the wholly privatized days of Fifth Avenue Coach; instead, you’d still have public ownership of the system but (hopefully) better efficencies with private operation.

Also, votters wouldn’t stand for privitization if it meant eliminating MetroCard transfers with the subways, and the same political demogaugery by certain city pols that kept the subway fare artificially low would no doubt return if a reborn autonomous NYCTA was created. But if the MTA were to be broken up, the best thing for the subways would be to avoid shouldering the added cash drain being tied to the current bus system operations would create.

Larry Littlefield November 16, 2011 - 9:14 am

How does the cash deficit for paratransit and buses compared with fares compare with the payroll tax revenue by county, assuming free transfers would count 100 percent as subway revenue?

Remember NYC accounted for nearly 90 percent of the payroll tax revenue. NYC also agreed to pay money to the MTA to cover the former privates, and otherwise cut off assistance to the MTA in the early 1990s when the state did.

So perhaps it could work without any savings from “privitization,” which mostly involves getting rid of some of the work rules and retirement benefits that have built up over the decades.

Bolwerk November 16, 2011 - 11:25 am

Bleh. I wouldn’t pay the slightest mind to what works in Nassau, or more importantly what doesn’t work. Nassau is simply a case of quantitatively illiterate local elected officials going ballistic because what something objectively costs is more than they’re willing to pay. And I haven’t heard anything about Nassau County withdrawing public support entirely. (Warning to New Yorkers: we have those types of politicians too. Jimmy Vacca wants cars at any cost, as long as he doesn’t have to pay any of them, and if you don’t like it you can STFU.)

If you want precedent for kind of profitable bus service, the Manhattan & Bronx Surface Transit Operating Authority has achieved a surplus at least in some years.

As for precedent for profitable rail service, it’s out there if you leave the USA.

nycpat November 16, 2011 - 10:30 am

TBTA, like the subways would go to the city as it is city property.

Larry Littlefield November 16, 2011 - 10:32 am

Should. But things don’t go as they should in Albany.

JB November 16, 2011 - 9:52 am

Question, why would the MTA or whatever it was called at the time decide to acquire all the different bus lines if they were such money pits? What was the rationale?

Larry Littlefield November 16, 2011 - 10:05 am

Empire building. At the time it was thought that public monopolies were good, because governments acted in the public interest. That was before the public monopoly became a self-interested union monopoly.

The bus lines more or less fell in the city’s hands, like the IRT and BMT, and like the state takeover of the LIRR and MetroNorth, because they were money pits.

The city passed the buck to the MTA under the incompetent Lindsey Administration, because it was thought “regionalization” would mean fiscal transfers from the increasngly affluent suburbs to the increasingly poor city. It actually meant the reverse.

BrooklynBus November 16, 2011 - 10:53 am

Also the MTA was supposed to see that all regional transportation would be coordinated and integrated which they have largely failed at other than producing some nice maps showing all services. They never restructured LIRR fares within the City so that someone from Bayside could take the LIRR at a slight premium over the bus and subway instead of being so much higher. LIRR still doesn’t accept MetroCard as payment for an LIRR ticket although you can buy one for use on the subway from an LIRR machine.

MTA Bus still operates totally apart from NYCT. During the lat round of service cutbacks they applied different standards so that MTA Bus Express buses performing far worse that NYCT Express buses were saved while the NYCT ones were cut that performed well by MTA Bus standards. You still have the wasteful B2 and the B100 that could be combined but aren’t because one is MTA Bus and the other is NYCT. When they are, the MTA will just eliminate the B2, rather than perform a meaningful combination to minimize inconvenience because the B100 is subsidized by the City and the B 100 is not.

No things weren’t perfect when the City ran transit, but the MTA has not helped much either other than providing TBTA funding.

Given the degree that the MTA has failed in it’s mission to integrate regional transportation and now with the cessation of LI Bus (which was the fault of Nassau County not the MTA). It is time to give this idea of Jo erupt for transit serious consideration provided there are safeguards to ensure Albany doesn’t screw us.

BrooklynBus November 16, 2011 - 10:59 am

“Jo erupt” should have been “home rule”. where does the IPad get these corrections from anyway?

SpendmoreWastemore November 16, 2011 - 3:45 pm

“Jo Erupt”

— That’s about what the pols, management and unions are doing to us.

nycpat November 17, 2011 - 2:44 pm

Time to call out the National Guard. They’ll deal with these swine! Right Spendmore?

John-2 November 16, 2011 - 11:22 am

The bus lines more or less fell in the city’s hands, like the IRT and BMT, and like the state takeover of the LIRR and MetroNorth, because they were money pits.

