MTA Economics

The New York Post discovers that, yes, some MTA employees are paid. (Source: The New York Post)

Ah, the fare hike. It’s that one time every few years when the MTA’s finances are scrutinized by everyone under the sun.

With the public hearings starting today (register here), The New York Post takes a look at what the MTA is paying its employees. Rupert Murdoch’s paper has found a rather large amount of overtime landing in the pockets of those MTA workers.

In an article detailing the escalating salaries of MTA workers, The Post has also discovered that the number of workers earning above $100,000 a year has risen as well. Bruce Golding reports:

As the MTA fights for a fare hike, the number of agency workers who took home more than $100,000 last year jumped 37 percent – as the agency paid a total of $397 million in overtime…

The number of MTA employees with base salaries exceeding $100,000 rose to 1,793 last year from 1,403 in 2005, a 28 percent jump. By comparison, the number of New York City workers with salaries over $100,000 rose only 6 percent during the same time.

Overtime payments helped push the number of employees taking home more than $100,000 to 4,382 in 2006, up from 3,209 the year before – an increase of 37 percent. At the LIRR, overtime pay boosted 656 workers past $100,000 in earnings, compared with 205 who made that much in straight salaries. At Metro-North, the numbers were 240 through overtime and 226 from salaries.

Now, I can’t fault workers for earning more than $100,000. While a lot of people on the Internet who write about the subways have a very low opinion of some subway workers and Flickr is chock full of pictures of MTA employees sleeping on the job, if their seniority and work ethic demand it, then these workers should be fairly compensated. While the article in The Post seems to be more concerned with the $100K figure than anything else, I’d like to focus on overtime.

According to this article, the MTA doled out a whopping $397 million in overtime last year. Now, that $300 million sure does sound familiar. Ah, right, it’s the amount of money the MTA needs next year to avoid the fare hike, according to MTA CEO Elliot “Lee” Sander.

I doubt it’s reasonable to expect the MTA to cut out all of that overtime, but I would have to believe that they could half the amount of money they pay out in overtime. Something in the organization culture of the MTA has led many, many employees to work overtime and expect pay for it.

As the MTA’s finances come under the fare hike microscope for the next two months, the MTA should start to cut some of that fat. Evening saving a quarter of this overtime money — $100 million — brings the organization that much closer to avoiding a fare hike or, if the fare hike is inevitable, paying for more service upgrades. Let’s see it happen.

So the fare hike. We’re talking about that confusing fare hike with the two-tiered fare structure, the supposed off-peak discounted and the upcoming public hearings designed to solicit rider opinion. Well, it ends up that the fare hike is not as straightforward — or as cheap — as was originally reported.

Since the end of September, all of the fare hike coverage had focused on this off-peak proposal. By charging people $1.50 for off-peak rides, the MTA hopes some riders were eschew rush hour travel for less crowded times. It’s an artificial — but potentially effective — way of alleviating subway overcrowding. But now the bombshell: That $1.50 may just be a pipe dream. According to a report in The Daily News, that off-peak fare could end up being $1.75 instead of the originally reported figure of a $1.50.

Take it away Pete Donohue:

The MTA may jack up fares even higher than top staffers proposed in September, the authority revealed on Tuesday as it set hearing dates for riders to sound off.

Public notices announcing next month’s hearings warn riders that Metropolitan Transportation Authority next year could impose a peak fare of $2.25 – without a discount option that could soften the blow for many rush-hour riders. The base fare is now $2. The notices also for the first time say an off-peak fare – proposed by top MTA staffers last month to be set at $1.50 – could actually cost $1.75.

According to MTA spokesman Jeremy Soffin, these posters were designed to give riders a look at the wider range of options that the MTA board will face in December. The board has to figure out how to raise nearly $600 million in revenue over the next two years, and a $1.75 off-peak fare, which doesn’t represent much of a discount from the current buy-five-rides, get-six deal in place, is just one of many solutions.

Furthermore, this $1.75 figure isn’t the only surprise on the poster (available here as a PDF). The other changes include reducing or eliminating the bonus on pay-per-ride Metrocards of $10 or more; increasing the cost of a 30-day unlimited card to $84 or $2 more than was originally announced; eliminating the one-day Fun Pass entirely; and increasing the minimum amount on one Metrocard to six dollars or one and a half round trips.

While the MTA notes that these higher figures are, in the words of Soffin, “not our proposal,” it is dismaying to see even higher figures emerge on the official announcements of public hearings. Considering the fact that New York subway riders are facing a very substantial fare hike, the MTA should be as transparent as possible with its numbers over the next two months.

We need full public accounting for the fare hike; we need to know how much the fares are going up; we need assurances that we’ll be better better and more reliable service. While I’m hoping for accountability, I fear the smoke and mirrors. These posters are not reassuring.

Of all of the charges levied against Mayor Bloomberg’s congestion fee by the plan’s opponents, I am most entertained by those weakly arguing the congestion fee is a regressive tax designed to hit poor more than it affects the rich. Well, newsflash, folks: The poorer people aren’t the ones driving and paying for a car in New York City.

