Home MTA Economics Who wants to be a $40-millionaire?

Who wants to be a $40-millionaire?

by Benjamin Kabak

When the MTA releases its 2014 budget in a few weeks, transit advocates and budget wonks alike will be rubbing their hands with glee, rather than dread. While the budget will likely contain some bad news and dismaying long-term projections, the big question of the month will finally be answered: Just what does the MTA plan to do with that extra $40 million?

For the better part of 2013, we’ve heard a lot about Gov. Andrew Cuomo’s transit largesse. As part of an increase in available state money, Cuomo upped his executive contribution to the MTA by around $40 million, and the MTA suddenly has an unexpected windfall to spend. A few months ago, the tug-of-war began with politicians calling for increased service and labor leaders calling for increased salaries. Only a few have urged the MTA to use this drop in the bucket to pay down its crushing debt load, and one way or another, it seems, the public will benefit in the short-term from the $40 million while the MTA’s long-term needs are ignored.

Lately, the battle has been heating up, and two competing editorials argued for the money this weekend. In the Daily News, John Raskin of Riders Alliance — of which I am a board member — and Gene Russianoff called for better transit service. The two write:

The need for expanded service is more pressing than ever. Ridership is at its highest level since 1950. The subways and buses are packed. Ongoing repairs from Sandy are causing additional hardships for R and G train riders, with future repairs likely to cause trouble on many other trains as well.

Riders are paying more money for less service. Fares have gone up four times in six years, at a pace that the state controller found to be more than double the rate of inflation. The base fare jumped from $2 in 2008 to $2.50 in 2013 — and the 30-day card increased from $81 to $112 during the same period. Meanwhile, the MTA still has not restored most of the service that was eliminated in 2010, putting back less than one-third of the $93 million that was chopped from the budget in the depth of the recession.

Restoring subway and bus service is not only possible because of a recovering economy; it is also necessary for New York to truly maximize its economic potential in the years to come. Our transit system is the lifeblood of the region’s economy, moving more than 7 million people every day to work, school, shopping and other appointments, and making a much-needed dent in productivity-killing traffic congestion. Improving service is an investment in jobs, economic growth and future tax revenue.

Specifically, they call for increased off-peak service for subways, restored bus lines, and more LIRR and Metro-North trains as well. I’m still hesitant to embrace the call for reactivating lost bus routes as those routes never had the ridership to justify service in the first place, but perhaps I’m falling for my own chicken-egg problem. If we add buses and encourage regular and predictable (or observable) service, maybe ridership will increase. If the MTA is investing in its service offerings, the other requests are no-brainers.

Meanwhile, on Long Island, the chair of the LIRR Commuter Council has issued his own wishlist in the form of a Newsday Op-Ed. He too requests an increase in off-peak LIRR service; more security measures for some of the system’s lesser-used stations; increased spending on cleaning, maintenance and waiting room hours; more wheelchair access; and fare reduction. His requests are reasonable, but it’s not clear if Mark Epstein understands how little $40 million is. If the MTA devoted the entire surplus to its fares, it would reduce any looming fare hike by less than one percentage point. It hardly seems worth contributing even a token amount of this money toward alleviating a fare hike because it won’t achieve much at all.

Ultimately, though, I’m still left with the uncomfortable feeling that everyone is arguing over something that will soon disappear. The MTA has a little extra money to spend for one year, but there’s no guarantee that money will remain in place in subsequent years. If the funding stream dries up, the agency will be left with a larger operating deficit, and we haven’t even accounted for the fact that the MTA’s budget rests on a shaky foundation of a net-zero wage increase. If net-zero is unobtainable, the $40 million will evaporate before a single extra train can roll down the tracks.

The politically expedient move is to spend the money on customers. The token gesture would placate politicians and irate straphangers. The economically expedient move is to spend the money reducing future debt loads even by just a little bit. I have a sneaking suspicion though the former will win out.

