MTA Economics

In one of the strongest pro-MTA editorials yet, The Times on Thursday urged New Yorkers to call upon Albany to save the MTA. It is a message I’ve harped upon for weeks and one well worth repeating.

As its new “doomsday” budget makes clear, the authority will require all sorts of drastic measures just to stay even. Without help from Albany, there will be fewer trains and buses, and a few subway lines and bus routes will be canceled altogether…

Governor Paterson and the Legislature must do whatever they can to keep the system from regressing to the slow and shabby days of the 1970s. A sensible course has been suggested by a commission led by Richard Ravitch, a former chairman of the transportation authority. The commission proposes raising revenues for public transit by installing tolls on Harlem River and East River bridges that do not already have tolls and levying a modest payroll tax for businesses, unions and governments in the New York City area.

Not surprisingly, the idea of new tolls has provoked a huge outcry from Brooklyn, Queens and the Bronx, and most city politicians have retreated from the idea. What this means, of course, is that the people who take their cars to work are winning out against the millions who take public transit. This is as unfair as it is environmentally unsound. Moreover, unless drivers pay their fair share, employers are likely to resist a new payroll tax proposed to help shore up the system.

New tolls and taxes are unpleasant. But longer waits and longer commutes and dirtier trains and much higher fares for millions of people who depend on public transit are more so. The remedy now depends on Albany.

In a sense, The Times is echoing what I wrote on Monday when I explored the vast difference between the numbers of drivers and transit commuters in Brooklyn. Why they published such an important editorial on Christmas Day, a notoriously slow news day, I do not know.

What I do know though and what The Times notes, many more people will be negatively impacted by a poorly funded MTA than by a bunch of bridge tolls on the East River. We’ll find out in a few weeks who will pay the most for the MTA’s woes. If the drivers don’t pay, the city as a whole will suffer, and Albany should make sure the MTA gets what it needs.

While yesterday’s FAQ hit on a few of the big misconceptions surrounding the MTA’s current budget crisis, there is one more major topic I’d like to hit on today. That topic focuses on the MTA’s current real estate holdings and the money they could draw in.

Over the last few weeks, these holdings have been in and out of the news. Most recently, we’ve heard that the MTA still expects $1 billion for the Atlantic Yards land even as the real estate development deal falls apart. Before that, Julia Vitullo-Martin published an error-filled piece in The Daily News about the MTA’s real estate. Her premise is one that deserves some attention, if only to dispute it.

When Vitullo-Martin wrote her piece, the MTA had yet to pass this Doomsday budget they unveiled upon the New York City world this week. But her point — that the MTA isn’t making the most of its real estate holdings — remain. Basically, she asked, “Shouldn’t we first insist that the MTA take advantage of any and all underused real estate that it already owns or controls under long-term leases?”

Her problem however is that she identifies parcels that either aren’t owned by the MTA or are like the Hudson Yards lands and are already included in plans for redevelopment. The MTA disputed the article and issued a statement:

The MTA is continually assessing its real estate to identify properties, like the Hudson Yards, that can provide revenue to the MTA without disrupting service. These opportunities are limited because so much of the MTA’s real estate is operated under master lease, wherein it can only be used by the MTA for transportation purposes. Nonetheless, we continue to find new revenue opportunities and use these funds to pay for critical capital needs, with $1 billion in the 2005-2009 capital program from asset sales (and another $500 million tentatively identified in the 2008-13 plan produced during the congestion pricing debate). It is bad public policy to sell assets to pay for operating expenses in any case, and to imply that the current fiscal crisis could be avoided in this way is simply not accurate.

Basically, that statement sums it up. Is the MTA making the most of its real estate holdings, as Vitullo-Martin alleges they aren’t? The answer to that is tough to pinpoint, but the fact remains that dealing with real estate holdings is a one-off solution. Let’s say the MTA really can get a few hundred million dollars for the Jay St. holdings in Brooklyn. In today’s market, that’s highly unlikely. But what happens when the budget comes due next year, and the transit agency can no longer sell real estate to cover a budget gap?

Like many critiques of the MTA, the real estate one is a red herring. We would all prefer the MTA to make ideal use of all of their lands, but forcing them to do so now would solve the problem for just one year, if that. We need long-term solutions and not some short-term measure. Hopefully, our politicians realize this as well.

