Second Ave. Sagas

Category: Fare Hikes

  • Service cuts, fare hikes ‘off the table for now’ due to COVID relief money

    MTA transit fares will not increase for the the foreseeable future., the governor announced earlier this week. (Photo: MTA / Jessie Mislavsky)

    In a boon for riders, the MTA is ending 2021 much as it began the year: by delaying a planned fare hike for at least six months and putting off planned service cuts indefinitely. The news, first announced by Gov. Kathy Hochul and later clarified by MTA Acting Chair and CEO Janno Lieber, will come as welcome news as subway riders continue to return to the system and came about due to various federal COVID relief bills.

    Hochul first announced the pause on Monday before flying to DC to joint President Joe Biden for the signing ceremony of the infrastructure bill, and she made it sound as though the BIF was the cause of the pause. She said:

    We’ve done the numbers. And as a result of the money we’ll be receiving from the president signing the bill today, I’ll be witnessing this. We anticipate that there’ll be no fare hikes for the MTA. So therefore, those of you who are commuters on the MTA and have been anxious about how much this is going to go up, especially in this era of inflation, when it just seems when you’re just trying to get your head above water and come out from under a long dark period of the pandemic, and you might get a little bit more money in your paycheck, that the cost of living from gasoline to the cost of turkeys in another week and a half, this is really affecting people’s ability to just put food on their table. And I’m really excited to say that we will not have to raise the fairs or have any service cuts. The service cuts that were planned for 2023 and 2024 are now off the table for MTA commuters.

    The MTA later clarified that the delay in any fare hikes and the indefinite postponement of service cuts is due more to COVID relief bills rather than the recent infrastructure deal, but either way, riders are the ones who stand to benefit. In comments on Monday to reporters during the MTA Board committee meetings, Lieber added context to Hochul’s promise. The MTA will delay any consideration of fare hikes for at least six months, if not longer, and the service cuts are no longer part of the agency’s budget projections. “We are not planning to reinstitute those hearings and that process,” Lieber said of the fare hikes, once planned for 2021. “For now, fare hikes are off the table; service cuts are off the table…We do not want to discourage people from coming back by raising the fares.”

    For the budget wonks among us, Lieber explained how the various COVID and infrastructure bills allowed the MTA to halt these harmful cost increases and service reductions. Effectively, since the BIF enables the MTA to receive more money directly, the agency does not have to borrow as much to fund its capital plan. The debt payments associated with capital borrowing are applied to the operating budget so more direct funding means less deficit funding. Additionally, a few days ago, New York, New Jersey and Connecticut finally reached agreement on COVID relief funding for transit, and the MTA no longer has to borrow against future revenues to ensure cash flow remains consistent. Thus, the agency had the financial leeway to hold off on fare hikes for now and defer service cuts for the next few years.

    Reading the political tea leaves allows us to catch a glimpse of when the agency may reconsider fare hikes, and it’s very unlikely to be during 2022. Lieber told reporters that fare hikes could be implemented “in theory” over the summer or in October, but that would align fare hikes with votes in a hotly-contested gubernatorial primary or general election next year. Hochul, fighting for a term of her own, is not going to permit the MTA to raise fares before she secures her seat, and Lieber and the MTA are more than willing to go along with their boss’ plan. “We are,” Lieber said, “taking fare hikes off the table for at least six months and maybe well beyond that.”

    What happens beyond the election in 2022 is anyone’s guess. MTA leadership has not been shy in noting that the COVID relief money is driving this policy. “The deficit is looming because of COVID when the Washington money runs out,” Lieber said, and he wants the legislature to come up with a funding plan that isn’t as heavily reliant on ridership as the MTA’s current projections. After all, COVID took a huge bite out of ridership, and the MTA — which must balance its budget by law — doesn’t want to cut service or raise fares as it works to rebuild its rider base. Currently, weekday ridership is around 55-58% of what it was before the pandemic, and the agency does not expect another big bump until early January when more commuters return to their offices. Thus, ridership revenue will continue to lag as it has since March 2020, and the state, the MTA says, should find more equitable ways to fund transit that do not fall so heavily on the wallets of passengers.

    That’s a discussion that will have to unfold over the next few months and years. For now, as the MTA freezes fares, I ask is this good policy? And is this good politics? By freezing fares, the MTA is foregoing approximately $200 million in additional revenue that could be used to further pay down past debts or finance operations. As the money isn’t a 1-for-1 replacement from the feds, the MTA, through a decision by the Governor, is foregoing this added revenue. In a vacuum, this may not be great policy, but it’s very good politics.

    While you or I may ride the subways regularly, the MTA still must work to convince New Yorkers to come back to transit. Those missing 40% of riders — which can amount to 2 or 2.5 million swipes every day — won’t come back by themselves, and the MTA will have to work for it. As many riders remain essential workers who never left the system and others look at various options, the MTA is wise to keep fares down, as they were earlier this year when they delayed the fare hike in January. The agency isn’t about to reduce fares as some cities have done, but not raising the rates at a time when service isn’t better and riders need to have faith in the subway is good politics.

