Fare Hikes

As Albany bickered over an MTA funding plan, the agency yesterday announce a $621-million increase in its deficit for 2009 and a $1 billion increase for 2010. Based on the response out of Albany, you’d never know how bad that news really is.

In a nutshell, the story is simple. Because ridership and tax revenues are both lower than projected, the MTA’s substantial budge deficit will grow by nearly 50 percent this year. While neither Malcolm Smith nor Sheldon Silver has realized it, this increase basically negates any Albany-produced funding package. Even if the State Senate and Assembly can come to terms — even if they pass something that brings some money into the MTA’s coffers — it will be enough to cover a $1.2 billion gap and not a $1.8 billion gap.

So then, what does this mean for New Yorkers reliant on transit? Well, at this point, the MTA will have little choice but to start cutting service. The cutbacks may not be as drastic as once feared, but a $600 million gap is pretty substantial itself.

The worse news though comes in the fare box department. Since the MTA is so reliant right now on fare box revenue, the agency said on Monday that it may have to raise fares twice in 2009. With no Senate action, the fares will go up by nearly 25 percent at the end of May, and for the first time in MTA history, the fares could go up a second time this calendar year and a third time in 2010.

Pete Donohue reports a potential eight percent increase on tap as the second fare hike of the year. I would expect that to arrive by October or November when the MTA has a clearer picture of how much money it needs to balance its books before the end of the year. I also wouldn’t be surprised if the eventual second fare hike ended up at over eight percent.

Times are bleak indeed for transit in New York.

While the ink has hardly dried on the MTA Board’s imprimatur to the fare hikes and service cuts, transit advocates are gearing up for another round of hikes. Unfortunately for transit-dependent New Yorkers, the MTA may now be on an annual hike plan to cover its ever-growing debt payments, and the next fare hike may come along as early as 2010.

Streetsblog had word of a statement from Gene Russianoff on the potential frequency of future hikes:

Without new financial help from Albany soon, the MTA says its current bad finances may mean another fare hike in 2010.

That would make it three years in a row for fare increases — March 2008, June 2009 and early 2010 — the worst record in the MTA’s 40-plus year history.

It demonstrates a trend of shifting the costs of operating transit from some beneficiaries of the subways and buses — such as motorists and businesses — onto riders. For example, the riders’ share of operating costs for the subways will go from 69% to an astonishing 84%, according to the MTA, if the just-approved fare increases are implemented.

Under the plan proposed by former MTA chairman Richard Ravitch, no new fare hike would occur before 2011.

Of course, all of this — absent general inflation-based fare hikes — could be avoided if Albany were to act. In one swoop, the State Senate could avoid extreme fare hikes and service cuts this year and any fare hike next year.

Maybe though instead of waiting for Malcolm Smith to get his ducks in a row, Sheldon Silver should, as the Post suggested today, pass a one-house bailout. Assembly action would force the State Senate’s hand. It could also create more of a press and voter uproar over Senate inaction.

Anyway, transit’s future in New York City is bleak. The MTA needs a few billion for its operating budget and has a $30 billion five-year capital plan in its pocket too. At a time when the economy needs transit, when the environment needs transit, when the city needs transit, we’re sitting here talking about the potential for a third fare hike in three years rather than true progressive solutions to something that shouldn’t be such a problem.

The view from the back of the ballroom. This Board has a long night ahead of it. (Click the smaller images to enlarge.)

7:41 p.m.: After waiting outside a ballroom at the Hilton Hotel on Sixth Ave. for over an hour this evening, I’m live from the MTA hearings. It’s been a rowdy 100 minutes with a minor conflict between some antsy folks and hotel security, and the ballroom is packed. I’ll update as the hearings unfold.

Before the year ended, the MTA released a whole bunch of numbers concerning the so-called Doomsday scenario that might come to pass. The agency unveiled four different fare hike proposals and outlined the various service cuts that could go into effect as early as June. It’s scary stuff for a city so dependent upon a healthy transit system.

While these numbers can seem a bit discouraging and overwhelming, the MTA isn’t releasing them into the void of the public for no purpose. Legally, they are required to announce the proposed changes in advance of this month’s public hearing, but politically, the powers-that-be at the MTA have an endgame as well. Newsday reminds us of just what that endgame is in an editorial:

But let’s look at the MTA’s underlying message. What the agency is trying to convey is a doomsday picture, which it will carry out unless the State Legislature comes to the rescue. We’re all familiar with that concept, now that our tax dollars have bailed out Wall Street and Detroit.

The MTA must find a revenue stream to fund its operating costs, which are out of whack by $1.2 billion next year. Its bailout would come in the form of East River bridge tolls and a payroll tax, which were recommended by a commission led by former MTA chief Richard Ravitch. The Ravitch Commission ideas could eliminate the need for service cuts and reduce fare increases to 8 percent. But that would mean more taxes and no incentive to squeeze fat out of the bureaucracy. No fare hikes can begin until March…

MTA news has been muddled, but keep the endgame in mind, and you won’t be fooled: The State Legislature is the real target of these fare-hike scary tales.

The emphasis, clearly, is mine.

It’s hard to understate this theory. The MTA does not want to institute a fare hike while significantly scaling back service. The agency doesn’t want to annoy millions of New Yorkers who suddenly find themselves waiting longer for more crowded trains that run on reduced routes. The transit authority would rather be adding more bus routes and select bus service instead of cutting bus routes and jacking up express bus fares.

But they can’t. They don’t have the money or political support to do so, and until that support arrives, they will be left with the only tools at their disposal to balance the budget: fare hikes and service cuts.

New Yorkers have a seemingly hard time understanding this point, but Newsday nails the issue. If straphanging citizens of this city are unhappy with the MTA, that’s their prerogative, but that ire should also be directed at Albany and City Hall. Until some politician can come up with a plan, the rest of us will be left out in the cold, paying more and waiting longer for the trains.

