2007-06-08 / Community

Straphangers: Subway, Bus Fare to $2.40 By 2010

The NYPIRG Straphangers Campaign today released an analysis of the MTA's finances over the next three years. The review was conducted by the New York City Independent Budget Office at the request of the Straphangers Campaign, which is releasing the analysis.

The IBO forecasts that the base subway and bus fare would have to rise 20% from its current level of $2.00 to $2.40 by 2010 - even if other sources of revenue grow at a similar rate, such as 20% higher yields from dedicated taxes, state subsidies and automobile tolls.

The cost of a 30-day unlimited MetroCard would have to rise from the current $76 to $92 under this scenario. 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 forecasts 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."

Growing operating deficits - and the resulting pressure on fares - would be due to "a dramatic deterioration of [the MTA's] financial situation over the next three years," wrote the IBO. The IBO relied on MTA projections for its analysis, finding them realistic, and did not make its own projections.

While the MTA is expecting a surplus of $270 million in 2007, the IBO "projects large operating budget shortfalls" in 2008 ($799 million), 2009 ($1.46 billion), and 2010 ($1.78 billion), according to the IBO's "Review of the MTA's Financial Outlook and Options for Closing the Gaps."

The IBO noted that "debt service" alone - which are payments on the interest on scores of billions of dollars of bonds issued by the MTA for vital transit repairs - would increase by $563 million between 2006 and 2010, going from $1.310 billion annually in 2006 to $1.884 in 2010.

"If we don't get financial help soon, transit riders will face whopping fare hikes," said Gene Russianoff, senior attorney for the Straphangers Campaign, a riders group. "We call on Governor Elliott Spitzer for help, especially in pressing for Mayor Michael Bloomberg's congestion pricing proposal to help bring billions to the transit system."

Among the IBO's findings (on page nine of the attached analysis) for closing the budget gaps through 2010 were:

+ "The cash [subway and bus] fare would have to rise from its current level of $2.00 to $2.40, and the cost of a 30-day unlimited MetroCard would have to rise from the current $76 to $92," in a scenario where all major MTA revenue sources - fares, tolls, dedicated taxes, and subsidies- were to rise at an equal 20%.

+ 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.)"

+ "Closing the MTA's budget gap through fares alone would require an increase of 48% over 2007 levels by 2010, the cash fare would rise to almost $3, the cost of a seven-day unlimited-ride MetroCard would rise to $36 from the present $24, and the cost of a 30-day MetroCard would rise to $112 from the current $76."

+ The IBO also estimated that "if the MTA's projected deficits were eliminated solely through fares, NYC Transit's fare box operating ratio would rise from its current level of around 59% to over 79% by 2010."

+ (The IBO also noted: "The MTA funds over half of its transit operating expenses through fares, a considerably greater share than most transit agencies. For example, the fare box recovery ratio of the Chicago Transit Authority was just 36% in 2005.")

+ 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."

The IBO also reviewed possible revenue options for addressing MTA operating needs. In a cover letter to the IBO's analysis, the IBO's executive director, Ronnie Lowenstein, noted: "We present these examples to illustrate the effort that will be needed to close the MTA's budget gaps and not as an endorsement or recommendation of any examples."

Examples of possible revenue options reviewed by the IBO included:

+ phasing-in 20% fare hike yields $342 million (2008), $624 million (2009) and $764 million (2010)

+ phasing-in 20% toll hike yields $114 million (2008), $208 million (2009) and $255 million (2010)

+ 1/8 % increase in downstate sales tax yields $236 million annually;

+ 1/8 % increase in real property trans

fer tax yields $30 millionannually

+ extending mortgage recording tax to co-op apartments yields $140 million

+ increasing state general aid to MTA to level permitted under law yields $444 million annually.

Russianoff noted that Mayor Bloomberg's recent congestion pricing plan would help yield $900 million annually for transit, when coupled with proposed new commitments of state and city aid.

Only "modest savings were available from reductions in service," wrote the IBO. For example, the IBO noted that a 2006 MTA proposal to discontinue service on 95 New York City Transit late nights was "projected to save only $8.7 million, about one sixth of one percent of NYC Transit's total operating expenses." The IBO analysis also noted that "the MTA's main labor contract (with TWU Local 100) does not expire until January 2009, so any initiative in this area would be a long-term strategy."

The IBO was created by a City Charter Revision Commission in 1989. Its mission is to provide independent, non-partisan financial advice to public officials and civic groups. The IBO director serves for a fixed, four-year term. In their analysis requested by the Straphangers Campaign, the IBO concludes that: "given the size of the MTA's projected shortfalls it is likely that remedying the problem will require a mix of actions and sources that will spread the burden across a broad range of the region's businesses and residents."

More information on Mayor Bloomberg is congestion pricing proposal can be found at www.campaign forNew York.org. It is supported by many civic organizations.

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