    It’s also good personal politics for a politician to avoid fare raises during an election year. While the MTA was founded to remove politics from fare decisions, we saw during Andrew Cuomo’s reign just how easy it is to politicize transit. If Hochul wants to do us all a favor by keeping fares where they are for another year, I won’t look this gift horse any more closely in the mouth than I already have.

    And so the fares remain the same. More importantly, the service cuts, which would exacerbate a death spiral, remain off the table, and the MTA continues along, bending to the will of the governor who is in control and allow the public some measure of relief as New York continues its late-COVID rebound.

  • MTA to shelve 2021 fare hike for now, citing the economic toll of the pandemic on NYC

    Amidst an ongoing pandemic that has decimated the economy and reduced daily transit ridership to essential workers traveling to keep the city and themselves afloat, the MTA Board has tabled talks of a fare hike, agency officials confirmed on Monday. The decision comes after months of public pressure by both elected officials and transit advocates, and it marks the first time since biennial fare hikes began in 2010 that the MTA Board — and by extension, the governor — has opted to cancel or at least postpone a fare hike.

    Rumors that the MTA would be delaying the fare hike had been swirling since the New Year, and as the local pile-on from elected officials continued throughout the holidays and into 2021, it seemed as though the politics of a mid-pandemic fare hike would make the move untenable. CBS 2’s Marcia Kramer broke the news, and MTA Chairman and CEO Pat Foye sent out a statement a few hours later explaining the decision:

    “The COVID-19 pandemic has wreaked economic havoc — devastating the MTA’s ridership and revenues and bringing them to levels far worse than the Great Depression. It has also hit people of color and low income communities hardest, many of whom are the very same essential workers that have been on the frontlines of this crisis and who are also most dependent on mass transit.

    “As part of our biennial review of fare and toll policy, the MTA conducted the unprecedented level of outreach this year required, holding eight public hearings and receiving 2,100 public comments. What we heard at these hearings was that people are suffering and cannot shoulder even a modest fare increase right now.

    “Buoyed by President-elect Biden, incoming Senate Majority Leader Chuck Schumer and Speaker Nancy Pelosi, the MTA also has hope for $8 billion in additional pandemic relief and continued federal investment in mass transit in 2021 and beyond. For these reasons, the MTA has decided to postpone the planned fare increase for several months. We plan to move forward with a discussion and vote on recommended toll changes in February.”

    According to Clayton Guse of The Daily News, the MTA will not move to raise the fares until at least the summer, and I expect the agency to delay the hike until the pandemic abates and transit ridership rebounds significantly.

    The city’s transit advocates were quick to praise the move. “When riders organize, our governor listens. With offices closed and Broadway dark, a transit fare hike would fall overwhelmingly on essential workers and New Yorkers with no other way to get around beside the bus, subway, and paratransit,” Riders Alliance Policy & Communications Director Danny Pearlstein said. “With the regressive MTA fare hike off the table, Governor Cuomo must now put a stop to state raids on transit-dedicated funds. While riders are breathing a sigh of relief, the governor must craft a bold, progressive solution to his transit agency’s money woes.”

    For now, the relieve is temporary. The MTA will seek to raise fares within the next six or twelve months, but the decision this week is the right. Last month, as the MTA seemed on a collision course with a public economically drained by the pandemic, I wrote a piece urging the MTA to delay the fare hike, and the reasoning holds up. On the backs of essential riders, the MTA would have raised approximately $79 million in total by implementing a 2021 fare hike, and the agency is still requesting $8 billion from the incoming Biden Administration. It would have been political suicide for any fare hike to go through, and from conversations I’ve had with MTA and state sources, it seems clear the Governor knew this.

    So what happens next? First, the mystifying debate over the future of unlimited ride fare cards will be delayed a few more months, and that may give us more time to understand why Larry Schwartz, architect of New York State’s current vaccine rollout plan, wants to eliminate them. Second, the bridge and tunnel toll hikes will continue, and this is good public policy. Drivers should be expected to pay more, both as a way to capture the externalities of driving and as a way to encourage transit usages.

    The MTA hasn’t revealed the specifics of the planned toll hikes, but we know that crossings could increase to as much as $6.70 for New York E-ZPass customers. We also know the MTA is considering variable tolling based on time of day and/or on so-called Gridlock Alert Days, a quasi-congestion pricing plan. Resident discounts and carpool incentives may be reduced as well. Again, these are all fine proposals that should be adopted, especially as bridge and tunnel traffic has recovered significantly faster than transit usage. (Bridge and tunnel traffic is down by only 16-17 percent from pre-pandemic figures while subway and bus ridership have steadied at around 30 and 45 percent of normal, respectively.)

    Still, the MTA plans to reduce some service. The commuter rail lines will see some trips eliminated as part of a pandemic-related “right-sizing” of weekday service, and New York City Transit has had to cancel around 2 percent of scheduled trips in recent months due to crew unavailability, as Jose Martinez reported on Monday. The LIRR/Metro-North cuts will be approved by the MTA Board, but the subway service reductions remain off the books. Ideally, the MTA won’t have to make further cuts, but the budget remains shaky at best.