By now, it’s no secret that the MTA Board had to approve the Doomsday budget yesterday. It’s little comfort to know they did so under duress. The law requires them to pass a balanced budget, and to achieve that untenable goal in 2009, the MTA will have to cut services and raise fares unless our state legislatures act.

Now, we have a buffer of a few months. As the various governing bodies in New York debate the merits of the Ravitch report, this budget won’t start to come due for a few months. In March, the Board will vote on the fare hikes. In June, the service cuts and fare increases will put implemented. That gives the city’s pro-transit forces a little under six months to get the ball rolling.

As Doreen Frasca, an MTA board member, said yesterday, “What I’m going to do, and I know a lot of other people on this board are going to do, is go up to Albany, look our lawmakers in the eye, and say to them, ‘Why can’t you put transit first on the agenda for a change?’” We should all join her.

For now, though, I want to tackle something else. As I read through the comments on the City Room post about the MTA Board meeting, I was struck by how ill-informed New Yorkers are. In an effort to avoid thinking about Civil Procedure in advance of my rapidly-approaching 1:30 p.m. final educate the masses, I thought I’d try to respond to some of the misconceptions people have surrounding the MTA. So after the jump, some questions and my answers.

As a caveat, these answers may sound to be apologetic on behalf of the MTA, but I’m a neutral third-party in favor of full funding for public transit in New York. I’m not affiliated with the MTA and am, at times, supportive and, at times, critical of the agency’s operations.

In the end, my answer is that the MTA isn’t to blame as much as New Yorkers would like to blame them. The people to target are our elected officials who refuse to vote for congestion pricing, who balk at tolling the East River bridge tolls, who won’t fund mass transit. These things aren’t free; someone will have to shoulder the costs. Will it be the riders or will it be everyone? That’s up to us.

Anyway, here we go.

I’ll let the press release speak for itself:

The Board of the Metropolitan Transportation Authority (MTA) today approved the agency’s budget for 2009, including service cuts and a 23% increase in revenue from fares and tolls. These measures were necessary to balance the budget and close a $1.2 billion deficit. Agency officials and board members expressed hope that the recommendations of the Commission appointed by Governor Paterson and chaired by Richard Ravitch would be implemented to return the MTA to stable fiscal footing and eliminate the need for these measures.

“Today we fulfilled our requirement to adopt a balanced budget within the constraints of existing resources, and those resources are simply not great enough,” said H. Dale Hemmerdinger, MTA Chairman. “Our fervent hope is that available resources will grow in the coming months, so that this budget can be amended before it is implemented.”

“I have called this budget draconian, severe, and extremely painful, and it is all of those things,” said Elliot G. Sander, MTA Executive Director and CEO. “We are deeply appreciative of Governor Paterson for convening the Ravitch Commission and of the Governor and Mayor Bloomberg for supporting its recommendations. The transit system is the engine that powers the state’s economy. Implementing the Ravitch recommendations will secure its future and act as a stimulus bill for New York State, and I hope our legislators will act quickly.”

So there you go. The clock is ticking. In March, the board will vote on the fare hike. In June, the hike and service cuts will be implemented. Now is the time to contact your representatives on the City Council and in Albany. Tell them to approve the Ravitch recommendations. Otherwise, we’ll all be paying the costs.

Reactions and more coming later.

Nearly two weeks ago, Richard Ravitch released his commission’s report upon the city. His forward-thinking recommendations called for a slight fare increase along with a payroll tax and East River crossing tolls to fund the $1.2 billion gap in the MTA’s operations budget and some of the capital campaign. Since then, New York politicians have done nothing but grandstand on the report, and the MTA is moving closer to affecting massive service cuts and fare hikes.

On Wednesday morning, the MTA Board will meet to approve a budget for 2009. By law, this budget must be a balanced one, and since no one has yet to act on the Ravitch recommendations or any of the alternative plans, the budget will, for now, feature reduced service and extreme hikes.

On Monday, the MTA’s Finance Committee approved sending this drastic budget to the full board for a vote. Both NY1 and the Daily News reported on various features of the budget. First, the good news. According to Bobby Cuza, the MTA has scaled back the fare increase for the Express Buses. Originally pegged at $7.50, up 50 percent from the current $5 fare, the plan now includes a 25 percent increase. The Express Buses may wind up costing $6.25 before 2009 is out. “We have to make priorities and the priority I think that this sets is, pain will be shared equally, however bad it may be,” Jeffrey Kay, an MTA Board member, said to Cuza.