Various fare hike proposals from the MTA

What you are looking at above is the bad news. The MTA released on Monday a fare policy memo (PDF) from CFO Gary Dellaverson to the agency’s board detailing the various possible fare hikes.

To summarize, the first column on the left is the current fare structure. Following it are two proposals the MTA would consider under its so-called “Doomsday budget.” In those instances, the MTA is not relying on any sort of transit relief via the Ravitch proposal or any other idea that may come down the pike. Rather, on its own, the agency is searching for a way to generate what Dellaverson called “a 23% increase in yield from fares.”

The two columns on the right represent the fare hike if the Ravitch plan or some other form of relief is passed. Under those fare structures, the MTA would expect its rider to shoulder a fare hike of just eight percent. Both of these plans also involve raising rates on the MTA commuter rails and bridges and tunnels.

It’s hard to feel too good about either of these proposals because, no matter what, New Yorkers will suffer through two years in a row with fare hikes in 2009. No matter the outcome of the Ravitch proposal or the economy, no matter what happens with any potential stimulus plan, the MTA will raise the fares in 2009, and there is nothing anyone can do about it except grin and bear it.

With that in mind, I much prefer both Proposal 2 and Ravitch 2 over the other options for this inevitable fare hike. Simply put, these options reward frequent travelers as best as they can. In my opinion, the biggest mistake the MTA made when they raised fares in 2008 was in choosing to not raise the base fare. By keeping the standard fare at $2, infrequent riders got to enjoy a low fare while those who used the system most had to pay the most.

Now, I understand that we’ll all have to pay, but the fares should be raised in a way that generates enough revenue without negatively impacting the people most dependent on transit. Those people, in my book, are the ones who buy the Unlimited ride cards. Proposal 2 keeps the 30-day card under that psychological $100 barrier, and Ravitch 2 minimizes the increases across the board. That’s the way it should be.

As 2008 draws to a close tomorrow night, it hasn’t been a good year for the MTA. While Elliot Sander marked the agency’s 40th birthday with an ambitious eye toward the future, the year has ended with bad economic news, a hazy outlook for expansion and now a fare hike. Here’s to hoping 2009 will bring better subway news for New York City.

Back in November, when The Daily News first reported on the looming three-dollar fare, I figured someone in a position of power would act before things got that desperate. But as the New York state legislature and City Council continue to deliberate or ignore the implications of inaction on the Ravitch Report, the MTA took another step closer toward a $3 base fare for the New York City subways and buses.

In a pdf file announcing upcoming public hearings scheduled for January and February, the MTA detailed how it will attempt to generate a 23 percent increase in fare revenue across all MTA fares and tolls. While the language is convoluted, the news is decidedly grim.

First and most prominently is the news that base and cash fares could go up to as much as $3, and Pay-Per-Ride MetroCards may feature a $3-per-swipe deduction as well. Alternatively, the MTA could go with a $2.50 charge on MetroCards while the base cash fare and single ticket rides stand at $3. The discount bonus for pay-per-ride cards, if it survives this fare hike, would not kick in until a user reaches a $12.50, and the MTA proposes that the bonus range from as high as 35 percent (unlikely) to as low as 0 percent (not ideal but likely).

The Unlimited Ride MetroCards, preferred by around 46 percent of subway riders, would see marked increases. The one-day pass could cost as much as $9.50; the seven-day pass could be $32; the new 14-day card could cost $60; and the 30-day unlimited would be as much as $105. While that 30 percent increase for the 30-day card pales in comparison to the 50 percent base fare hike, crossing that $100 barrier is a significant psychological blow to New Yorkers.

Elsewhere the hikes would be significant with drivers paying a lot to cross over and through the MTA’s bridges and tunnels. Seniors would enjoy fewer discount hours and paratransit fares could hit $6 per ride. But this is all avoidable if the state can pass a sensible MTA bailout plan.

Instead of bailouts though, let’s talk about another idea not mentioned. What if the MTA adopted a Washington, DC, or a London style fare structure? Right now, it costs $2 (or less) to ride from Coney Island in Brooklyn to Riverdale in the Bronx, a distance of nearly 27 miles driving. It also costs $2 to ride from 14th St. and 8th Ave. to Grand Central, a distance of about 2.2 miles driving.

Various other subway systems aren’t so generous. In DC, an off-peak 14.1-mile trip costs $2.35 via the Metro while a three-mile ride costs $1.35. At rush hour, the fares increase so that the 14.1-mile trip is $4.30 and the three-mile ride is $1.60. A variable pricing structure would certainly do a lot to increase the MTA’s revenues.

There are, as I see it, two major problems to this proposal. First, the MTA’s antiquated MetroCard system isn’t set up to allow for entry and exit fare swipes. The MTA would have to refit the entire system with newer and better SmartCard technology. While the day should come when the MTA does just that, a time when money is tight and fares may need to be jacked up just so the agency can meet its operating budget is no time for an enormous technological investment.

Second, this proposal basically fleeces people who can’t afford — or, in some cases, choose not to — live close to Manhattan. Unlike Washington, D.C., and London, two cities with variable fare structures, New York City isn’t really a suburban city. People in D.C. commuting in from Franconia-Springfield generally choose to live in the suburbs and take Metro into the city. Folks in New York commuting from Coney Island to Manhattan aren’t enjoying the same luxury. At that point, we’re taxing the people who can least afford to pay.

Anyway, as the MTA gears up for public hearings, we’re going to need some out-of-the-box solutions to combat this potential fare hike. We can imagine a world of variable pricing; we can imagine a world of East River tolls. But unless imagination becomes reality, we’re going to soon be facing a New York City with significantly higher mass transit fares.