The IRT and BMT were city-regulated money pits, due to the political grandstanding by pols in the post-World War I era of maintaining the 5 cent fare to the point of eventually driving both companies — the BMT as the BRT — into insolvency (albeit the IRT got itself into the mess with the contract it signed as part of its takeover of the Manhattan elevated railways that locked in the nickle fare).

Artificially holding down fares despite market conditions would also be a big potential problem for a revived NYCTA under local control — demagoguery from pols that would prevent adequate funding of the system and result in the same sort of deferred maintenance that first reared it’s ugly head with the breakdowns of the R-1/9 cars in the mid-60s, prior to the MTA’s takeover of the system on 5/1/68. The Lindsey Administration agreed to the takeover in large part to shift the blame for the subway’s problems 150 miles up the Hudson; if the city were to take it back, and somehow get the subway and bus finances separated out, you’d still have the problem of politicians trying to woo voters by offering them if not free, then discounted lunches without concern about future consequences to the system (and no doubt there are still pols out there who would easily return to the quaint 1970s idea that the subway system should be free, with magical money fairies somehow providing the operating capital).

Larry Littlefield November 16, 2011 - 11:31 am

“Artificially holding down fares despite market conditions would also be a big potential problem for a revived NYCTA under local control — demagoguery from pols that would prevent adequate funding of the system and result in the same sort of deferred maintenance.”

Hence the advantage of keeping the subways, and all rail operations, in MTA hands, and just turning over the buses to NYC and the counties.

The buses and paratransit are social services, and the city could decide how much to subsidize them. And if they went with low fares and deferred maintenance, future politicians could change their minds by buying new buses. Reversing decline on the rails is more difficult.

John-2 November 16, 2011 - 12:58 pm

That probably would be the better option. A unified regional rail authority shorn of the need to prop up the less cost-effective bus system and at the same time sheltered somewhat from direct political pressure would be the best option, though areas of the city and suburbs without nearby rail access would howl about getting the short end of the stick (which goes back to why watching the success/failure of the Nassau County privatization experiment would be so important to the chances of something similar even being considered within the city limits).

Bolwerk November 16, 2011 - 1:22 pm

The waste may be structural, but what is keeping it around is largely cultural and to perhaps a similar extent political. I think until you start addressing the culture at the MTA and its various subsidiaries,* any structural re-shuffling is just playing with political dangly bits. Sundering the organization could easily just make things worse by making more competing fiefdoms. And while it’s fine that local governments should generally oversee their own bus networks, there is no reason why that should prevent the entire metropolitan region from having one fare media and a common, rational, preferably mode-agnostic fare structure.

* see my comment some months ago to BrooklynBus, and much of the discussion thread on that page is also generally kind of interesting about addressing the culture issue.

BrooklynBus November 16, 2011 - 6:29 pm


The culture of the MTA is something that no chairman addresses. There is much talent within the MTA. Many people have a better handle on how to solve problems than the people in charge of making those decisions. The problem is that of a strong bureaucracy that does not permit you to go over your boss’s head. If you have a good idea, your only chance of getting it heard without disturbing the bureaucracy is the Employee Suggestion Program.

While some departments welcome the program, others are extremely arrogant believing they know best and no one even someone from another department within the same agency has the right to tell them their job. If you are outside of the agency, you can forget about any of your ideas even being considered. You will just get excuses, illogical reasoning, contradictions or a response to a proposal you never made.

In instances where the Employee Suggestion Program works, the MTA has saved millions of dollars from some simple suggestions and has rewarded those employees handsomely with awards of $15,000 for saving them millions. This program needs to be beefed up and headed by a vice presdent with the power to overrule those arrogant departments who won’t listen to anyone. Instead it is headed by an analyst, not even a manager, who has no power to challenge any BS rejections she sees.

The MTA also needs to appreciate employees more who do a good job instead of treating everyone equal. Those doing an excellent job get treated the same as those doing the minimal amount of work possible, so there is no incentive, especially when someone sees underserving people getting promotions because they know the right people.

I once single handedly saved the MTA $4 million, and all I got was a verbal thank you, no merit, no promotion, no nothing.

Then they will go and bring in consultants because a Board Member or someone else owes some company a favor instead of using its own internal talent to solve problems wasting money unnecessarily.

Alon Levy November 16, 2011 - 5:17 pm

If they separate bus and subway operations, they’ll probably start charging for transfers again.

Andrew November 16, 2011 - 11:52 pm

You mean the way there are separate charges for transfers between NYCT and MTA Bus and (for the time being) LI Bus and the non-MTA Bee-Line system, and in the past the various private bus lines in Queens?

Oh, right, those transfers are and were free.

Alon Levy November 17, 2011 - 1:19 am

No, I mean like the free transfers between PATH and the subway, or between any commuter railroad and any other operation.