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BBnet3000 July 16, 2013 - 6:09 am

The reason we are paying more money for less service is because of debt service and other obligations to the past. All of the $40 million should go toward paying that down. A surplus is not a profit.

Larry Littlefield July 16, 2013 - 9:47 am

If you are still borrowing money to pay for “reimbursible” operating expenses, and painting, a surplus is not in fact a surplus.

All those audits by all those Comptrollers, and no one has had the guts to point this out. But it is right there in the budget documents.

Bolwerk July 16, 2013 - 2:34 pm

Eh, it is a surplus. A budget by definition has a temporal scope, and and what is left over afterwards is a surplus.

What people need to learn is a surplus is not as great as it sounds.

BBnet3000 July 18, 2013 - 12:22 am

Bolwerk: Indeed, a surplus is just more revenue or less costs than budgeted. In common parlance it is mistaken for PROFIT (for a public agency, this would be extra money).

Larry Littlefield July 16, 2013 - 6:42 am

Peter Abbate says it should be spent on 20/50, which would cost nothing.

stephen - nyc July 16, 2013 - 7:33 am

I will admit I don’t read everything that’s out there, so two questions:
1. Who is Peter Abbate? (yes, I know I could look him up).
2. What is 20/50 as it pertains to this topic?

Thank you.

Larry Littlefield July 16, 2013 - 9:08 am

Peter Abbate is the Assemblymember who always co-sponsors bills to increase pensions retroactively.

In the most recent session, he was part of a bill to exempt pensions from considerations as income when determining if seniors are eligible for enhanced property tax relief under the STAR program.

That enhanced relief was intended to help poor seniors (but not poor workers). But if you exempt all retirement income of retired public employees, guess what, they can claim to be poor and get out of paying property taxes. (They are already exempt from state and local income taxes).

They can always borrow the money, raise taxes on work income (like the MTA payroll tax surcharge), vut the pay and benefits of future public employees, or cut services to make up for it. Abbate has voted quietly for all of that, with the rest of them. So it will probably pass someday.

Skip Skipson July 16, 2013 - 8:43 am

20/50 – Reference to funding the pension plan?

$40 mil surplus is better than a multi-million dollar deficit, though a drop in the bucket. The money will end up going towards increasing service.

Even if all $40 mil went towards reducing debt, it won’t make much of a difference.


Nathanael July 21, 2013 - 11:23 pm

Increasing service is the wrong thing to do with the money.
Paying down debt is *also* the wrong thing to do with the money.

The correct thing to do with the money is to spend it on physical repairs so that things like this don’t happen:


Nathanael July 21, 2013 - 11:24 pm

– if the debt gets too big, you can always default on it;
– if you have lower service, you can always run more service in the future;
– but if the tunnel has collapsed, it prevents you from running service for decades.

BrooklynBus July 16, 2013 - 9:04 am

So let me get this straight, Ben. You are against spending this money on the customers, yet you want those walking free G transfers at Broadway and at Atlantic Avenue?

Benjamin Kabak July 16, 2013 - 9:13 am

I’ve never voiced support for free OOS transfer between the G at Fulton and Atlantic Ave. It’s simply too far and too prone to abuse. The transfer at Broadway has far more utility and carries with it a significantly lower (<$1M) cost to the MTA.

BrooklynBus July 16, 2013 - 10:11 am

But you did say you don’t think the additional $40 million should be spent on te passengers, or did I misread what you said?

Also, wouldn’t you think that the walking transfer in Manhattan between 59 St and 63 Street is also prone to abuse, and it was done?

Benjamin Kabak July 16, 2013 - 10:14 am

I’m not issuing a judgment one way or another on how the $40 million should be spent. It likely will be spent on increased service — which the Daily News essentially confirm today — but part of the discussion should focus around the MTA’s long-term financial outlook instead of short-term benefits for riders.

As to the 59th St. transfer, I can’t imagine anyone uses that as a legitimate in-system transfer these days. It doesn’t pass the convenience test. Think about how long it takes to get from platform to street level to platform when switching between those stations.

