Fare Hikes

When 2011 arrives, the MTA will have the statutory power to raise subway fares. The state legislature granted the authority this power when it approved the 2009 funding package, and the MTA will, through thick or thin, implement a fare hike of at least 7.5 percent by early 2011 at the latest. But the way things are going, that fare hike could come sooner.

As Andrew Grossman of The Wall Street Journal reports today, the MTA is up the proverbial creek without a paddle. On top of a $400 million deficit, the MTA says tax revenues are down by $135 million this year. The agency has to present a balanced budget next July, and with service cuts set go into effect next week, the agency’s only option may be to raise the fares, as Grossman puts it, “higher and sooner” than anticpated.

For months, though, Jay Walder, the MTA CEO and Chairman, has tried to avoid a third fare hike in as many years. He’s led an admirable effort to trim inefficiencies in the way the MTA works; he’s ushered in a regrettable slate of service cuts; he’s tried to work with the union to reform payroll and pension costs. But the agency’s appetite for service cuts may be at an end.

“I don’t see how you do much more service cutting without really making an overcrowded system, frankly, or putting you in a situation where we’re like other transit systems that only serve the trunk lines and don’t have bus service into other heavy demand areas,” Bill Henderson of the Permanent Citizens Advisory Council to the MTA, said to The Journal, “If you’ve got to do one or the other, [raising fares is] probably the more acceptable one for the riders because at least the service is still there.”

Of course, the riding public may not find it appealing to see fares go up so soon after services are cut. In the past, fare hikes have been tied to increases in service, and even if those increases were the token additions of a few rush hour trains, riders weren’t asked to suffer through the indignities of paying more for less service. Now, though, it appears as though the MTA has its back to the wall.

This isn’t the first time this year we’ve heard talk of a premature fare hike. In March, talk of an increase emerged in the press, but the MTA officially denied considering raising its rates. Still, when a one percent increase in the fare generates approximately $50 million in additional revenue, the financial promises of a fare hike always remain low-hanging fruit for a financially strapped MTA to pluck. It might just be inevitable.

For the last three months, the MTA has firmly insisted that they would not raise fares for 2010. When faced with an initial deficit of under $400 million, Board members said the authority would become a leaner one with more streamlined service options and fewer costly and underutilized runs. When the deficit ballooned to $751 million, they began to dance around the issue, but CEO and Chairman Jay Walder repeatedly said he preferred to stick with the scheduled 2011 fare hike. Well, the best laid plans…

Today, the Post reports that the MTA is considering a fare hike in 2010, not least of all because most people at last week’s hearings expressed a strong preference for a hike over a service cut. I’ve touched on this topic in a few posts since December, and I too prefer a hike over the cuts. Tom Namako has more:

Increasing the cost of a ride on subways, buses and commuter rails in 2010 is just one option out of many that officials have put on the table to overcome the staggering deficit, management sources said.

“I think there is a set of options. And the fare is one of those as we try to get to the bottom line,” a board member said.

“In view of the reaction we got to the service reductions we have out there, I think that asking most board members if they’d rather see more service cuts or a fare increase, I think, at the moment, many would pick a fare increase.”

In a statement to the Post, the MTA denied exploring the hikes. “Our position has not changed. It remains our intention to raise the fare in 2011 as agreed upon last year,” spokesman Jeremy Soffin said.

Yet, the truth remains that to cut $751 million worth of services would cripple the MTA and the New York City economy. Without massive layoffs and an agency-wide restructuring, it is nearly impossible to cut that much while meeting ridership demands.

Meanwhile, Bill Henderson of the Permanent Citizens Advisory Council to the MTA raised some interesting points about the fare hike. He first noted that a hike this year could be viewed as an acceleration of the 2011 hike, but it is my understanding that the MTA’s fare hike in 2011 is a foregone conclusion whether they raise fares this year or not. Henderson noted, however, that if the MTA were to announce a fare hike within the next few weeks, it would go into effect right around Election Day. Hopefully, straphangers would be angry enough at the way Albany robs from the MTA to vote the anti-transit representatives out of office.

And so we are where I expected us to be. The MTA is broke, and it needs to offer transit service to the millions of New Yorkers who rely on it a day. It doesn’t enjoy any sort of political support in Albany and has become a scapegoat for the politicians’ inabilities to defend their constituent interests. Soon, we’ll be paying more for, hopefully, the same amount of service. Cutting service and raising fare would lead to a dark day for New Yorkers indeed.

As the MTA’s finances have gone south, the authority has held the line on their preference for service cuts over fare hikes. Since the fares have gone up in each of the last two years and are scheduled to increase again in 2011, the agency is hesitant to use a fare increase as a fiscal band aid yet again this year.

“Throughout the situation,” Jay Walder, MTA CEO and Chairman, said, “it has been my intent to hold to that scheduled increase. I believe that having regularly scheduled increases is preferable to increasing fares and tolls in other circumstances, and we’re trying very much to stay in that mode.”

I’ve often wondered if Walder’s Moby Dick-like aversion to fare hikes is misguided. I’d rather pay more for the subway service we have than suffer through longer waits, more crowded trains and generally less convenient service. In a poll I conducted on site a few weeks ago, 78 percent of voters agreed. Still, the cuts are coming closer.

Yet, now the MTA faces a greater deficit than originally anticipated. By recent accounts, the authority is $750 million in the hole for 2010, and it is but only the end of February. Unless the economy turns around in a hurry, that financial picture will grow darker as the year goes on. “Our financial position is dire, Walder said yesterday. “I don’t think I can overstate that. Clearly I’d like to look at every avenue we can do for ways we can reduce our costs, ways that would be less painful for our customers and our employees.”