BrooklynBus November 17, 2011 - 10:00 am

There are free transfers between PATH and the subway?

Alon Levy November 17, 2011 - 9:29 pm

I’m being sarcastic.

Billy G November 16, 2011 - 10:41 am

If NYC Transit wants continued funding and management at the state level, the next capital construction project had better be the Tappan Zee rail component. We do quite resent the MTA payroll tax, as well as the mortgage recording tax and the sales tax.

Make the subway users pay their full share.

Benjamin Kabak November 16, 2011 - 10:47 am

Make the subway users pay their full share.

You win the award for “most tired NY GOP talking point.” Can you please, please explain to me how subway users don’t pay their full share any more or less than LIRR/MNR riders do? First, 90 percent of payroll tax revenue comes from NYC. Second, there are a whole slew of other taxes in NYC that support the MTA too. I’d love to tell the suburban counties to screw off and fund their own transit. How’s that sound to you?

As far as Tappan Zee is concerned, that had nothing to do with anything relating to NYC and everything to do with Cuomo, his priorities and readily available federal dollars.

Bolwerk November 16, 2011 - 11:04 am

With that attitude, Billy is a hypocrite if he doesn’t send New York City a check.

Al D November 16, 2011 - 11:31 am

Aren’t the NYC subways the least subsidized compared to most any other transport, commuter rail, ferry, and yes, driving!

nycpat November 16, 2011 - 12:44 pm

I believe upwards of %60 of operating costs in the subway are covered by fares, one of the highest rates in the world.

Alon Levy November 16, 2011 - 5:18 pm

One of the highest by whose standards? The provincial French commuter rail networks that the rest of Europe laughs at?

Miles Bader November 16, 2011 - 5:54 pm

I believe upwards of %60 of operating costs in the subway are covered by fares, one of the highest rates in the world.

No it’s not.

Alex C November 16, 2011 - 6:57 pm
Alon Levy November 17, 2011 - 1:22 am

I don’t think it’s the 60% part that Miles was objecting to. It’s the “one of the highest rates in the world” factoid.

nycpat November 17, 2011 - 12:54 pm

What would be the ratio in Montreal, Berlin , Stockholm…

nycpat November 17, 2011 - 1:25 pm

I see a wiki article w/ratios. NYCTA is in the upper quartile. The subways would have a higher ratio if busses were seperate and double fares were re-instituted.

Alon Levy November 18, 2011 - 2:14 am

I’m not sure whether the comment I wrote got eaten or is in moderation hell because of links. But the Wiki ratios may not be apples to apples. The 67% number for New York is subway-only, and excludes depreciation.

In contrast, if you search for ZVV finances you’ll see Zurich has a farebox recovery ratio of 47% including capital charges and all modes, which compares with 40% for NYCT. If you then go to the revenues link, you’ll see higher revenue numbers, which translate to a 70% ratio – I’m not sure which of the two numbers is the correct number for farebox revenue.

Similarly, commenters from Germany report very high numbers locally – 70%+ not including depreciation. A Munich-based commenter on Human Transit claims 95% for the Munich bus system (it may be just avoidable costs though, like the route-by-route numbers for NYCT buses).

Alon Levy November 18, 2011 - 2:31 am

Also, if you search STIF budget or STIF budget amortissement you’ll see clear figures for farebox revenue in Greater Paris (€2.972 billion) and a range of expenditure figures: €7.387 billion on the official budget, including some investments but probably not the big-ticket extensions; €8.5 billion according to a writeup on Caprice Project. The lower number corresponds to 40% farebox recovery, the higher number (which seems to incorporate slightly higher farebox revenue) to 37%. In either case, it’s comparable to the MTA.

The difference between Paris and New York in terms of funding is that a majority of the subsidy to STIF comes in the form of a payroll tax that ranges from 1.4% to 2.6%, so it’s less exposed to political vagaries. In contrast, even a 0.33% MTA payroll tax is controversial in New York’s suburbs.

nycpat November 18, 2011 - 10:50 pm

I wish I had seen the above posts earlier, they are interesting. I’m sure that transit workers in Germany ,France and Switzerland are well compensated with comprehensive benefit packages.
Our problems are political problems. Our leaders propose to solve transit funding issues by cutting pay and benefits for transit workers. Our system is sclerotic and sick.

nycpat November 17, 2011 - 1:29 pm

My bad. I should have excluded Asia where all ratio over 100%.

Alon Levy November 17, 2011 - 9:38 pm

Why exclude Asia just because its rapid transit is more financially successful?

nycpat November 18, 2011 - 1:28 am

Their histories and societies are too different.