SEAN July 16, 2013 - 11:35 am

I understand your point with the $40-Million, however you neglect the instant gradification mode our mindset has been stuck in for so long & is getting worse. To quote WPIX’s Lionel, “Americans have the atention span of a gnatt.” Longterm is tomorrow not 20-years from now & that’s why fiscal reality doesn’t register with so many unless it’s packaged in a 2-minute sound bite.

Jonathan July 16, 2013 - 1:19 pm

I tried the 63d-59th St transfer (actually 63d to 60th) last week, but dropped my metrocard on the F train escalator and had to pay a second time anyway. I was coming from Main St Flushing, changed to the F at 74th/Roosevelt, and ended up on the downtown 6 to Union Square.

I wanted to use my phone on the way and the transfer allowed me to be outside.

ajedrez November 28, 2013 - 3:51 pm

Wouldn’t it have been easier to stay on the 7 (which is elevated until it hits LIC) and use your phone on that? (And then get off at Grand Central for the 6).

BrooklynBus July 16, 2013 - 2:17 pm

You are probably right about 59St. All I really wanted to do is point out the inconsistencies with MTA logic as to why they rejected the Atlantic Avenue transfer.

Justin Samuels July 16, 2013 - 2:25 pm

On weekends when there is no M service, I have used the 63rd Street transfer to quite a bit. People do use it.

Andrew July 16, 2013 - 11:05 pm

What inconsistencies? Have you even read the G report?

On page 7:

Under NYC Transit policy, MetroCard walking transfers between subways are established only to mitigate permanent or temporary service changes. The only permanent MetroCard walking transfer currently in the system is between the Lexington Av-63 St F station and the 59 St 456/Lexington Av NQR station; this was established to maintain a connection between the F and the Lexington Av Line when the F was rerouted from the 53 St Line to the 63 St Line in 2001. Walking transfers cannot be implemented on the G without modifying NYC Transit policy systemwide.

And further down on the same page, to explain why this particular transfer would not make sense even in the absence of a policy against it:

While a walking transfer between Fulton St on the G and the Atlantic Av-Barclays Center station complex may be useful for certain trips, the distance between the closest entrances is over 1,200 feet, significantly greater than any in-system transfer distance. The most direct route between the stations requires up to seven minutes to walk. This transfer would largely benefit trips within Brooklyn, since most trips to/from Manhattan would be faster by transferring to/from the AC at Hoyt-Schermerhorn Sts.

Given current ridership patterns, an estimated 4,000 trips per weekday would be eligible for a MetroCard walking transfer, slightly under half of which use pay-per-ride MetroCards, which would result in an estimated annual revenue loss of $1.34 million with restrictions to reduce multiple trips for the price of one entry, and $7 million without these restrictions. Given the density of subway stations in Downtown Brooklyn and the heavy commercial activity in the area, restrictions would not clearly distinguish between transfers that improve connectivity and entries for a second trip that use the walking transfer to avoid paying a second fare. A significant portion of these “transfers” would likely be stop-overs by riders who travel to the area and then, within the MetroCard two-hour time limit, re-enter the subway at Fulton St once they are done with their activities.

llqbtt July 16, 2013 - 9:23 am

Here’s an example, Ben of perhaps what you are referring to regarding bus service. Instead of discontinuing the B71 whose rideship was increasing, instead try something new, extend it through the BBT and have it end at South Ferry (as an example). Try to encourage ridership rather than discourage it. The F & G trains do not serve lower Manhattan and while the A & C do, they don’t all of lower Manhattan and it is a transfer anyway. Plus the F has plenty of riders already. Instead it would give the opportunity to try something new and potentially useful.

Benjamin Kabak July 16, 2013 - 9:25 am

My dearly departed B71, just a ten-yard walk from my front door.

Could not agree more. That bus didn’t have high ridership but it had increasing ridership. Pulling the plug instead of figuring out a better routing option, as BrooklynBus has often argued, seems like a knee-jerk reaction to me.

