I prefer not to repeat myself, but with so much disinformation being put out with regards to the proposed MTA fare increase, I feel compelled to respond. But before responding to the nonsense, let’s talk about what is real, and what no one is saying. For the past 15 years, advocates of lower taxes, lower fares, and richer pensions, and other spending priorities have had a deal – satisfy all of them by de-funding the transportation system, both road and transit. Why haven’t we noticed? Because billions of dollars were borrowed so the consequences of this would not become apparent until those who mattered have cashed in and moved out. The sums of money are so large that they make the whole fare increase discussion trivial. The MTA has a surplus? The agency’s buses, subway cars, tracks, structures and other equipment wear out at a steady rate, and if they aren’t replaced at that rate the transportation system falls apart. In order to pay for a barely break-even amount of normal replacement in the 2005 to 2009 period, the MTA is borrowing $12.5 billion or $2.5 billion a year. So how can an agency borrowing $2.5 billion per year to meet expenses that will continue indefinitely have a surplus? It’s like all those households borrowing against their home equity at low teaser rates to live large for a few years, but now facing foreclosure and bankruptcy. Massive borrowing by the MTA has going on since the early 1990s, because like sub-prime mortgage borrowers, many of us didn’t want to read all the boring budget documents. Our so-called leaders, like predatory lenders, didn’t mention the eventual bill, only the short-term monthly payment, which they were considered heroes for keeping as low as possible.
These same “leaders,” now that the cost of their decisions may be about to explode, are coming up with this whole “save the fare” issue to make sure that when the sacrifices are made they aren’t held accountable. All that is going on is misdirection by people who endorsed the finances of every MTA Capital Plan, every fare discount, every pension sweetener, every debt incurred. Both the city and state government cut off most money to the MTA, aside from the dedicated taxes collected specifically for the agency. The state handed some of even that dedicated revenue back to suburban counties for road maintenance, forcing city taxpayers to pay for their roads. Which in part offsets the fact that the state also raided the state road trust fund, paid into by taxes and fees paid by drivers, to fund other things. Additional dedicated MTA funds, paid by city residents, were diverted to transit agencies Upstate – the part of the state where politicians stoke resentments and attract votes by telling people that city residents are lazy parasites living off them. All these “savings” were redirected to those who mattered and played the game in Albany, those who have taken their winnings and moved on.
So now politicians from the city are saying that since someone (they aren’t exactly saying who) has drained the MTA, riders shouldn’t pay more. But riders, or should I say past riders, were in on the deal too, no matter what the Straphangers say. The fact is that the fare was $1.50 in 1995, with no free bus-to-subway transfers, no 6 for 5 discounts, no unlimited rides. Without adjustment for inflation, the average fare is lower than 12 years ago, but with inflation, it has plunged. Advocates of lower fares point out that fare revenues cover a higher share of operating costs in New York than elsewhere in the U.S., perhaps copying data I reported several months ago here http://www.r8ny.com/blog/larry_littlefield/the_national_transit_database_retired.html . That is true. But the MTA could actually get more money, much more money, by cutting the fare back to $1.50 and eliminating all the discounts.
What the advocates don’t say is that taxpayers and tollpayers also pay more for mass transit here than elsewhere – the New York City Transit subsidy alone costs New York City residents 1.5 percent of their personal income over and above what the fare covers. The national average for ALL state and local government taxes is just 10 percent of personal income, and in most of the country very little of that goes to mass transit. The reason both taxpayers and fare payers are paying more for transit is that our transit system is bigger. If we only had one little rail line like St. Louis, we could have a fare of zero and the subsidy required would still be low. But the transit system’s large size is also the reason why we save so much money on transportation overall, thanks to all the private motor vehicles we do not have, and miles we do not drive, relative to other Americans.
Neither taxpayers or riders are paying enough, however. What do Richard Brodsky and the other 80 folks objecting to the fare increase have to say about the next MTA Capital plan? Having borrowing for the equivalent of the operating costs for 15 years, do the expect to the MTA to simply cease ongoing normal replacement and allow the system to fall apart now that their g-g-generation won’t need it anymore? Or do they plan to keep borrowing for another 15 years? Assume (conservatively) that construction costs are up 20 percent from five years ago. That means borrowing another $15 billion, not for new services like the Second Avenue Subway and East Side Access but just for ongoing normal replacement, in the 2010 to 2014 period. And perhaps $18 billion in the five years after that. And another $21.6 billion in the five years after that. So that’s $67.2 billion in debt right there, with a cost of debt service that would exceed the entire budget of New York City Transit, and would have to be paid without a single bus or subway train being run. The massive pension and retiree health care obligations, and debts incurred by the road system, are on top of that.
Perhaps the greatest fraud is the way politicians of all stripes talk about benefits from the government or agencies like the MTA as if government and the MTA somehow have their own money, rather than someone else’s money. Republicans pretend that tax cuts can be bestowed, and Democrats pretend that spending and benefits can be increased, with “the government” or “the MTA” making up the difference. Well the government and the MTA are merely conduits, and if some people are taking more out or putting less in, someone is going to be the loser. If politicians call for lower fares today they are actually calling for someone else to become worse off, but they never identify that someone else. At least not publicly.
The main loser has been our future, both with regard to MTA finances and with regard to just about everything else. They have robbed the transportation system. They have robbed Social Security. They wish to leave nothing behind for the rest of us. And they expect us to be grateful and treat them as heroes because for a few more months they will “save the fare.” In addition to deceiving the losers, as part of their services to those who really count, they allow the winners to deceive themselves into believing they are getting what they are entitled to and there is no loser on the other end. Government by rationalization.
Given that we are nation where millions have squandered their personal futures by going deep into debt to buy McMansions, hummers, cruises and lots of junk from China, a nation where the collective impact of those decisions over many years is debasing our currency, a nation that has put itself in a position of acute political and economic vulnerability in exchange for 20 years of cheap oil and gasoline, now over, rather than endure the higher prices that would make alternatives and conservation profitable, perhaps it is no wonder that they have been able to get away with it. Who knows? Perhaps those pols demanding that the fare increase be deferred are so skilled in self-deception that they have completely rationalized what they have done, and thus what they are. Well I know what they have done, and what they are.
Brodsky has called on the MTA to ask for more money. I’ll ask for them. We need $3 million dollars in current revenues, collected in the year it is spent, over and above what has been provided in the past (plus adjustment for inflation), to pay for the agency’s ongoing normal replacement in its current and future capital plans. We also need ongoing reconstruction of the state’s roads and bridges to be funded with revenues collected in the year spent. How much is that, another $2 billion perhaps? We need all the additional costs created by the “free” pension enhancement in 2000 to be covered. Finally, I believe the MTA’s forecast of next year’s real estate transfer taxes is off on the high side by at least $500 million. We need funds to cover that too. So a $5.5 billion addition to the state budget is the lowest level possible if there is to be any kind of generational equity and a reasonable future for the state. And we need all of this additional money to be found without any reduction in expenditures for any of the other losers, such as primary health care and the New York City schools, and without any increase in state and local taxes by the state’s overtaxed wage earners.
And, if any additional money is available over and above that, it can provided to “save the fare.” Personally, I like the modest fare increases proposed by the MTA. It is the massive fare increases and service reductions certain to result from past and present decisions, decisions that predate the Bloomberg and Spitzer administrations but which Bloomberg and Spitzer have thus far decided to continue, that I mind.