    The big X Factor though involves federal funding. With a technical Democratic majority in the Senate and control of the House, the Biden Administration should be able to secure the rest of the funding the country’s transit agencies have requested, including $8 billion the MTA wants, and the next COVID-19 relief package should include this funding, if Democrats get their way. With no room for error in the Senate, that remains a reasonably sizable “if,” but we should know soon how aggressive Democrats in the Senate will be in determining the future of the legislative filibuster and their political success. The city and the MTA need a strong federal response.

    For now, though, cooler and saner heads have prevailed, and transit fares will not increase in April, as originally anticipated. This is welcome news for a city and its workforce hoping to reach the light at the end of the pandemic tunnel and the right move by the MTA and Gov. Cuomo.

  • 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.

  • As part of the 2021 fare hike, the MTA is considering eliminating unlimited ride Metrocards. Why?

    No matter what happens with its Doomsday budget, whether federal transit funding comes through or not, the MTA is going to raise the fares next year. The uptick is part of the never-ending, biennial fare increases that see the cost of transit inch upward in New York City every two years like clockwork and not, as MTA Chair and CEO Pat Foye has repeatedly said, part of the MTA’s effort to close its multi-billion-dollar budget gap.

    In other words, the fares would be going up with or without the pandemic next year, and while New Yorkers have grown numb to the drumbeat of ever-escalating transit costs, this year’s menu of potential changes to the fares sure has raised eyebrows among the city’s transit cognoscenti. In particular, as part of the strategy of throwing everything against a wall to see what sticks, the MTA has proposed eliminating unlimited 7- and 30-day Metrocards. The agency had previously cut the 1-day Fun Pass and a 14-day card a few years ago due to low usage rates, but it’s not clear why the MTA would look to do away with passes that incentivize more transit usage. To make matters worse, the rationale offered by Larry Schwartz, Andrew Cuomo’s MTA enforcer and right-hand man on the agency board, were mystifyingly mysterious.

    We’ll get to all the politics and policy decisions in a minute. Let’s start with a look at the proposals on the table.

    Usually, when the MTA prepares for these fare hikes, the agency offers two menus of fare hike options. But after increased criticism a few years ago from MTA Board members who felt they were denied a say in the policy of the fare hikes, the agency has opted for a series of blanket policies and a variety of logic games. It’s not yet clear how the MTA is going to get from here to a concrete set of new fares, but the net impact of the changes to the fares will be a 4% jump in fare-based revenue. The table below, which the agency has labeled “for illustrative purposes” only, offers a glimpse at the “policy options” under consideration.

    The MTA put more details online last week, and here we have a quasi-glimpse of the various proposals at play. The permutations are confusing with a lot of conditional statements, but the MTA is essentially considering maintaining the base pay-per-ride fare or increasing it by 25 cents. If the pay-per-ride fares increase, the unlimited ride cars would see smaller increases — a 7-day card could cost $34.75, up $1.75 from the current price, and a 30-day card could cost $134, up $7. If the MTA holds the base fare, the weekly pass could cost $36 or $3 more and a monthly could cost $139, up a whopping $12 from current rates. The monthly hasn’t seen this large an increase since 2010 when the cost went up from $89 to $104.

    In this great puzzle of either-or-maybe options, the MTA has also said it could keep the fee for new Metrocard purchases at $1 or increase it to $3 per card. This fee, which is avoidable if you stick an expired Metrocard into a vending machine, should be increased as both an incentive to get riders to switch to OMNY and a way for infrequent or tourist riders to offset commuting costs for transit regulars.

    But I’m burying the lede: The MTA is considering eliminating “one or more” time-based passes. There is no trigger here or an either-or option, and it’s not clear what will happen if the MTA decides to embrace the proposal. That is, the move to cut unlimited ride passes stands alone, and the MTA has not the public what the trade-off would be. Would it mean no increase in the pay-per-ride fare or a separate slate of fare proposals? We do not know, and instead, this is a pure policy consideration by the MTA, allegedly separate from the ongoing pandemic slump. It also makes absolutely no sense.

    Generally speaking, one goal of a well-run public transit system in a heavily populated cit is to incentivize transit usage. The only way for millions of New Yorkers to move through the city each day efficiently is via high-capacity,, rail, and the more riders the better. Unlimited Metrocards were a revelation for New York City and one that unlocked the transit system for millions. For a one-time upfront fee each month (or week), potential riders could swipe as many times as they wanted, and taking short trips — whether by bus or train — became second nature. It was, in fact, best to maximize monthly swipes to get a better deal. At a time when the MTA needs to attract riders to shore up its finances and help avoid crushing gridlock on city streets, doing away with time-based incentives is foolhardy.

    If anything, in fact, the MTA’s unlimited ride, time-based passes should be cheaper. Currently, the breakeven point for a 30-day Metrocard is a shade over 46 rides and for a 7-day card, 12 trips. With the 47th swipe in a 30-day period, it becomes more cost-efficient to pay $127 than to buy rides at $2.75 per trip. This is generally a high bar to clear when compared with international norms. Most international transit systems heavily incentivize time-based passes – in Stockholm, for instance, the break-even point for a 30-day pass is 26 rides and a 30-day Navigo pass in Paris pays for itself after the 39th trip. So the MTA already over-burdens users of time-based compared with international peer systems.