BrooklynBus July 16, 2013 - 10:08 am

29% increased ridership in five years mostly due to the extension from Grand Army Plaza to te Brooklyn Museum. Imagine if it went further east and it could be done without increase in operating costs if it utilized the current B45 route along St Johns Place.

SEAN July 16, 2013 - 11:39 am

Or just extend the B45 west over what was the B71.

BrooklynBus July 16, 2013 - 2:22 pm

You couldn’t do that since the B45 goes to Downtown Brooklyn. You would need to maintain some B45 service to Downtown Brooklyn, probably about half. You do not need all of it to go to Downtown Brooklyn since the B65 was rerouted to serve area a number of years ago and B45 service remained the same.

Even if you choose to bring back the B71 and send it to Ikea or through Manhattan through the Battery Tunnel, that would still be good. The MTA doesn’t want to do that because they know it would be too successful. Service at every 30 minutes would have to be increased to 20, then 15, then 10. Then tey would claim it is stealing riders from the subway because hey woud rather everyone ride like crowded animals than be comfortable since service would be cheaper to operate that way.

Andrew July 16, 2013 - 11:25 pm

Because, for an agency that is under perpetual fiscal attack, saving money is a bad thing.


(The proposed B71/B77 extension had a net cost of over $4 million annually – of the 35 proposed enhancements from 2008, only the proposed M13 was costlier. Source)

BrooklynBus July 17, 2013 - 7:51 am

There is a difference between saving money and saving money because you are short sighted and don’t want to increase system flexibility which has advantages like increasing the number of trips made which are never considered in MTA analyses of saving money.

They say that adding a new transfer in Downtown Brooklyn would mean a change in fare policy like that would be the worst thing they could do. They should have considered a time based fare for making trips a long time ago which would be fairer than the two hour transfer which still allows you to double back for one fare but necessitates two fares for many short trips. If someone has to pay a double fare, I would rather it be for extra long trips, not short ones that encourage the use of dollar vans.

Andrew July 17, 2013 - 11:53 pm

I have no objection whatsoever to improving service, whether on an individual line basis or on the basis of changing broader policies.

But costs cannot be simply ignored. Your apparent assumption, that all service improvements are self-sufficient, is simply false – the vast majority, in fact, are not. Perhaps in 1981 it was considered acceptable to ignore costs (although, frankly, I doubt it), but in 2013 it is not.

An out-of-system transfer in downtown Brooklyn could be considered as part of a package of service enhancements, although frankly, given both the long walk and the large number of people who make brief stopovers in the area and would get accidental free return trips, I don’t think that particular transfer is very promising. (The other one, at Lorimer and Broadway, is a lot more intriguing.) In any case, the G study was a G study, not a transfer policy study.

As I’ve said many times, I’d love to see unlimited transfers rather than just one – but I recognize that unlimited transfers come at a cost, and that the base fare would need to be higher than would be otherwise necessary. I’d be willing to pay a higher base fare in exchange for a more generous transfer policy, but I don’t know if I’m typical.

BrooklynBus July 18, 2013 - 10:37 am

Unlimited transfers would come at a cost. And has anyone done a study of what the true cost would be, not only to the MTA but a study that includes economic benefits to all?

For 50 years the NYCTA including MaBSTOA said it couldn’t afford to have free transfers between all buses, but when it was finally done the additional cost wasn’t nearly as great as was feared because no one predicted all the additional ridership it would cause. I always said that if a free transfer were allowed in all sensible directions between all intersecting buses ridership would increase by 30%. Everyone said I was crazy. But look how mch ridership increased when it was allowed. I think it was about 30% so the increased costs were nowhere near what was anticipated. And it went up even more when bus subway transfers were allowed.

If we had a time based transfer ridership woud skyrocket again which would reduce the negative impact of those making round trips for a single fare which wouldn’t even be that many because most round trips are not made within a two hour period.

Of course you coud argue that more passengers mean increased service and that costs money. Using that logic we should make mass transit as inconvenient as possible to encourage reduced ridership so we can provide less service and reduce the deficit. Correct?