So maybe, says Michael Grynbaum of The Times, picking up on Walder’s hedging, fare hikes

While a part of the Albany compromise for the MTA bailout included a freeze on fare hikes until 2011, the whispers of an unplanned fare hike swirled amidst stories of the MTA’s poor fiscal state. Today, though, the agency put these rumors to bed with a release of its preliminary financial plan.

The latest iteration of the plan covers the 2010 fiscal year and includes a four-year budget projection as well. With money coming in from the payroll tax, fares and services are set to remain constant in 2010 but with hikes set to 7.5 percent and tied roughly into inflation scheduled for both 2011 and 2013.

The press release from the Authority bulleted the important parts:

• As promised to the Governor and Legislature, the 2010 budget includes no service cuts or fare increases.
• Projected cash balances of $29 million in 2009, $39 million in 2010 and $1 million in 2011. Manageable deficits are projected for 2012 and 2013.
• Significant spending restraints, building on the substantial expense reduction taken in 2009 to save $64 million in 2010. These savings grow to $279 million by 2013.

The MTA big wigs said all the right things. “We are grateful to Governor Paterson and the Legislature for their strong commitment to the transit system during this current economic downturn,” MTA Board Chairman H. Dale Hemmerdinger said with some rhetorical flourishes. “Meeting the MTA’s fiduciary responsibilities while sparing our customers from the drastic and painful measures proposed earlier this year will help us keep to our mission of providing safe, dependable and affordable public transportation.”

The interesting part of the timing of this announcement though is the fact that the final budget isn’t due for nearly five months. The MTA Board won’t pass the budget until December. In the meantime, the Board will hold extensive public comments on their latest financial plan and should try to wrangle more money from the state. Congestion pricing and East River tolls await.

Thirty years ago, the New York Public Interest Research Group, a non-profit research and advocacy organization, formed the Straphangers Campaign. Tasked with speaking up for the city’s millions of subway riders, the group has, as its Web site explains, enjoyed numerous success stories over the last three decades. They have helped — with an emphasis on the help — more transparency and citizen participation at MTA meetings, increased attention to transit investments, better MetroCard options and the restoration of the Court St. station into a permanent Transit Museum.

Yet, when push came to shove this year, when the MTA found itself with its back against the wall, when riders and politicians uneducated in the minutiae of the transit agency’s woes started slamming it for demanding more money or threatening a fare hike, the Straphangers were hardly a force in the debate. Gene Russianoff, the group’s lead attorney, made his perfunctory appearances at fare hike meetings and saw his name in nearly every article about the MTA. His quotes though are mostly bland and forgettable. Transit opponents have their “two sets of books” while Russianoff says on the eve of the fare hikes, “It would have been much worse – with double the fare hike, coupled with severe service cuts – if the state Legislature had not passed an MTA bailout, which spread transit costs among riders, motorists and business.” You tell me which one makes for a better talking point.

Over the last few years, I’ve gone from admiring the Straphangers’ ability to get their name out there for most subway-related things to believing that the group may need a new mission and a new focus. A glance at their Web site reveals nothing compelling. There’s yet another survey about pay phones underground and an annual look at how dirty the trains are. We have the slowest buses and the state of the subway awards. The only lists that are less interesting and less variable on a year-to-year basis are those ranking colleges and universities published by U.S. News and World Reports.

The site is notably silent on the fare hike. The lone link goes back to the hard-to-find page on the MTA’s website, and the organization doesn’t have anything resembling a one-pager about the state of the MTA, contacting officials or urging better investment in transit. They’re just not doing the job.

I’m not the only transit advocate who has noticed this lack of leadership. Over at On Transport, a new site run by Chris O’Leary, he slams the Straphangers for their ineffective leadership:

The outrage over the hike was not directed at the state’s inaction, but rather at the MTA for its alleged mismanagement of funds and bloated, overpaid board of directors…In the face of all these facts, the media, politicians, and the MTA’s customers have chosen to blame the MTA for their deficit.

A logical reaction by an organization that is working for the best interests of subway riders would be a campaign of facts: simply lay out some simple facts about how the MTA got into this mess, point out what the MTA has done to improve their efficiency and transparency, and make a call to action to rally riders to demand that the state provide new funding sources for the agency.

Instead, the Straphangers Campaign sat on their hands. They joined a coalition of over a hundred organizations that created a letter-writing campaign to the state legislators, but there was nothing they did to stop the flow of misinformation from politicians into the mass media…The organization has been far less proactive and far more reactive. In a time when transit was in peril in New York, the Straphangers Campaign did what they always do. Russianoff showed up on NY1, repeated the same valid but tired talking points, but never made it part of a wide-ranging campaign to get the truth out: fares were going up because of the State Government, NOT the MTA. The Straphangers Campaign seemed content to continue simply being quoted in the news and not making news of their own.

O’Leary ends with a pair of questions: “If the Straphangers Campaign refuses to do anything other than send out press releases and ‘report cards,’ how will they affect any change in getting the MTA fully funded at the state level? And if the Straphangers Campaign won’t take up the task of rallying people around the cause of a fully-funded transit system, who will?”

Over the last few days, I’ve posed the same questions and have arrived at no answer. The news reporters are mailing it in; the advocacy groups — and I count myself here — are preaching to the choir. Somehow, someway, we have to get the message out, and if the long-standing groups who have championed themselves as the voice of the riders won’t do it, then maybe it’s time for some new voices to step up and take the reins.