THE BLOG

We Need to Finance and Subsidize Mass Transit

03/30/2015 08:38 am ET | Updated May 30, 2015

This past week, New York City's subway fare rose from $2.50 to $2.75. In some ways this system is one of the great bargains in American transit. Last week, I traveled to Washington D.C., where metro fares are often double the cost of New York's subway. Commuter lines in New York, however, are also growing more and more expensive. For some, the convenience and speed of leaving the auto at home is worth the money, but for working people struggling to make ends meet it is a hardship, and overall, higher mass transit fares encourage people to drive.

Of even greater concern than rising fees is the failure to adequately fund the capital plans that keep mass transit systems from deteriorating. In New York City we underfunded mass transit capital throughout the 1960s and 1970s and nearly destroyed the mass transit system. The result was a major and expensive effort at reconstruction in the 1980s and 1990s. Here in New York it appears that we are about to begin another cycle of disinvestment. While mass transit ridership has risen to record levels, the Metropolitan Transportation Authority has been unable to generate the state funding needed to subsidize its capital plan. Reporting in the New York Times last week, Emma G. Fitzsimmons observed that the Metropolitan Transportation Authority's:

...capital plan... proposes $32 billion in spending over five years, but it is $15 billion short -- the largest funding gap ever and a striking sign of the difference between what the system needs and what the authority can afford. Mr. Cuomo, a Democrat, has called the plan "bloated" and has not addressed the funding gap... But the authority's chairman, Thomas F. Prendergast, has argued that the measures outlined in the capital plan are essential, such as replacing aging cars and tracks, modernizing the signal system so more trains can run and beginning the next phase of the Second Avenue subway.

The transit agency's capital plan may well be bloated, or more than we can afford, but the need for a serious capital plan and a better form of transit subsidies is a real one. The financial facts that led Mayor Michael Bloomberg to propose congestion pricing remain. Too much time (and therefore money) is wasted when trucks, cars and busses are trapped in Manhattan gridlock. Getting people to pay more for driving on the surface of Manhattan south of Central Park could help address both the traffic and transit dollar problem. If Governor Cuomo believes the MTA capital plan is too large, he should use his control of the MTA Board to develop a more realistic plan. To fund an expanded capital plan we need to develop a new revenue stream that is routine and predictable.

The issues of capital investment and fare subsidies are distinct but related; both require money. A low bus and subway fare is a blunt instrument for making sure working people can commute at a reasonable price, but it works. A tax deduction or credit may be too indirect and too long-term to motivate behavior. If fares must rise, however, a discounted transit fare for low-wage workers, similar to the one given to senior citizens, could provide a way to make mass transit affordable, while raising the fare for people with the ability to shoulder higher costs.

Anyone riding mass transit in the New York region this past winter has seen the stress that this old system is under. Delayed trains, decaying stations, and more crowded cars are increasingly common. There is little question that the system needs a cash infusion for long-term capital improvements and short-term operation and maintenance. Mass transit use is growing in New York City, due in part to economic and population growth. In 2013, total subway ridership totaled 1,707,555,714 trips. Bus ridership in the city that year was 677,569,432 trips. Ridership growth is not simply happening in New York either. In an article in the New York Times this past December, Jon Hurdle reported increases mass transit use in:

... San Francisco, Chicago and New York, all of which reported annual increases in the number of riders for the both the latest quarter and the first nine months of 2014. The national increase, which follows a 57-year high in ridership for all of 2013, reflects improvements in the reach, trip frequency and quality of public transportation, and weakens a traditional link between gas prices and transit use, said Michael Melaniphy, president of the [American Public Transportation] association. While previous spikes in transit use resulted from increased gasoline prices, and people would typically get back in their cars when gas prices retreated, that relationship is unraveling as transit services improve, Mr. Melaniphy said. The latest evidence of a break in the link is an increase in ridership at a time when retail gasoline prices have fallen to their lowest in more than four years, he said.

People are getting tired of being stuck in traffic, and the availability of mass transit has a positive impact on real estate values in many parts of the United States. The New York area's mass transit system is one of the region's great advantages as it seeks to become more sustainable. While most greenhouse gases in other parts of the United States come from transportation, in New York, most emissions come from buildings. It is a good idea to keep transit as energy efficient as possible. On a per capita basis, New York City is still the most energy efficient place in America. A viable and functioning mass transit system is a key element of the region's energy efficiency and economic vitality.

Maintaining that system and ensuring it can attract both working people and wealthy people, and is an essential public service in a crowded place like New York. Places like Chicago, Washington D.C. and San Francisco also have similar needs. The growth of the Washington metropolitan area into Maryland and Virginia over the past quarter century would not have been possible without the Metro transit system. Anyone trying to leave the district by auto at the end of the workday can tell you what gridlock really looks like. The DC system, like New York's, faces fiscal challenges. Writing about funding the DC Metro system in the Washington Post this past December, Paul Duggan reported that:

For the 12 months starting in July 2015, Metro's financial managers have proposed an operating budget of $1.8 billion -- about half of it coming from fare revenue -- to cover the day-to-day costs of running the rail and bus systems. That would be about $69 million more than the current operating budget, or an increase of about 4 percent. But next fiscal year's proposed $1.3 billion capital budget -- money for infrastructure upgrades and other long-term improvements -- would amount to 14 percent more than this fiscal year's $1.14 billion capital spending plan. Money for the capital budget comes from federal, state and local sources, not from fares.

Duggan detailed a series of important modernization steps proposed by Metro's managers but noted that, "The projects will go forward only if money to finance them is appropriated by the Washington-area jurisdictions served by Metro." As in New York, there is widespread support for maintaining and improving mass transit, but difficulty in finding the money needed to fund capital projects.

While it would be nice to see a mass transit financing solution included in an effort to rebuild the nation's depleted highway trust fund, a nation that refuses to tax itself to repair deteriorating roads and bridges appears unlikely to provide funding for mass transit. Still, no effort to increase energy efficiency and reduce greenhouse gases can succeed without enhanced mass transit. Since a national solution is not on the political agenda, DC, New York, Chicago and San Francisco are on their own. We should get used to it.