Andrew July 23, 2013 - 10:23 pm

I’m sure the MTA has an estimate of the revenue implications of such a policy. (You think they just make these things up?)

Bus ridership has been in steady decline for decades, with the single major exception of the period closely following the introduction of MetroCard transfers, unlimiteds, and bulk discounts. The fare dropped (by more than 50%, for bus-and-subway riders), and of course ridership went up. And to accommodate that new ridership, a lot of service had to be added. The increased revenues did not cover the increased costs.

Prior to MetroCard, bus ridership was declining. Whatever transfer policies changed during that period had no significant impact on ridership.

A time-based system would only induce a slight increase in ridership. Ridership certainly wouldn’t skyrocket, since, relatively speaking, very few riders make (or decline to make due to the fare) bus-bus-subway and bus-subway-bus and bus-bus-bus and subway-subway (with OOS transfer) trips, and anybody who makes such a trip with any regularity already uses an unlimited. Most of the people who would benefit from such a policy are people running errands, who currently pay two fares for a round trip or a stopover. The revenue loss would be substantial; the ridership gain would be much less so.

But you have completely ignored my primary point: “But costs cannot be simply ignored. Your apparent assumption, that all service improvements are self-sufficient, is simply false – the vast majority, in fact, are not. Perhaps in 1981 it was considered acceptable to ignore costs (although, frankly, I doubt it), but in 2013 it is not.” The MTA simply cannot spend more on service than it brings in in fares and other revenue sources.

As I have said, I would like to see a broadened transfer policy. I hope it is considered in conjunction with the next fare hike.

BrooklynBus July 24, 2013 - 9:55 am

There you go again and mislead. Bus ridership went up 30% when free bus transfers replaced add a rides. Of course ridership went up even further when subway transfers and discounts were added.

I thought the goal was to increase mass transit usage. If we use the rational that any fare reductions or improved service will result in increased ridership which will result in additional service having to be added that cannot pay for itself, we shouldn’t make these improvements in the first place.

Indeed that is the exact logic the MTA is using and why we are in the mess we are in. Of course anyone who needs a bus to subway to bus regularly would by an unlimited. However, substantial numbers need to make occasional trips where an unlimited is not justified and are discouraged from using mass transit because of it. Those are precisely the ones we need to encourage to use mass transit. Instead they be be taking two long and slow local bus trips when they may be able to use a bus subway bus combination instead and save 20 minutes, but don’t in order to save a fare. And if two or more are traveling together, the extra fares are considerable.

The result is we are providing extra bus service we might not need because people are using slow buses instead to save a fare, the same slow buses you want to speed up.

In any of the MTA’s analyses regarding revenue implications, they never consider time saved by those able to make shorter trips with a time based policy, less service that could be privided or new trips that would be made or attracted from dollar vans. They just do straight forward projections. That’s why NYCT resisted introducing free bus transfers all over for forty years and insisted they would not result in additional trips when in fact ridership increased by 30% as a result of that change.

No one is saying that costs should be ignored. But realistic analyses need to be done that consider all the factors involved also without revenue being the only consideration. Greater economic benefits as well as the benefits of more using transit and less using cabs also need to be considered.

Bolwerk July 16, 2013 - 12:01 pm

I made Komanoff buttsoar for saying this, but Russianoff is up to his usual theatrics. Service should not be restored based on a single percentage digit rounding error in the MTA’s budget of billions$. This is counterproductive for the system. All it takes is a slight economic downturn (and hello, the GOP still controls the House) for this to disappear entirely.

By all means, put it toward saving money later, either paying down debt or making repairs. Pick the one with the higher rate of return. But keep in mind that, spread over the system, this amount is so little that it would only kinda be missed if the MTA just burned it.

Nathanael July 21, 2013 - 11:21 pm

The CORRECT move is to spend the money repairing the “beyond useful life” capital assets. For instance, signal system replacement, viaduct repairs, tunnel lining repairs, etc.


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