Next week, bus and subway riders in New York City will get hit with a fare hike — the fourth in five years. Starting in March, the base fare will increase by 25 cents to $2.50. Seven-day passes will cost $30, a dollar more than they did previously, and 30-day MetroCards will increase by $8 to $112.
But don’t get comfortable in your seat yet (if you can find one). The agency is planning yet another fare hike in 2015 — one transit advocates are already deriding.
It begs an important question: Is the planned 2015 fare hike a done deal, or are there actually things the MTA, city and state can to do prevent it?
Two important facts are not in dispute. One, the transit system is underfunded. And second, the MTA has few options to increase revenue. Most of the money for the MTA’s operating budget comes from just two sources: the revenue raised from fares and bridge- and-tunnel tolls, which account for about two-thirds of the total, and funds provided by the state government.
A myriad of forces drive the MTA’s persistent financial woes. According to transit advocate Gene Russianoff of the Straphangers’ Campaign, pinpointing exactly one cause is bit like solving a murder mystery. “It’s like inviting ten strangers to your mansion and figuring out who did it,” he said.
But among the culprits is the MTA’s longstanding tendency to borrow money to finance not only for new equipment — what agencies usually borrow money for — but also repairs to the system.
“Maybe that doesn’t hurt early on in the process, but as time goes on, more of your budget goes toward debt,” said research associate Rahul Jain of the Citizens Budget Commission, which has criticized the MTA practice of borrowing to pay operating costs. “You’re above now 15 percent of your cash budget that needs to go to debt servicing, and that number can go up and up and up.”
Borrowing has led to $33 billion in debt, and this year the MTA expects to spend more than $2.2 billion — or about 17 percent of its total budget — paying it off.
And debt costs are not the only budget item that has been growing.
“We have to face increased non-discretionary expenses, expenses that we can’t control,” said MTA spokesperson Kevin Ortiz. Those include pensions, health care and other benefits for workers, as well as paratransit services for riders with disabilities.
There’s no direct route to increasing revenue to cover those rising expenses. “The menu of options is really very small because we’re talking about big money here,” said Veronica Vanterpool executive director of the Tri-State Transportation Campaign. “We’re talking about billions of dollars, not millions.”
Here are three ways the MTA could raise those billions:
NEW TAXES. This year, the MTA will receive about $4.7 billion — about 35 percent of total revenue for its operating budget — through taxes levied by the state specifically to fund mass transit. Changing or increasing these taxes would take an act of the legislature — like a 2009 MTA bailout package that included a payroll tax. While ultimately members of the public still pay, taxes can be made more progressive than a flat fare, which hits poorer riders harder than wealthier ones.
Russianoff wants to see more state investment in the MTA. “At some point the legislature is going to have to bite the bullet like it did 2009 and come up with new revenues,” he said.
Imposing new taxes, though, is not a guaranteed way to generate revenue. The money brought in can fluctuate based on market conditions. As for the 2009 payroll tax — a Long Island judge rejected it last year as violating the state constitution, and while the tax is still in effect, the fight against it continues.
Finally, it’s unlikely that additional funds will come from the federal government. That leaves the MTA. It has had some success raising money by selling advertising space, leasing properties, and licensing T-shirts, train sets and the like, but the money raised is in the millions, not billions.
COST CUTS. The MTA can also cut its labor force and reduce related costs. The agency has already rebid health care contracts, reduced overtime and eliminated administrative positions. The MTA projects such efforts will result in $800 million in savings this year, and $1.2 billion annually by 2016.
The agency’s non-union employees have not had a pay increase since 2008, while those represented by the Transit Workers Union Local 100 have been working without a contract for a year. The MTA’s financial current projections assume that there will be a net zero wage increase for three years; the union has asked the MTA for cost-of-living-raises.
TOLLING DRIVERS. Other options for raising revenue include congestion pricing — originally proposed by Mayor Michael Bloomberg as part of PlanNYC — under which drivers would pay to enter central Manhattan during prime hours. That proposal died in the legislature, and similar plans have not gained much traction since.
Advocates are not ready to throw in the towel yet. “I would say that no fare hike is inevitable,” said Vanterpool. “But unless there is new financing streams, the 2015 fare increase could be inevitable.”
Jain at Citizens Budget Commission calls the 2015 hike “very, very likely,” because of the mountain of bills facing the MTA. “These are expenses that have to be paid.”