Fare Hikes

We love New York, but New Yorkers don’t love fare hikes. Photo: Marc A. Hermann/MTA New York City Transit

The MetroCard, still at least five years away from retirement, will live through at least three more fare hikes, if the MTA sticks with its current schedule, and the first of the three is officially set for March 22nd. At its meeting on Thursday, the MTA Board voted to approve a modest fare hike that will bump fare revenue — and most fares — by approximately four percent, and although some New Yorkers grumbled about the higher transit costs, most advocates focused their post-hike comments on the MTA’s gaping capital budget hole.

The details didn’t come as much of a surprise as the MTA opted to raise the base fare for the second hike a row while maintaining a pay-per-ride discount. The unlimited ride cards went up only a small amount while tolls and commuter rail fares saw similar increases. Beginning March 22, a swipe will deduct $2.75 from a MetroCard while the pay-per-ride bonus will jump from 5% to 11% on purchases above $5.50. Effectively, then, the per-swipe cost will be $2.48, up just ten cents from $2.38. The optics are bad, but the fare hike is modest.

For those of us who use the bulk/unlimited-ride options, this year’s hikes are smaller than recent jumps. The 30-day card jumps from $112 to $116.50 while the 7-day option hops up a dollar from $30 to $31. The four percent hike for the 30-day card is significantly smaller than recent fare increases, but it’s hard to ignore how the cost for a 30-day ride has gone from $70 at the star to of 2005 to $116.50 ten years later. Even in a shorter time frame, the jump is significant as a 30-day card cost $89 as recently as December of 2010. The $1 surcharge on all new MetroCard purchases remains.

“The MTA has been able to limit these fare and toll increases to the equivalent of 2% a year thanks to our continued aggressive cost-cutting, while still adding service and improving service quality for our growing number of customers,” MTA Chairman and CEO Tom Prendergast said after the vote. “Our Financial Plan assumes modest biennial fare and toll increases, and the Board has chosen options with lower increases for our most frequent customers.”

In a way, New Yorkers have come to accept these fare hikes. Some people were grumbling about higher fares without a corresponding increase in service, and the MTA has seemingly settled into a pattern of offering service that’s good enough. Generally, the subway works well, and although it’s very crowded, with nine individuals days in December witnessing over 6 million riders, we’ll deal with crowds and delays. Improvements are just out of reach, and that remains a big concern.

As many MTA Board members pointed out during the meeting and as many transit advocates noted following the vote, if the $15.2 billion capital budget gap isn’t filled, we could be in for much steeper fare hikes in 2017 and 2019. “Today the MTA Board voted to raise fares on more than eight million subway, bus and commuter rail riders. But the real scandal may be yet to come. If Governor Cuomo and members of the legislature don’t decide on new revenue sources to fund the MTA’s five-year capital plan, larger fare increases are lurking around the corner,” John Raskin of the Riders Alliance said. “Paying for public transit with fare hikes is a regressive way to fund a public service that the entire region relies on. We urge Governor Cuomo and the legislature to act quickly to fund the next MTA Capital Plan, instead of passing on the cost to overburdened riders.”

Cuomo, of course, is too busy plotting an airtrain to address real funding concerns, and few people are paying attention to the way in which the fare structure seems to favor those with money who afford the $116.50 outlay. WNYC’s Matthew Schuerman analyzed the socioeconomic breakdown of the MTA’s fare structure, and it’s something I’ll revisit in a future post. Needless to say, although the MTA is on sounder economic footing today than they were five years ago, the agency is on the precipice of steep fare hikes that will make this year’s seem negligible if the capital gap is not closed. That would be bad news for New Yorkers.

After years of constant fare hikes, the straphanging public in New York seems immune to the looming increase set to descend upon the city in a few weeks. Instead of anger and protests, mass resignations rule the day, and the fare hike hearings last month were pro forma gatherings for the same old nothing. Still, the MTA has a decision to make, and according to reports, the agency may be leaning toward raising the base fare again while maintaining a pay-per-ride bonus.

The latest word comes from Rebecca Harshbarger of The Post. She reports that MTA Board members would prefer to maintain the incentive discount — a good idea if only for the psychology of it — while upping the base fare again by a quarter. In either fare hike scenario, the seven- and 30-day unlimited cards will increase to $31 and $116 respectively.

Harshbarger writes:

MTA officials are backing the hiking of the MetroCard’s base fare and increasing the bonuses on pay-per-ride cards in March– rather than keeping the fare the same and ditching the bonuses, the Post has learned. The MTA board will vote on fare and toll increase proposals next Thursday, but its members are overwhelmingly leaning towards raising the MetroCard from $2.50 to $2.75, sources said. To ease the pain, the hike will be accompanied with a 11 percent bonus if riders put $5.50 or more on their cards — an increase from the current 5 percent they would get.