    Meanwhile, as OMNY completes its system-wide rollout in a few days, the MTA should look to further incentivize transit while making the system more accessible through fare capping. In essence, fare capping means that after a certain number of rides per time period – whether it be day, week or month – a rider no longer pays for additional trips. In London, for example, generally, rider aren’t charged each week after their 15th trip. This allows riders who can’t afford a monthly pass upfront to enjoy the benefits of limitless transit after reaching a fare level. The MTA has yet to determine if they will implement fare capping with OMNY, but this, rather than the elimination of time-based passes, is the policy discussion worth having.

    So why is the MTA considering a shift in fare policy that would disincentivize riders while shifting away from international norms? The answer appears to have arisen in the form of a half-formed rant by Cuomo aide and MTA Board Member Larry Schwartz during last month’s board meeting. Here’s what Schwartz had to say:

    I’m going to take the same position I took two years ago. I don’t think the people who depend on the MTA’s mass transit system should have to pay more. It’s for the casual rider that I believe should be paying more in offsetting any increases that the riders who depend on the system. That is why I like freezing the New York City subway fare at $2.75 because it would actually mean a $2.65 fare. It would be a 10 cent decrease. That is why I believe the 30-day commuter – these are people who depend on the mass transit system to get to work as opposed to the casual daily rider that buys an off-peak ticket or to go to a show or restaurant, the doctor or has a trial in New York City. So I’m all in favor of that.

    The other thing I want to say is that right now, I am somewhat in favor of eliminating the time based passes because I believe there is a lot of fraud associated with them…I would really like to see the 7-day time based fares on ZIP code or something. Who is purchasing those 7-day time-based passes? Because again, I am not here to hurt the people who rely on the system the most. The people that can afford to should pay more, the people that cannot shouldn’t. But I’m also concerned with the 7-day and the 30-day. There’s been a lot of fraud associated with these things that hurt people who pay the 2.75 trip on New York City subways.

    Again, my goal is not to see the base fare increase for both the bus and subway riders and also for those people who depend the most on commuter rail, those monthly pass holders. Again, the people who depend on the system the most should be held harmless, and the people that are casual riders who use the system….um, you know, they can…It’s the best deal in town. They’ll never find an alternative source of transportation other than walking to get from Point A to Point B whether it’s coming into the city or going from one part of the city to another than it is the MTA system….My thing is for those casual people, they can probably absorb a little bit more.

    So much of what Schwartz said makes no sense, and if you can make heads or tails of these arguments, more power to you. Even though in pre-pandemic times, over 50% of riders used time-based cards, Schwartz thinks they’re used only by casual riders. He also seems to think those riders don’t rely on the system most and should be socked by higher fares, again a shift from a rational fare policy. I don’t know how or why he thinks eliminating unlimited cards would lower the fare, but the biggest red flag is in his evidence-free claims of fraud.

    The last time Schwartz raised an argument like this, it sent us down a years’-long path arguing over fare evasion and its impact. Now, Schwartz, without providing a shred of evidence, claims that 30-day cards are subject to “a lot of fraud.” On its face, that makes little sense as each time-based card carries with it an 18-minute timeout to combat fraud, and Schwartz has provided nothing to back up his claim. But we have to listen to it because he’s the one on the board closest to the Governor, and the Governor is responsible for the decisions made within and about the MTA.

    So here we are, staring at fare hikes that involve a lot of moving parts and a threat to cut off the city’s unlimited cards, transit lifelines for millions and one that makes riding easy. If the MTA is truly considering eliminating these cards, they owe it to the public to explain why, and Schwartz owes it to the public to present evidence of this fraud. Otherwise, the MTA should leave well enough alone and make these time-based cards more readily affordable for everyone rather than cutting them out entirely.

  • Nixing pay-per-ride discounts, MTA Board approves April fare hike

    Hot on the heels of yesterday’s joint Governor-Mayor MTA reform proposal and after delaying a vote on the topic last month for no clear reason, the MTA Board on Wednesday approved a fare hike that eliminates the pay-per-ride discount and keeps the break-even economics of an unlimited card in place. Due to the one-month delay, the agency will lose out on $30 million this year, and the new fares will go into effect on April 21.

    Here’s a look at what we’ll all be paying in two months. The increases clock in between 3-5% depending upon the service.

    For pay-per-ride cards, this move finally wipes out the MTA’s bulk discount, long a target of fare hike proposals. Currently, the MTA offers a 5% on purchases over $5.50, making the effective fare $2.62. But come late April, all riders who aren’t buying time-based cards will pay the same $2.75 per ride. The unlimited passes go up by a similar percentage, but the breakeven points for each card remains the same. As it is today, on the 47th swipe, a 30-day card is a better deal than paying as you go, and on the 13th swipe, a 7-day card saves you money. I’ll have more thoughts on the MTA’s approach to fare structure in the coming weeks.