Alon Levy November 18, 2011 - 2:08 am

Doesn’t mean we can’t learn. For one, the distinguishing feature of Asian countries with high transit mode share and profitable transit is that they engaged in traffic restraint early or didn’t build too much infrastructure for cars (e.g. car taxes in Singapore and Hong Kong, limited highway building in Korea and Japan). The Asian countries that did otherwise got different results: Malaysia built a large freeway network and subsidized driving in order to help its state-owned car companies, and as a result Kuala Lumpur’s transit mode share is 16%, vs. 30% in New York and 53% in Singapore.

But even European countries engaged in different transportation policy from the US. They built more highway infrastructure than Japan, Korea, Hong Kong, and Singapore, but less so than the US. They also had higher gas taxes even early on, since they didn’t have the lockbox initiatives that became popular in the US in the 1910s and 20s. (But their transit revival is recent, and comes from good practices and planning.)

nycpat November 18, 2011 - 3:16 pm

What’s your point? A certain erudition about international transit policies? What can we learn?
Singapore and Hong Kong were colonies where the gov. owned 90% of the land. Korea and Japan were completely shattered by war only 60odd years ago. Malaysia is an islamic country.
U.S. policies grow out of our geography. Also we were a net exporter of petroleum products until 1941.

Alon Levy November 18, 2011 - 11:00 pm

What we can learn is that trying to attribute things to culture is stupid. Japan and Korea were shattered by the war(s); so were Malaysia and Thailand. (And no, Malaysia’s being Islamic doesn’t mean anything any more than the USA’s being Christian.) For what it’s worth, in the US disasters served to accelerate the decline of rail rather than to forestall it – for example, when hurricanes washed out rail lines, the rail lines would be abandoned.

Nathanael November 21, 2011 - 11:39 pm

Bluntly, government ownership of rail lines, and treating rail lines as a public trust, is why rail lines got *improved* when they were washed out in most countries — and the opposite, private ownership, and treating rail lines as a problem, is why they get *abandoned* when they’re washed out here.

Bolwerk November 17, 2011 - 1:14 pm

Does it even matter? I know I’ve been wrapped in these discussions too, but such ratios say a little something about financial performance yet tell you little about system performance. Cut back service frequency somewhat and raise the fares by 25% or 50% and you can probably see that number shoot up above 100%, at least for the subways. Do that, and we’ve lost a lot of convenience and the working class – which supposedly gets raped when the tolls go up – is paying even more for the mode it’s really using. You can easily imagine a system with daily or weekly runs that achieves full profitability – but it won’t be able to do what the New York Subway does.

The road system in the USA obviously has awful financial performance, but that only scratches the surface of the problems with auto-centric development: health, the environment, dependence on unsustainable energy sources, terrorism, and even better uses for the land (e.g., to grow food) are all much bigger concerns than the year-to-year operating/capital deficit.

Alex C November 16, 2011 - 6:54 pm

Really? If we make everyone pay their fare share you’d be paying a lot more, friend. Just out of curiosity, how much do you think it costs to run the commuter rail that runs to whatever lavish suburb you live in? You think whatever measly fare you pay covers all those salaries, equipment purchases, depreciation, maintenance, supplies, utility bills. You really think your fare is magically paying for all of it? We city folk pay for your ride, so it’s the suburbs that need to pay more. Entitled and spoiled.

Bolwerk November 16, 2011 - 11:11 am

Candidates for office turned the subway’s nickel fare into a campaign issue, …. When the state assumed control of the subway system and eventually created the MTA, it did so for purposes of financing.

This may not be ideal, but for the purposes of at least labor the city could still have complete administrative control while the state still oversees the purse strings. For instance, whether someone is hired or fired could be a city matter, while what the person’s salary is could be a state matter. The TWU could then take it up with Albany, while the city can focus on the day-to-day operations that people in Buffalo shouldn’t really be concerned with. The capital/material costs of running the MTA should be fairly straightforward.

You probably see a kind of analogous situation in some school systems. A principal may make hiring and firing decisions, but he shouldn’t even know how much the people he is hiring and firing make so there isn’t even a whiff of age or salary discrimination.

Al D November 16, 2011 - 11:34 am

The state was partly successful when it fully funded capital plans in the 80s. Otherwise, it’s not been successful. So, after 40 or so years, perhaps it’s time to give someone else a turn?

Al D November 16, 2011 - 11:39 am

As a follow-on, perhaps the city can run its subways and buses and a separate, regional rail authority could be created to work at truly integrating rail in the region. After all, the regional boundaries are quite different from the political/legal ones?

John November 16, 2011 - 2:32 pm

Maybe the New York City-State should control the subways. 🙂

Nathanael November 21, 2011 - 11:40 pm

It would actually make sense to separate NYC from Upstate… except that Upstate would end up run by lunatic Republicans, so I’d rather you didn’t do it just yet. 😉


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