To find an example, though, of a crippling regressive tax at work, look no further than today’s announcement by the MTA describing the potential fare hikes. The proposal, detailed here by William Neuman of The Times, involves jacking up the base fare and the prices on Unlimited Ride Metrocards, doing away with the buy-five-rides-get-six discount and instituting lower off-peak fares.

William Neuman, in an earlier post at the Cityroom blog, has more:

A person who buys a pay-per-ride MetroCard would be charged $2 to ride the subway or bus during the morning and evening peak periods. Travel during off-peak periods, including midday, would cost $1.50. The intention would be to encourage some riders to travel during off-peak hours, which could reduce crowding during the rush periods.

If that proposal were adopted, the 7-day and 30-day unlimited-ride MetroCards would increase to 8 percent from 6.5 percent. A new 14-day unlimited ride MetroCard would be created, at a cost of $48. The authority would no longer offer 20 percent bonuses for purchases over $10.

An alternate proposal would involve a more traditional fare increase. The base fare would increase to $2.25 from $2. The pay-per-ride MetroCard would continue to operate as it does today, with riders receiving a 20 percent bonus if they put at least $10 on the card. The cost of weekly and monthly unlimited ride passes would each go up 4 percent. And a new 14-day MetroCard would cost $45.

Based on this information, the MTA, projected nearly a $1 billion surplus this year, is going to, as Straphanger Campaign lawyer Gene Russianoff noted, foist its desired money onto commuters instead of forcing the state or city to pick up a tab. This development comes after both the state and city comptrollers issued reports noting that common sense measures could result in the necessary financial allocations without the need for a fare increase.

All of which brings me back to my original point: By charging people more for peak-hour rides, the MTA, if it opts to go with the peak/off-peak plan, will be instituting a regressive tax on everyone who rides the subways to and from work during rush hour. The MTA’s proposal, in an attempt to alleviate overcrowded rush hour subways, penalizes those who commute to work during the rush hour time slots and rewards those who use the subway outside of rush hour.

But who are the people who must ride the subways during rush hour? And who are the people who can afford to ride the subways in off-peak hours? Generally, those people making the least are the ones riding during the peak hours. The 9-to-5ers with little job flexibility will have to shoulder the burden of the fare increases.

Meanwhile, people beholden to no one — or few others — can take the subway at a more leisurely and cheaper hour. People who work themselves and set their own hours, people who are their own bosses, they can take the subways during the $1.50-fare periods. The people who are most able to afford the fare hike won’t be the ones suffering because of the fare hike.

While even the plan simply to have an across-the-board fare hike is a regressive tax, the one with tiered fares is more egregious than the other. The only way to avoid a regressive tax when trying to raise more revenue would be to avoid a fare hike. But as SUBWAYblogger noted, these fare increases, one way or another, are going to be a reality. I just hope those sounding the alarm of the congestion fee as a regressive tax take up the mantle when it comes to opposing this subway fare hike too.

For the last few months, we’ve heard a litany of calls from politicians urging the MTA to hold off, or outright reject, the upcoming fare hike. The folks who hold the purse strings — the New York State Comptroller and the New York City Comptroller — got in on the act as well. Now, a supergroup of advocates has called on the MTA to hold off on implementing the hike until the middle of 2008.

These advocates, led of course by the ever-present Gene Russianoff, have released a letter written to MTA CEO Elliot “Lee” Sander, urging him to wait until at least March 31, 2008, to proceed with the fare hike. The letter, available here as a PDF, lays out a compelling case for the delay. Take a look:

As civic groups concerned with decent transit, we write to urge that if the MTA does adopt a fare increase for 2008, no final action be taken before March 31, 2008, at the earliest …

Right now, the MTA plan calls for a decision on fares in December 2007, to go into effect in “early 2008.” But we urge that no final action on the fare should happen before March 31, 2008. That’s because two other key actions take effect on that date.

First, this is the date by which the state legislature and New York City Council have to decide on the recommendations of the traffic congestion mitigation commission recently created by the state legislature. The commission will be considering Mayor Bloomberg’s congestion pricing proposal, which would include new transit funding.

Second, on that same day, the MTA is required to submit its five-year, multi-billion dollar capital rebuilding plan, giving the public its detailed program for what repairs will be slated between 2008 and 2013. Our groups feel strongly that the whole range of transit funding — from operations to capital needs — should be considered as a whole, rather than piecemeal.

This is a rock-solid rebuttal to what is beginning to look more and more like an unnecessary-for-now fare hike. Of course, the MTA is pushing back. In an article in today’s Daily News, Jeremy Soffin, MTA spokesman, spoke on the need for financial relief sooner rather than later. “Our financial plan puts the MTA back on sound financial footing while actually increasing service for our ridership,” he said. “Delaying its implementation will only lead to larger fare increases and unacceptable service cuts.”

But if the city and state come through on the congestion pricing issue, won’t the MTA stand to benefit more by delaying the fare hike until every piece of the financial puzzle can be completed? I think so; Gene Russianoff thinks so; now we just have to hope the MTA thinks so too.