    In comments following the vote, Fernando, Ferrer, one-time Bronx borough president and the interim chairman of the MTA, had this to say: “It’s painful for a lot of reasons, for a lot of people, but we had to do it, and it is within inflation. So it wasn’t exactly a mugging.” You can take that line to the bank.

    Meanwhile, the MTA also announced a new series of internal cost-cutting and performance measures to go with yesterday’s congestion pricing/reform proposal, including a promise that each MTA subagency will issue consolidation plans that identify $500 million in cost savings. I’ll have more on this soon, and you can read about it here in the agency’s own press release.

  • The Delayed Fare Hike Edition of ‘That’s No Way To Run a Railroad’

    A $3 base fare for subway and bus rides were among the fare hike options the MTA decided to push off until February.

    When 2018 drew to a close, a level of certainty seemed to surround the MTA. The long-planned L train shutdown loomed four months out; a looming vote on fare hikes seemed to be a mere formality; and with momentum building for a congestion pricing plan, Andy Byford’s Fast Forward plan seemed well on the way to reality.

    But then, thanks to Governor Andrew Cuomo, everything changed in the blink of an eye. Cuomo, circumventing the MTA Board, canceled the L train shutdown, sidelined Andy Byford from the project, and then capped off his month by pushing the MTA to delay the planned vote on the fare hikes. It was a flurry of activity orchestrated by the man in charge of the MTA who keeps insisting he isn’t pulling the strings, and it’s created uncertainty — and potentially budgetary pressures — at a time when the MTA can least afford to lose on the money.

    The latest chapter in this saga began to unfold last week shortly before the MTA Board meeting that was planned to feature the fare hike vote. Now, as much as New Yorkers don’t want to pay more for what many perceive to be declining subway service, biennial fare hikes have been a feature of the MTA since the structure was approved as part of the 2010 bailout. Every two years, the fares increase by a modest amount, and these hikes, the best tool the MTA has for guaranteed revenue increases, have been met with relatively little resistance as the fare jumps are built into the budget.

    But this time, after torpedoing the L train plans, Cuomo started speaking out against fare hikes, as Emma Fitzsimmons reported in The Times last week. Cuomo, expressing “no faith” in what his MTA says, urged the agency to avoid a fare hike. “Tighten your belt,” he said. “Make the place run better.”

    In the same piece, former Cuomo aide and current MTA Board member Larry Schwartz said he was examining ways to tie fare hikes amorphously to, as he put it, “performance improvements” or would be otherwise “dead set” on voting for a hike. And then, during Thursday’s meeting, the MTA simply punted. Before any debate or alternative proposals could be presented publicly, the agency tabled all talks. “I’m concerned that we’re making a decision today when we need to be a little slower, a little more thoughtful, and need to consider a few more options,” Cuomo appointee Peter Ward said, moving to delay the discussion. The Board quickly decided to wait on debating fare hike proposals until the next meeting, currently scheduled for Wednesday, February 27.

    What was so strange and abrupt about the move was how quickly it came about. The MTA Board had heard only some words from the governor and vague rumors of other proposals. After the vote, Schwartz said his efforts to develop a proposal tied to performance metrics was “in vain” despite internal conversations. To me, this is a good thing, as any attempt to tie guaranteed revenue to better service is one way to put the MTA on a path to a death spiral. If the agency can’t provide better service, the agency can’t raise fares or generate revenue for service at which point its only option is to cut service, thus leading to worse service, less revenue and that dreaded death spiral.

    Much like with the L train shutdown shutdown, the “why” of the delayed fare hike vote remains an open-ended question. Dana Rubinstein tried to break it down. I’d urge you to read her entire piece, but I found this excerpt a succinct summary of this mess:

    Gov. Andrew Cuomo controls the MTA’s L tunnel plans and the color of its tunnel tiles, but he claims he doesn’t control the MTA. The governor says he has “no faith” in the MTA’s leadership, which he helped appoint. He thinks the MTA doesn’t actually need more than $300 million a year in new fare revenue, because it can just “tighten” its belt and “make the place run better.” But he does think the MTA needs $1 billion a year in new revenue from congestion pricing, which he wants to see imposed on New York City. “It’s really hard to decipher,” said one board member, referring to the general state of MTA politics right now.

    It’s well within Cuomo’s rights as the head of the state to attempt to reform the MTA, but running the agency as a fiefdom and operating behind closed doors at a time when the agency needs public support does little but undermine the MTA. With uncertainty clouding the fare hike discussion, it could now be a few months before the MTA can generate the revenue it claims it needs to avoid massive budget shortfalls. If new fare hike proposals are presented next month, the agency may need to hold additional public hearings, wait to vote on the new proposal and then wait to implement these proposals. Instead of a fare increase — and guaranteed revenue come April 1 — the MTA may have to wait to increase fares until July, losing out as much as $90 million it can’t afford to see wiped off the books. Ultimately, too, the public will pay for this politicking through increased hikes or service cuts.

