The MTA should not raise fares in 2021

I originally published a version of this piece on my Patreon last week and wanted to share it here as well. As a reminder, Second Ave. Sagas is fully reader-funded, and I will be revamping the Patreon tiers in the new year. Have a safe and healthy beginning to 2021.

With the news emerging from Washington a week and a half ago that the MTA will secure $4 billion in pandemic relief funding from the federal government, the MTA’s Doomsday budget has been averted for now. The agency received only one-third of the $12 billion it requested and may still face a deficit of around $1 billion for 2021 before the figures balloon in the out-years. But that’s something the agency will address down the road. The service cuts, which would have hamstrung New York’s post-COVID recovery before it even began are off the table, at least until the country goes through this unnecessary dance again later next year.

Instead, the transit advocacy world’s focus has turned entirely to the 2021 fare hikes. Over the past few weeks, the MTA has launched the process of soliciting public feedback regarding their fare hike proposals, and the early reviews are negative across the board. Although the MTA has taken great pains to stress how the fare hike was scheduled for 2021 and was going to happen regardless of the multi-billion-dollar hole the pandemic has blown through the agency’s budget, no one is happy with options on the table.

I wrote about those various options a few weeks ago, and examined why the MTA would even consider eliminating time-based Metrocards. The public comments have struck similar chords. No one wants to see unlimited ride cards, which encourage transit usage and eliminate transfer penalties, eliminated, and in fact, many politicians and advocates are taking an even stronger stance this year: They are urging the MTA to skip its biennial fare hike entirely.

It’s almost ancient history these day, but the MTA’s regularly scheduled fare hikes grew out of the 2008 recession and 2010’s own version of the Doomsday budget. As part of the state’s rescue package, in exchange for the payroll mobility tax, the MTA agreed to a series of ostensibly modest fare hikes every two years in perpetuity. This was designed to foist some of the MTA’s own economic pain onto the shoulders of its riders and allow for certainty in revenue increases. That certainty, of course, went out the window as pandemic ridership has dropped to barely 30% of normal, but the fare hikes must go on, or so says the MTA.

Should they though? The question of delaying the fare hike is both an easy one and complicated one. Or maybe it’s just an easy one. For starters, the MTA’s revenue projections for the fare hike are modest. The agency has a need for $8 billion over the next few years, but in the short-term, fare hikes are expected to cover only a small portion of the budget gap.

Setting aside the revenue from bridge and tunnel toll increases (which should continue on sound policy grounds), the MTA expects the fare hike to net just $90 million in 2021 and only an additional $189 million in 2022. Meanwhile, those who are still riding the subways and buses are essential workers who are keeping the city healthy and afloat, and those essential workers are going to be the bulk of ridership well into 2021. Does it make sense to attempt to balance even a small portion of the books on the backs of these folks who have little choice but to ride? Is it a fair and just policy decision?

The answers to those questions depend on whether one views transit as a public good to be subsidized or a quasi-private benefit that should be rider-funded. I fall into the former category. As a strong believer in the claim that transit is a public good and should be treated as one, these fare hikes amidst a pandemic — hikes that will burden essential workers at a time we need them most — are bad policy and should not be approved this year.

There are other secondary considerations at play as well. One is the current elasticity of ridership. In the Before Times, fare hikes generally had little impact on ridership as transit remained the most cost- and time-efficient way to travel. Lately, though, transit ridership has been very sensitive to outside effects. When it snowed on Thursday, bus and subway ridership dropped by nearly 40%, and even the rainy days this fall saw ridership dip by nearly a quarter. Thus, the same expectations may not apply, and with a skeptical public looking for excuses to avoid transit, higher costs could turn some casual riders away at a time the agency needs more fare revenue.

That brings me to point two. Unfairly or not, the MTA has borne the brunt of bad publicity this year. Some of the focus has been around crime (which is up in the subway as trains have emptied out, but still sits at levels comparable to the late 2000s/early 2010s); some of the focus have been around unfounded fears of transmission risks. As the MTA looks to welcome riders back to the system and assuage concerns about the relative safety of transit, raising fares may be counterproductive and, again, a bad policy decision.

Finally, politics rears its ugly head. Even as the MTA pleads poverty and begs for more and more federal funding, even as the MTA looks to foist a fare hike onto essential workers, Gov. Andrew Cuomo is again withholding money earmarked for transit or diverting millions to his pet projects. In a statement before the MTA Board this week, Reinvent Albany’s Rachael Fauss levied this charge:

The MTA board must not approve $148M in fare hikes for 2021 while Governor Cuomo is planning to raid at least $600M in MTA dedicated funds. As the MTA said in July, it is asking for $12B in federal emergency funding, including $600M to compensate for the loss of “state subsidies.” (“Subsidies are a euphemism for dedicated taxes, in this case primarily Metro Mass Transportation Operating Assistance “MMTOA” funding.) This $600M was added on top of its spring deficit of $10.3B which already accounted for COVID-19 revenue losses from ridership and its economic impact on MTA dedicated taxes.

To be clear, we fully support the MTA getting billions in much-needed federal COVID emergency aid, but at the same time more federal aid is not a license for the Governor to raid at least $600M of MTA funds.

The details get a little wonky, but effectively, New York State is cutting the MMTOA by approximately 35% while state budgets are being cut by only 20% across the board. In other words, the MTA is getting approximately $600 million less than it should have due to Cuomo’s budget moves. Again, riders should not be asked to pick up any of this slack while the governor looks to wash his hands of this decision.

Ultimately, the decision to raise the fares is a political one, and the MTA Board may not have much cover to vote down the fare hikes this time around. But they should. It’s bad policy at this moment in time to attempt to raise revenue off the backs of essential workers who have pushed the city through the pandemic, and it gives cover to bad budgetary decision-making from New York’s politicians. The MTA should not approve a fare hike for 2021. It is the right choice.