A report about the M.T.A. prompts a debate about what ‘improved’ means
New York State comptroller Tom DiNapoli issued a report today declaring the M.T.A.'s finances "much improved," and said that was an argument for "reducing the size" of the fare hikes planned to take effect beginning in 2015.
The M.T.A. and the Straphangers Campaign quickly echoed his point, but apparently it's a debatable one among transportation advocates.
"Where’s the other money?" asked Rich Barone, the director of transportation programs for the Regional Plan Association. "How are they going to make up that difference? ... They can cut service. That's their recourse."
Benjamin Kabak made a similar the argument today over at Second Avenue Sagas.
"[C]ertain government bodies should rise above the populist calls against fare hikes," he wrote. "Whenever the M.T.A.’s budgetary conditions improve, as they recently have, anyone with a megaphone yells for fare hike reductions. It may make for happier customers and, perhaps, more riders, but it does not make for sound fiscal policy."
DiNapoli bases his recommendation on the fact that the operating side of the M.T.A.'s ledger has stabilized since the depths of the recession.
The M.T.A.'s financial outlook, according to him, is improved thanks in part to the strengthening economy on which the M.T.A.'s tax revenues rely, and cost-cutting at the M.T.A.
Barone thinks that's a dubious claim.
"On an operating basis, even that’s questionable, because you could obviously argue that it could spend more money just to maintain the stations better, the fleet better, forget the capital needs," he said.
And then, once you take into account the authority's next capital plan, which isn't funded yet, and the fact that the authority's debt burden is astronomical (and serviced from the operating side of the budget), the picture looks a whole lot grimmer.
In fact, DiNapoli's own report said that "Without fare and toll increases, debt service as a percentage of total revenue could rise from 16.2 percent in 2013 to nearly 20 percent in 2018. (Even with biennial fare and toll increases at the projected inflation rate, the burden could reach 19 percent by 2018.) These estimates also exclude the potential impact of the next capital program."
Which brings us back to those fare hikes.
"It’s contradictory, right?" said Barone. "You read it. He’s says in one breath that the M.T.A. is doing quote-unquote better ... and then in the next breath, he says that the M.T.A. is in a really precarious position financially."
Barone's R.P.A. was part of a coalition of organizations that successfully called for biannual fare hikes back in the depths of the recession.
"In the past, these fare hikes were either infrequent and when they did happen they were 20 percent increases," said Barone. "The idea of a regular increase is something that we felt was necessary in order for the M.T.A. to have a better, stabler financial footing."
"It’s important that we try to keep everybody focused on the fact that the M.T.A. is not fiscally healthy," he added. "It has tremendous amount of debt."
UPDATE: Gene Russianoff, head of NYPIRG's Straphangers Campaign, had this to say: "I thought the DiNapoli analysis was the height of reasonableness. The M.T.A. is a billion dollars ahead of where they were this summer, so why not consider doing something about every-2-year fare hikes at 2X the rate of inflation. Whether it's a sea of debt service or 'pay-as-you-go' using fare revenue, it's the riders who get screwed. That's where Rich Barone's logic takes us."
"The IBO report on fares in July shows were frequent high fare hikes are taking us: 'The M.T.A. relies more heavily on fare revenue from riders than many other transit system operators. Using 2011 data from the Federal Transit Administration, IBO estimated that the overall farebox recovery ratio—passenger fare revenue divided by operating expenses—was 58 percent for New York City subway and buses, compared with ratios of 44 percent, 38 percent, and 36 percent for local transit in Chicago, Boston, and Philadelphia, respectively."