The other proposal that had been under consideration was keeping the base fare the same, but eliminating the bonuses. Cards with bonuses are more popular among subway riders than single-ride tickets, which are used for less than 1 percent of trips and typically in stops with a lot of tourists…

“Only way we’ll know how the board votes is to attend next week’s board meeting,” said MTA spokesman Kevin Ortiz.

When I put the proposals to a vote in November, what is reportedly the MTA Board’s preferred option lost by around six percentage points. Still, I think this is the right way to go. It hurts to see the base fare increased for the second consecutive fare hike, but the pay-per-ride bonus is an important drive for transit ridership. It incentivizes bulk purchase which, in turn, incentivize more riders to use the system. Anyway, we’ll know for sure next week. Stay tuned.

After an election and weeks of waiting, the inevitable became reality as the MTA announced its fare hike proposals for the looming 2015 rate increase. Taking pains to stress the latest jump — the fourth hike in seven years — is a “limited” one, the agency noted that it amounts to only around two percent a year. On the one hand, that’s good news, but on the other, that means a fare hike in 2017. But we knew that already.

“The MTA is keeping its promise to ensure fare and toll increases are as low as possible, and these options are designed to minimize their impact on our customers,” MTA Chairman and CEO Thomas Prendergast said in a statement. “We have cut more than $1 billion from our ongoing expenses, but a modest fare and toll increase is necessary to balance our budget against the increased costs of providing the bus, subway, railroad and paratransit service that is the backbone of the region’s mobility and economic growth.”

It’s still up for debate whether the smaller hike was a good idea, and the details are as we heard last week. Take a look at the table below. The full proposals for the express buses, commuter railroads and bridges & tunnels can be found here.

Yet again, the MTA is giving the public a choice, and the agency heads will hear from those members of the public who choose to voice their views during public hearings from Dec. 1-Dec. 11. Based on the pressure from rider advocacy groups who have identified the pay-per-ride discount as a key incentive for less well-off riders, already forces are lining up behind Proposal 1, but that would mean the second straight fare hike with an increase in the base fare. The MTA notes that under Proposal 1, the average swipe would be $2.48 while under Proposal 2, the average would be a straight $2.50. Even with the small difference, it’s hard to ignore the psychological affect of the discount.

For me, a regular user of the 30-day monthly, the fare hike is an inconvenience. I’ll have to pony up $54 per year more for my rides one way or another. I don’t have a strong preference, but do you? Let’s open it up with a poll.

The fares to fill up a MetroCard, such as this one celebrating the MTA’s new $1.4 billion Fulton St. Transit Center, will soon increase. (Photo by Benjamin Kabak)

The MTA has, for better or worse, made a biennial habit out of fare hikes. As part of a master plan hatched a bunch of years ago, the MTA committed to raising the fares every two years in an effort to maintain steady revenue streams. Although the current fare hikes outpace inflation, the MTA is also working to overcome a significant fare decrease from the late 1990s brought about by the introduction of pay-per-ride discounts and unlimited MetroCards. On average, we pay less per ride today than we did in 1996.

The riding public — the folks that don’t pay much attention to the ins and outs of transit policies, politics and economics — will be caught off guard by the 2015 fare hike. Due to pressure from Gov. Andrew Cuomo who was trying to avoid any whiff of bad news in the lead-up to last week’s Election Day, the MTA has remained tight-lipped about the fact the fare hike is happening or any details regarding the proposals. Now that the Governor has assured himself of another four years of whatever he’s doing, the unofficial MTA news embargo can finally be lifted, and we can talk about good news such as higher subway fares for all!

Now, gone are the days that politicians lived and died by the nickel fare, but the fare hike process lends itself to a special set of outrage. The MTA is legally obligated to go through a public hearing process, and it’s largely a charade. People will express outrage over higher fares while probably bringing up two sets of books over and over again while politicians bemoan the system they refuse to support. The MTA raises the fares anyway, usually based upon plans drawn up months before.

So as we gear up for the hearings, what does the future hold? Pete Donohue, tell the audience what they’ve won:

The MTA has drafted two possible fare-hike schemes for bus and subway riders — one that keeps the $2.50 base fare stable and another that raises it by a quarter. But both models would increase the monthly MetroCard by $4.50. The two scenarios were fashioned in advance of public hearings that the Metropolitan Transportation Authority will hold next month. The MTA board may not vote on a final package until January, but the increases would still go into effect as scheduled in March.

