![The MTA budget documents released yesterday show how aggressive cost cutting and fare hikes could eliminate nearly all potential deficits through 2017. [pdf]](http://bkabak.wpengine.com/wp-content/uploads/2013/07/MTABudget20142017.jpg)
The MTA will rely more and more on fare hikes to close its budget gaps in the coming years. [pdf]
It wasn’t a big surprise when the MTA last week revealed a budget that relies on biennial fare hikes for the foreseeable future. Richard Ravitch put forth a plan in 2009 to rescue the MTA’s budget that would have spread the fiscal pain around equitably, and in it, he called for fare hikes every two years that aligned with inflation. The MTA is simply following through on their end of the bargain, but how long will the public be accepting of such hikes?
By the time mid-2017 rolls around, when the 7 line extension reaches the Far West Side and Phase 1 of the Second Ave. Subway is in revenue service, New Yorkers will have lived through two more fare hikes. The MTA anticipates that each hike will be around 7.5 percent and will generate, by 2017, nearly $1 billion in added revenue. The MTA needs this money because rising paratransit costs and health and pension obligations along with a never-ending stream of debt service payments will continue to tax their budget. When the new subway lines are ready for passengers, operating costs will go up as well. It’s an expensive, vicious cycle.
I’ve been wondering for the last few days how long New Yorkers will stomach these fare hikes. Already, subway riders complain about everything, and many of their complaints are with merit. Sometimes, we’re paying more for less, and usually, we’re paying more for the same. As complaints continue and fares go up, ridership increases as well. May, for instance, witnessed one of the most popular month’s in New York City subway history. At some point, though, the grumbling will grow louder, and New Yorkers may be able to make enough noise to get politicians to do something about the constant increases. That day hasn’t yet come.
I’m not the only one who’s noticed the ever-rising fares. In their Sunday editorial, the Daily News cast a wary eye on the MTA’s fiscal future. The planned fare hikes, they noted, far exceed the measure set forth in the Ravitch plan, and it’s time for something — whatever that may be — to be done.
Since 2008, the cost of a 30-day MetroCard has risen from $81 to $112. This represented a 38% leap at a time when inflation ran at 8%. Had fares tracked inflation, the 30-day card would cost $88…[Under the Ravitch plan], assuming the state fulfilled its obligation to provide adequate funding, riders would suffer hikes every two years. But how much would those increases be?
Here’s exactly what the Ravitch report stated: “The Commission’s view is that the MTA Board, as part of its normal, public budget making process should be empowered to increase fares and tolls no greater than the change in the Regional Consumer Price Index and no more frequently than bi-annually.”
…Since then, the MTA has kept to the every-other-year schedule and plans to do so again in 2015 and 2017. But each time it has factored in hikes of 3.75% a year, almost double the inflation rate. Asked why and how the MTA set the raises at 3.75% annually, or 7.5% for two years, the agency’s spokesman replied, in effect, that no one had any idea. MTA Chairman Tom Predergast must change the basic assumption as to how much the riders will be asked to pay. He needs to abide by the bargain struck with the MTA’s financial rescue five years ago. The riders will do their part by ponying up for inflation — and no more.
On the one hand, the News raises a very good point about the Faustian bargain Ravitch had proposed. The fare hikes were supposed to be tied to the rate of the inflation, and that would have been a rather livable solution for many New Yorkers. But on the other hand, the editorial relies on a few assumptions — one that didn’t come true and one that’s highly problematic. The first is that the state did not fulfill its obligations. It torpedoed a congestion pricing plan that would have helped alleviate the fare hikes, and the state hasn’t developed a new significant source of regular and reliable transit funding.
More fundamentally, though, concerns the question of who should pay and for what. The MTA can raise revenue without state action only through fare hikes, and there is a very valid argument to be made that riders should be expected to pay for the service they need and want. Thus, if the MTA’s costs and budget demand more revenue, higher fares — to the tune of a 7.5 percent fare hike every other year — are the way to go. The problem here concerns costs. The fare hikes aren’t paying for more service for riders; rather, the money from the hikes is going to uncontrollable pension costs for former employees no longer working. Whether that’s fair for everyone is a question I’m in no position to answer right now.
So the fares will go up, and they will go up far more than we’d like. Until New Yorkers get so fed up with cost increases that they appeal to their representatives to do something, we’ll be left with 7.5 percent fare hikes every other year. The subways and buses aren’t getting cheaper, and the people who ride will be the ones footing more and more of the bill, for better or for worse.