    To me, this is backsliding. After years of a commitment to transparency and a big show by Byford to produce a plan to do better, Cuomo has seemingly stepped in to blow everything up, and no one knows why. Did he do it because congestion pricing is now significantly closer to reality and he seems concerned about the political fallout from that move? Is he worried Corey Johnson and other city reps are making noises about re-asserting local control over subways and buses? Did someone actually shake him by his lapels to get him to focus on the L train and, by extension, the MTA?

    No one yet knows why Cuomo is suddenly doing what he’s doing. But shortly after the fare hike vote was delayed, Cuomo had an about-face and acknowledged that the MTA would have to implement a rate hike sooner rather than later. It was an odd admission from the governor who had spent weeks slamming the agency for planning to raise fares and one that left observers scratching their heads even harder. Right now, Cuomo’s endgame is opaque and playing out on a day-to-day basis. Where this ends is up in the air, but riders, agency officials and MTA rank-and-file don’t know which way the wind will blow on any given day. And that’s no way to run a railroad.

  • Fare hikes and service cuts and death spirals, oh my!

    A $3 base fare for subway and bus rides are among the fare hike options the MTA is currently debating.

    On its own, a fare hike doesn’t portend a looming transit death spiral. In fact, regular and predictable fare hikes for, say, a subway ride designed to ensure that revenues remain fairly consistent with inflation and other costs over the long term can be a sign of a robust and well-managed transit system working to compete with other modes of transit. But when a fare hike is coupled by service cuts amidst a prolonged period with an overall decline in ridership and revenue, the transit death spiral canary starts chirping a bit louder in that coal mine. Last week, the canary showed up at the MTA Board’s budget meeting as the board books showed a continued decline in ridership, the budget forecast called for service cuts, and the MTA started debating the structure of next year’s fare hike. It certainly seems like New York City’s transit system sits on the edge of a death spiral.

    The transit death spiral is a particularly prickly beast to pin down. A few months ago, Aaron Gordon wrote about it in his newsletter, and I’d like to reframe Aaron’s model slightly. The death spiral encapsulates a budget cycle in which a transit agency recognizes a revenue shortfall due to lower-than-project ridership, raises fares and cuts service to compensate, and thus further dampens ridership, leading to additional shortfalls. As the cycle repeats, the spiral becomes inescapable until a massive bailout or death. When the topic arose over the summer, Cap’n Transit wrote a rebuttal to Gordon’s piece, and in the intervening few months, the spiral seems to have worsened.

    The current cycle will come to a head soon when the MTA Board reconvenes to approve a 2019 fare hike. On its own, the 2019 fare hike isn’t a surprise as the MTA instituted biennial fare hikes beginning in 2011, but with service reliability on the decline, riders seem particularly up in arms over next year’s planned hike. You can see the proposals in the chart atop this page, and I’m agnostic as to which one the MTA should choose. With the introduction of subsidized Metrocards for low-income New Yorkers on the horizon, eliminating the pay-per-ride discount and keeping the increase on unlimited passes at a minimum is probably my preferred outcome, but that choice is akin to just shuffling deck chairs. In a handful of months, we’ll be paying more.

    You can view the fare and toll hike proposals in this pdf, but the details of the hike aren’t the big story. Rather, the big story is the MTA’s worsening financial picture. That story unfolds in this pdf, and it’s a dire one. In the span of two years, since the July 2017 financial plan, the MTA’s long-term outlook has worsened by over $800 million. According to MTA documents, the biggest drivers are declining ridership ($485 million), paratransit costs ($321 million), workers compensation payments ($125 million) and overtime ($100 million). The MTA has relied on a series of one-shot budget moves to stave off deficits, but these one-shots are drying up. As Robert Foran, MTA CFO said last week, absent healthcare and pension reform, the MTA is out of cost-savings measures, and no politicians have desired to leap into that fraught battle. (In fact, Gov. Cuomo did just the opposite when the MTA labor contracts were up recently.)

    So the options are fare hikes and service cuts, the two best ways the MTA has of controlling revenues and expenses. With fare hikes scheduled for 2019, service cuts loom for 2020 – the first cuts since the crippling scalebacks in 2010. The MTA, of course, hasn’t said exactly what the service cuts will be, but it sounds as though the agency could change “service guidelines” to allow for more crowded trains and less frequent service. The total cuts to the subway will equal around $10 million – which is modest and projects to a few fewer trains per hour during certain times of the day on some, but not all, lines – and $31 million for buses which will devastate the bus network. Perhaps then the buses, with extremely steep ridership declines, are closer to that death spiral than the subways.

    Service cuts by themselves won’t close the MTA’s budget gaps and will harm the long-term health of the transit network by driving down ridership.

    Still, service cuts are a last-gasp approach. As Foran detailed at last week’s meeting, the MTA prefers to seek out a separate revenue streams to avoid service cuts while closing its budget deficit, and I think back again to the piece I wrote on the fight for congestion pricing revenue. The money may have to go to shoring up the MTA operations budget before it can go to the capital plan (or Andy Byford’s Fast Forward fund) as everyone is laying claim to a magical cure-all that won’t be.