Pete Donohue, however, had the bad news: Many stations along the BMT in Lower Manhattan will shutter overnight and over 150 stations will see reduced staffing levels:

Cuts include removing customer assistants from turnstiles and MetroCard machines, the MTA plan says. The MTA’s proposed budget also would close or reduce the hours of full-time token booths at dozens of stations, potentially resulting in longer lines.

The four stations that will go dark between 11 p.m. and 6 a.m. affect N train riders on the Broadway Line: City Hall, Cortlandt St. and Rector St. in Manhattan, and Lawrence St. in downtown Brooklyn. The Cortlandt St. station is closed for construction.

Parts of three complexes used by N trains late at night would be shuttered: Canal St. and Whitehall St. in Manhattan, and Court St. in downtown Brooklyn. The N train will stop at Canal but on an express track. At Whitehall and Court Sts. riders could use a connecting passageway to take trains on other lines.

But for all this talk of cutting, the MTA would rather not implement this budget, and they have time not to. The Board won’t vote on the fare hike until March, and it won’t go into effect until June. The state legislature, as various MTA officials have stressed, need to act, and they need to hear from a public that wants them to act.

“Our fervent hope,” MTA Executive Director & CEO Lee Sander said, “is that the legislature will adopt the Ravitch recommendations, that we will not have to do this. We share your outrage.”

A funny thing happened on the way to the fare hike. A new study notes that, as the city experienced massive growth, transit ridership — and not car use — spiked. At a time when the MTA is facing an uncertain financial future, this report should bolster proponents of the Richard Ravitch-inspired bailout.

The report, set to be released later this morning by New York transportation guru Bruce Schaller, earned some good ink in The Times this weekend. William Neuman reports:

[A]ccording to a new city study, the volume of traffic on the streets and highways remained largely unchanged, in fact declining slightly. Instead, virtually the entire increase in New Yorkers’ means of transportation during those robust years occurred in mass transit, with a surge in subway, bus and commuter rail riders…

Mr. Schaller said that vehicle trips citywide peaked in 1999 and then leveled off, with a dip in 2001 as a result of the terror attack on the World Trade Center. The overall trend has been largely stable traffic volumes across the city from 1999 through 2007. In contrast, during the years when the economy was most buoyant, from 2003 to 2007, transit ridership soared, increasing about 9 percent during those years, according to the city study.

The difference is even greater when the focus is on the core commercial district of Manhattan, south of 60th Street. From 2003 to 2007, the study found, traffic entering that area fell by 3 percent. During the same period, transit ridership into the same zone rose 12 percent.

However, the most marked change occurred in the level of travel in Manhattan that crossed 60th Street heading south. Traffic from this direction was down 8 percent, even as vehicle traffic from Brooklyn and New Jersey was largely unchanged. At the same time, transit and commuter rail ridership going south and crossing 60th Street increased.

Basically, what the city is seeing is a form of congestion policing. As travel into and out of Manhattan became increasingly frustrating and time-consuming, commuters embraced transit as a viable alternate. Not content to sit in bumper-to-bumper traffic up and down Sixth Ave., New Yorkers are now more likely to take the subway. It is, in other words, the perfect argument for congestion pricing proponents who want to show how a fee would decrease traffic by a greater degree.

But beyond the obvious, this report also shows why the MTA needs its bailout plan, Ravitch-approved or otherwise. As the city grew economically, transit ridership surged. If the MTA cannot keep the system running even as it is now, the city’s economy will slowly grind to a halt. We’ve seen it happen in the 1970s, and we’re dangerously close to that precipice again. The economy will lead transit numbers up, but declining transit reliability will lead the economy down.

The MTA, for its part, gets it. Neuman quotes William M. Wheeler, the MTA’s director of planning. “The increase in transit has paced the economy. They’re going hand in hand. I think it’s pretty compelling,” he said. “I guess now the question is what’s in the future. The challenge is going to be, can you have an adequately funded transit system to be there for that economic growth.”

That is a very good question indeed.