According to sources, the two fare-hike options are:

Option One: The base fare would remain at $2.50, but the 5% bonus would get trimmed. The 7-Day MetroCard goes up a buck, to $31, while the 30-Day MetroCard rises $4.50, to $116.50.

Option Two: The base fare is boosted by 25 cents, to $2.75, and the bonus increases from 5% to 11%. The 7-Day and 30-Day MetroCards are the same as in option one: $31 for the 7-Day card and $116.50 for the 30-Day pass.

Metro-North and the LIRR will be raising fares took, and Andrew Tangel of The Wall Street Journal reports that MTA Bridge & Tunnel tolls for trucks could increase by as much as 12 percent.

It’s hard to get too worked up one way or another over this proposal. The MTA had previously committed to a smaller-than-planned fare hike this year and stuck with it despite a huge capital funding gap and higher-than-anticipated labor expenditures. The fare hike is again whittling away at the pay-per-ride bonus, and to that end, I think a higher base fare with a more generous bonus is better. But higher base fares always affect those who can least afford it. Either way, I’ll be paying $116.50 (before tax, of course) for my 30-day card soon enough.

Which brings me to another point: As the federal government can’t do anything these days, pre-tax transit benefits are currently capped at $130 per month and seem to be stuck there. In the not-too-distant future, the MTA is going to hit that ceiling for 30-day cards, and then we’ll see what happens in Washington. For now, we’re facing another modest fare hike and one the city will have to resignedly accept.

Over the years, the MTA has not always used its best judgment when giving away money. In December of 2005, for instance, facing a variety of unfunded obligations — many of which still exist today — the agency reduced fares to $1 for the month as a way to give back. Some board members wanted to bank the surplus, but it passed anyway. A few weeks into the the discount program, the TWU went on strike, and eight years later, we’ve all but forgotten that brief fare blip.

Today, in 2013, the MTA has, in a sense, announced a different sort of giveaway. With various economic indicators on the rise and internal restructuring identifying perennial savings in excess of projections, the agency may not need to rely on fare hikes to cover large gaps, as originally projected. With the TWU’s contract situation outstanding, the agency’s current forecasts rely on a net-zero wage increase, but still, the MTA is confident enough to announce that out-year fare hikes will be lower than originally planned. Instead of increases every two years of 7.5 percent, the agency is looking to generate a pair of four percent hikes.

Many observers feel this is the right move. The 7.5 percent jumps were aggressive. Fares are still lowering in adjusted dollars today than they were before the onset of unlimited ride MetroCards in 1996, but the planned increases far outpaced inflation. It seemed too tough to ask passengers to continue to foot these bills every other year with no end in sight, and the IBO predicted $168 30-day cards by 2023. It was, some say, too much to ask of riders.

In today’s amNew York, the editorial board of the free daily makes that argument. Noting that fares went up, in some sense, by nearly 25 percent during an economic downturn, the paper politely applauds the MTA for showing some restraint:

While the MTA’s smaller projected fare hikes are plenty welcome now, they’re still not what we’d call a great leap forward. They’re just a smaller step backward. The plan — which the MTA board still must vote on — would slap riders with separate 4 percent increases in 2015 and 2017 instead of 7.5 percent increases. That’s roughly in line with inflation.

We’re pleased that the MTA — in its own tough-love way — does seem sensitive to recent sacrifices by riders. There are other ways it might have chosen to spend this windfall, which comes from internal belt-tightening and a pickup in real estate and ridership revenues. T

he agency — more than 68,000 employees strong — must hammer out a labor contract with the Transport Workers Union soon, and the TWU has had its eye on this money for awhile. There’s also the eternal imperative for upkeep — stations that need rebuilding, signal systems that need updating, track that needs replacing — an agenda made all the more urgent after the devastation of Sandy. So, while everyone has a hand out, the MTA wants to give its customers a break. It’s a smart move, and a good way to build a stronger base of customer support.

Allow me to play Devil’s advocate for a second, and question the smart move. Right now, the MTA can maybe promise a smaller fare hike, but what if everything collapses around it? If the TWU wins a big wage increase and if tax revenue drops, if the state raids its coffers, if another disaster strikes, that money is now gone. The MTA would have to swallow its pride and suffer at the hands of indignant riders and politicians if they roll back the decreased fare hikes, and it’s just impossible to predict the economics in a few years.

So instead the MTA has given up a few hundred million dollars of guaranteed money. Fare hikes remain the only way the agency can control its fate, and now, four years away, they’ve been reduced. I’m happy not to pay even more in 2015 and again in 2017, but if anything goes wrong, that’s a tough pill to swallow.