    If that doesn’t further complicate the picture, Aaron Gordon in his newsletter last week noted yet another issue the MTA budget projections: Their out-year projections do not account for planned or potential work that could further stifle ridership and revenues. I quote from last week’s edition:

    The L shutdown, for example, begins next year. The MTA predicts the vast majority of trips will still take place within its ecosystem, but it’s easy to imagine ridership falling due to discretionary trips not being taken or a higher-than-projected rate of folks opting for rideshare or bicycling instead. Indeed, the MTA now predicts a 1.1 percent decrease in ridership in 2019, following a 2.8 percent decline this year. This is a major revision from the July plan, where they predicted ridership *increases* in 2019 and 2020 despite acknowledging the L shutdown. Their logic: the economy is good.

    These explanations are more confusing than insightful. Pegging ridership trends to future employment projections may be accepted practice but it’s been demonstrably unreliable in recent years due to fundamental changes in how we work, shop, and travel…But there’s an even bigger red flag in their ridership projections. If the MTA does get funding to move ahead with the Byford Plan, entire trunk lines in Manhattan as well as major branches in Queens and Brooklyn will be shut down on nights/weekends for months if not years on end. In other words, the most extreme planned work shutdowns in the city’s history will occur in the next decade if Andy Byford gets his money. Ridership will almost certainly suffer.

    That’s not an argument against doing the work, but merely a consideration therein, especially when projecting budgets. But, as of now, the MTA is predicting flat ridership for 2020-2022. Of course, the MTA cannot budget for a plan that has yet to be funded, but they don’t even flag this as a potential risk. This is emblematic of the agency’s tendency to get caught flat-footed by predictable ridership trends.

    In other words, the plan to repair the system will, by necessity, lead to temporarily lower ridership, and the MTA isn’t accounting for it now. Their budgets for outyears aren’t conservative enough, and we’ll have to go through this process sooner than the MTA currently anticipates. You see where this is going? That’s also part of that death spiral.

    Meanwhile, the MTA itself is struggling to figure out why service is declining. This came up first over the summer during the presentation of the July financial plan when the MTA failed to distinguish between the cause and the effect of the ridership decline. Ridership is declining because off-peak and weekend service isn’t reliable, and with easy and cheap alternatives such as for-hire vehicle apps, those who take discretionary subway trips are opting for more reliable means of travel. Last week, the MTA bigwigs tried to blame fare evasion as the leading cause of ridership declines without offering any evidence whatsoever, and it seems like the gatekeepers don’t know what ails the transit network. Between the lack of foresight in budget planing and the lack of understanding of the ridership decline, it’s hard to say if the current MTA Board and management can work its way out of this mess before the spiral leads to death or at least temporary paralysis cured only by a steep infusion of cash.

    I am ultimately not particularly optimistic as we sit here a few days after Joe Lhota’s departure and a few months before fare hikes and the L train shutdown start to tax the system. It’s not clear what the future holds for Fast Forward, and it’s not clear where these downward trends lead. Enough people are watching that I hope we can escape the spiral before it gets worse, but like I said, that canary just won’t stop chirping.

  • MTA Board approves fare hike but avoids a $3 swipe, for now

    The new fares shown in the table here go into effect on March 19, 2017.
    The new fares shown in the table here go into effect on March 19, 2017.

    At the last board meeting of his almost four-year tenure atop the MTA, outgoing Chairman and CEO Tom Prendergast had the unfortunate opportunity to oversee yet another vote to approve a fare hike. For Prendergast, this was the agency’s second fare increase during his tenure, and he missed a third by a matter of days as Joe Lhota resigned from the MTA nearly moments after voting for the 2013 fare hike. These increases have become a way of life for New York, part of the MTA’s fiscally responsible plan to catch up with inflation by raising rates every two years, but this economic reality doesn’t make them any easier to swallow.

    For the MTA, last week’s fare hike vote came wrapped in intrigue. The MTA had proposed a $3 base fare with a substantial 16 percent bonus for pay-per-ride card purchases above $6 which effectively made the fare $2.59. But the public could not stomach a $3 per-swipe deduction, and the agency ultimately approved a deal worse for all but ocassional riders and those who cannot afford to buy fares in bulk. The per-swipe cost will still be $2.75, but the bulk discount bonus will drop to 5 percent for purchases of $5.50 and above. The actual cost of a ride, then, will be $2.62 or three cents more than it would have under the $3 proposal. It is perhaps a psychological victory for riders but not exactly an economic win.

    For those who pay time-based passes, the increases were a fait accompli as both fare hike proposals included the same increases for unlimited ride cards. A 30-day card will now cost $121, up $4.50 for its current rate, and 7-day cards will see a $1 bump to $32. For those who ride at least 47 times a month and can afford an initial $121 outlay, the 30-day card is the best deal while the 7-day card requires 13 rides. Express bus fares jumped 50 cents, and Metro-North and LIRR riders will see increases of around four percent, all of which are tracked in this pdf.

    The new fares will go into effect on March 19, and I’ll have any details on grace periods for 30-day cards and other sunsetting windows as the MTA announces them. The agency, meanwhile, tried to spin this with good news as this year’s biennial increase is a lower-than-expected hike. “The MTA is focused on keeping our fares affordable for low-income riders and frequent riders, and on how we can keep necessary scheduled increases as small and as predictable as possible,” Prendergast said in a statement. “Keeping fares and tolls down was possible because of the continued operational efficiencies and ways we have reduced costs while adding service and capacity along our busiest corridors, most recently with the opening of the new Second Avenue subway.”

