Straphangers To Lawmakers: How To Avoid A Fare Hike
The Straphangers Campaign released the following letter this week to state legislative leaders:
June 22, 2007
Hon. Eliot Spitzer
Governor
Executive Chambers, State Capitol
Albany, New York 12224
Hon. Joseph Bruno
Majority Leader
New York State Senate
Albany, New York 12247
Hon. Sheldon Silver
Speaker
New York State Assembly
Albany, New York 12248
Hon. Malcolm Smith
Minority Leader
New York State Senate
State Capitol
Albany, New York 12247
Hon. James Tedisco
Minority Leader
New York State Assembly
State Capitol
Albany, New York 12248
Re: Congestion Pricing and Transit Fares and Repairs
Dear Governor Spitzer and Legislative Leaders:
The Straphangers Campaign urges that you move a congestion pricing plan forward for New York City – to both help prevent potential transit fare hikes and also to make sure that the MTA’s vital repair program continues at full throttle.
A June 19th Quinnipiac poll shows solid public support for congestion pricing if the funds generated “were used to prevent an increase in mass transit fares and bridge and tunnel tolls.” In that case, “voters statewide support the proposal 52 - 36 percent. Upstate voters would back the idea 50 - 33 percent, while New York City voters would back it 56 - 36 percent and suburban voters would back it 49 - 42 percent.”
Below we spell out our perception of current MTA finances and our view that congestion pricing could help underwrite both affordable fares and critical transit repairs.
MTA’s Financial Woes
The Straphangers Campaign acknowledges that the MTA is facing a long-term “structural” deficit in its operating budget, drowning the agency in spiraling deficits. The MTA forecasts deficits of $1.4 billion in 2009 and $1.8 billion in 2010.
The New York City Independent Budget Office recently confirmed this bleak picture in an analysis released in June that was requested by us.
The IBO concluded that even with new state aid the base subway and bus fare would have to rise 20% from its current level of $2.00 to $2.40 by 2010 The cost of a 30-day unlimited MetroCard would have to rise from the current $76 to $92 under this scenario.
An equivalent "20% percent increase in commuter rail fares would push the average fare paid to $6.72 on the LIRR (up from $5.58 in 2006) and to $7.29 on Metro-North (up from $6.05 in 2006.)"
The IBO also found that "closing the MTA's budget gap through fares alone would require an increase of 48% over 2007 levels by 2010. Under this scenario, the IBO forecast that "the cash fare would rise to almost $3, and the cost of a 30-day MetroCard would rise to $112 from the current $76."
Closing the gap with fares alone on the commuter railroads would mean "the average fare on the LIRR would rise to $8.26 and Metro-North average fares would reach $8.95."
Since February, the MTA has projected a surplus of $270 million for 2007. But the agency is likely to run a greater surplus. There have much better than expected returns on real estate taxes dedicated to transit, as in the past.
Much of the increase is caused by growing interest on a large chunk of the $32 billion that the MTA has been forced to borrow since 1982. These bonds were issued to make up for a lack of city and state aid badly needed to fund key repairs to the 100-year old transit system. Borrowing costs will eat up an astonishing 20% of the MTA’s costs by the end of the decade.
At the same time, the MTA’s current and next five-year capital plan face shortfalls of billions of dollars for vital repair and expansion needs.
In 2003, critics of the MTA financial reporting fairly accused the agency of misleading the public as to its financial situation. It exaggerated the size of its deficit and was sued by us and other groups. In the wake of that controversy, the MTA undertook a number of steps to make its financial reporting more open and clear. In light of those steps, we believe the MTA is accurately reporting its finances and that it does face a long-term structural deficit.
The Fare
The Straphangers Campaign does not want riders to bear an unfair share of these financial troubles.
We note that MTA New York City Transit riders already bear a high share of the costs of operating the system.
• Last January, MTA CEO Lee Sander told a state legislative hearing: “In 2007, MTA expects to generate $5.4 billion, or 60%, of its total $9.2 billion in operating revenues primarily from fares and tolls. This is a phenomenally high firebox return.”
• The MTA told federal transit officials in 2005 that the fare burden on its riders was 58% – with subways at 68.3% and buses at 42.4%. Riders contribute less in cities like Atlanta (31.2%), Boston (41%), Chicago (35.9%), Los Angeles (27.5%), and Philadelphia (38.5%.) Only two major cities – San Francisco (56.6%) and Washington, D.C. (47.8%) – are higher then the low range of the MTA’s burden. So are the PATH system (45%) and New Jersey Transit (43.9%.)