    Yet, what was notable about the debate of the fare hike wasn’t really around the details of the MTA’s fifth fare hike since 2009 but rather what it didn’t include: any relief for low-income riders. For months, a coalition of activist groups has been pushing the city, state and MTA on implementing a subsidized fare program for low-income riders who are challenged to find the money for transit fares. Depending upon the income cut-off, such a program would likely cost around $174 million per year, in line with the total amount the MTA spends on subsidized student fares. Groups have targeted both the mayor and the governor, but in the grand tradition of the de Blasio-Cuomo feud, the mayor has pointed to the governor as responsible for transit funding decisions and the governor has done nothing. It’s possible to make a case that either the city or state should fund this initiative, and I’m not sure there’s a wrong answer. But right now, no one is funding this fair fare proposal.

    And so our rides will get a little bit more expensive in March. It’s becoming the cost of doing business in an era without congestion pricing or cost controls.

  • Fare hike proposals for 2017 include $3 fare, reduced bonuses, $121 30-day card

    Take a gander at the two options the MTA is considering for its upcoming biennial fare hike:

    farehike2017

    I’ll have a full rundown of the options later. The short of it is that new fares go into effect on March 19, 2017, and the MTA Board will vote on one of the two proposals following eight public meetings that will be held throughout December. If the past is prologue, the MTA will go with Plan B — a jump in the base fare but a substantial pay-per-ride discount. Either way, those 30-day unlimited ride cards will soon cost $121, nearly double what they cost in 1998 when they were first introduced.

  • MTA continues to anticipate a March 2017 fare hike

    New York City’s transit fares are on the rise again next year. In what was nothing more than a formality, the MTA this week confirmed that the agency’s policy of small biennial fare hikes will continue at least through 2019 and that the fares will rise in March of 2017 by an amount designed to increase fare revenue by around 4 percent. Riders aren’t happy, but if the MTA can offer a carrot to this ugly stick of increased transit costs, it’s a pill New Yorkers will resignedly swallow.

    For a very long time, the MTA used to eschew fare hikes as a policy. Whether by order of those controlling the politics and purse strings in Albany or whether due to financial mismanagement, the agency would, as Chairman Tom Prendergast said on Wednesday, “stretch out” the period between fare hikes as much as they can. This led to perennially strained budgets and complicated negotiations with politicians. As the fares are the MTA’s only way to guarantee certain revenue, it wasn’t ideal, and the recent policy, enacted in the midst of a financial crisis, seems better than most, at least in a vacuum.

    The problem with constant fare hikes is how it exposes the tension between what the MTA is and what people want it to be. Setting aside legitimate gripes about the declining quality of service, what do we want and need the MTA to be? Is it a vital government service that ensures mobility for New Yorkers across neighborhoods and income levels while saving our city, to the extent it can, from Los Angeles-level gridlock? Or is it an entity that’s supposed to cover (most of) its costs through fare revenue? Is it capitalism, socialism or some mix of both? I can’t given you a definitive answer; those are questions worthy of book-length explorations. But right now, it’s a mix of both, and the price we pay for rides keeps increasing.

    So next year — and again in 2019 and probably again in 2021, 2023 and every two years until the Atlantic Ocean swallows our subway system — the fares will go up, and we’ll grin and bear it because even at $120 per month, a 30-day MetroCard will be a far better deal than driving everywhere. But something has to give. If the MTA is going to continue to raise fares, the agency also has to offer something in return for these fares hikes. Lately, the focus has been on a plan for reduced-fare MetroCards for low-income New Yorkers, and this movement will gain steam as another fare hike arrives. Under this plan, the city would subsidize rides, and the introduction of a new fare scheme would allow for a seamless transition to this arrangement if the city and state-run MTA can come to the table. The timing is right, but the politics of cooperation between the de Blasio Administration and Gov. Cuomo’s MTA may not be.

    The other something to offer should be in the form of better service. During comments on the new financial plan earlier this week, Prendergast acknowledged that the MTA has to improve service faster, but speaking at a meeting and doing something are two vastly different things. The MTA is hamstrung by work rules that require significant lead time for workers to pick new shifts; thus, the MTA can’t add service tomorrow without planning for it six months ago. But if a fare hike is scheduled for eight months from now, the agency can certainly prepare to offer better service then. The questions are whether the agency has the capacity to deliver more frequent and more reliable subway service, and as a core competency, it’s not quite clear the MTA can do much better than it has been lately. That’s not a comforting thought, and ridership has flatlined as a result of it.

    So where do we go from here? The fares are going to go up before the winter of 2016-2017 ends, and some service improvements or other relief should come with the hike. New Yorkers don’t like fare increases, and they certainly don’t like being told to pay more for what many few as sub-par service. To overcome the perception that the fare hike is simply a money-grab will require improved service of one form or another, and that right now is a big ask.