At the same, capital funding for vital transit repairs is threatened.
State and city officials will need to protect the $12 billion in current core and normal replacement capital funding, which makes it possible to buy new subway cars and buses and replace worn infrastructure such new stations, track and signals.
Former MTA New York City President Lawrence Reuter has warned that rising construction costs could eat up to $2 billion dollars of the plan, forcing he MTA to drop badly needed projects. Another $1 billion of the MTA capital plan is particularly shaky, requiring the MTA to get cash from the sate of its assets within the just the next two-and-a-half years.
Riders also will bear the costs of paying back bonds to fund expansion projects like the Second Avenue Subway or of connecting the LIRR to Grand Central Terminal. That cost is $642 million over the next four years.
A source of funding both to hold fares and to continue vital repairs could be from the proceeds of a congestion pricing system for New York. Even if congestion pricing were used largely for capital projects, this would take some pressure off fares in the years to come.
Funds from the pilot could also help underwrite the estimated $85 million for new service proposed by the City in PlaNYC to 22 outlying neighbors that now have inadequate transit options.
The alternative, as was the case in 2005, is for the legislature to also increase taxes dedicated to MTA. That year, the state legislature increased the sales tax, the mortgage recording tax and increased DMV fees. Given the very poor state of MTA finances, both steps may well be necessary.
We appreciate your consideration of our views.
Yours truly,
Gene Russianoff
Senior Attorney
Cc: Lee Sander
Hilary Ring
Tim Gilchrist
Ron Rock
Posted Jun 27 2007 by Gene Russianoff
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Responding To Roberts
On Monday, TA President Howard Roberts said there was "no room in the inn" for additional transit riders if congestion pricing went into effect. He later backtracked on his comments .
The Straphangers Campaign had this to say in response to his initial remarks:
Congestion Pricing Will Help Relieve Subway Crowding
Tuesday, June 26, 2007
The Straphangers Campaign agrees with MTA New York City Transit President Howard Roberts that several subway lines are over capacity. This is exactly why congestion pricing is so important to New York's future.
It's estimated that New York's population will increase by a million more people by 2030.
Congestion pricing would help raise $30 billion dollars over the next 20 years to repair and expand our vital transportation network, providing the capacity to move many millions of New Yorkers.
For example, congestion pricing would provide the funds for the first two phases of the Second Avenue subway, which will move hundreds of thousands of riders and relieve crowding on the Lexington Avenue line.
Similarly, congestion pricing would provide $3 billion for finishing connecting the LIRR to Grand Central. Today, more than 75,000 commuters take the LIRR to Penn Station on the West Side of Manhattan and then have to double back on the subway to the East Side. With a connection, those riders will have a much more direct commute and many will not have to use the subways.
The choice is clear: We either act now to handle the coming million more New York crowds, or drown in the crush. Congestion pricing is the answer.
In addition, under the City's plan, new transit services would be offered in 22 neighborhoods on the city's fringes, like Sheepshead Bay, Brooklyn, where I grew up. These include better transit options, such express bus and ferry service, eliminating choke traffic points for buses, "Bus Rapid Transit" and bus-only/high occupancy vehicle lanes on the Manhattan an Williamsburg bridges. These new services would be in place before congestion pricing takes effect, as was the case in London.
Transit President Howard Roberts says that there is not much room left at the inn. The Straphangers Campaign says make city transit bigger and better through congestion pricing.
Posted Jun 27 2007 by Gene Russianoff
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City And State File For Federal Funds
On Monday, the City and State filed a joint application for federal funds to setup congestion pricing and implement expanded bus service and other short-term transit enhancements prior to the start of congestion pricing. Here are the details:
Total federal funding requested: $536.9 million
Major elements of federal request:
- $107 million for EZ-Pass readers, license plate cameras and other field equipment for congestion charging system
- $72 million for central processing center for license plate recognition and EZ-Pass transaction processing for congestion charging system
- $207 million for purchase of 367 buses to increase bus service in New York City and suburbs
- $52 million for other bus improvements including bus layover facility, suburban park and ride and residential parking permit
- $37 million for bus rapid transit traffic signal priority and automated traffic signal controllers
- $4 million for East River ferry facility upgrades
Posted Jun 27 2007 by Gene Russianoff
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