The National Transit database is out for 2007, and this time there is data that is either new or at least new to me. For selected items, time series data is presented for each year from 1991 to 2007, showing how the MTA (and perhaps other transit agencies) got into this mess. I’ve analyzed the data for two MTA subsidiaries: New York City Transit (NYCT), my main concern and former employer, and the Long Island Railroad (LIRR), for comparison’s sake. The “download” portion of the attached spreadsheet also contains the same information for other MTA subsidiaries and New Jersey Transit, for those who want to go further. The expenditure detail doesn’t include such relevant items as pension costs, borrowing, debt service and retiree health care expenditures, which can be used by those skilled in political deception (or perhaps self-deception) to shift costs to, and suck revenues, from the future.
What the data does show, however, is that during the 1990s the amount of revenue provided to NYCT, both in fares and subsidies, was drastically reduced adjusted for inflation, both per-ride and per hour a revenue vehicle was in service. In 1993, just prior to the start of the administration of He Who Must Not Be Named, the NYCT had $2.92 per unlinked trip in revenues (operating and capital), including $1.30 from the fare, in 2007 dollars. By 2000 that had fallen to $1.90, a decrease of 35 percent, including $1.01 from the fare. For each hour it operated a revenue vehicle (bus or subway) in1991 NYCT received $264.65, including $94.50 from fares. By 2000 that had fallen to $155.64, a 41.2 percent decline, including $82.87 in fare revenue.
Unlinked trips, as measured by the Federal Transit Administration, are not the same as trips from the point of view of riders. When you transfer from bus to bus or bus to train the trips are “linked,” and the FTA counts them separately, a practice that may go back to the time when horsecar lines were operated by separate private companies which kept track of who owed who what when free transfers were granted. Back in 1991 it was possible to receive a paper transfer from one bus line to another. In the years since the introduction of the Metrocard, however, the “two fare” zones for bus riders beyond walking distance of the subway were also eliminated, and unlimited ride cards and per-ride discounts introduced free trips. NYCT’s revenues per ride fell significantly in nominal dollars, and drastically when adjusted for inflation.
Until 2001 expenditures per unlinked trip also fell, relative to inflation, as shown in Chart 1 in the spreadsheet, though at a slower pace. In part this was a result of rising productivity, with fewer workers doing more work in NYCT departments such as Car Equipment and Track, thanks to the introduction of scheduled maintenance, the replacement of more maintenance-intensive older cars, and the introduction of track panels for track replacement. In part ridership grew without adding to costs, filling empty spaces in under-used off-peak trains and buses. Even so, according to the FTA’s data, a consistent gap between revenues and expenditures opened up in the 1990s, one filled by debt.
Those expenditures, moreover, did not really fall as much as implied, because the MTA (and others) took advantage of a temporary stock market bubble to reduce pension contributions, another debt shifted to today. And in 2000 the state legislature passed a huge pension enrichment for older generations of public employees, citing those same ephemeral stock market gains, projecting even more, and claiming that therefore the pension enhancement wouldn’t cost anything. In reality that is another hidden debt shifted to today, and tomorrow, by Generation Greed. Pension costs soared after the dot.com bubble burst, and have been high and going higher ever since. (The response, as usual, is that those who benefited shouldn’t give up anything, but future generations of workers should be less well compensated. Again.)
The second chart shows NYCT revenues per unlinked trip by type. Most of the MTA’s non-fare non-federal revenue comes from dedicated taxes, although before the deep fiscal crisis of the early 1990s it came from other city and state aid as well. The data shows operating subsidies plunging from $1.32 per unlinked trip (in $2007) in 1991 to $0.42 in 1997, or two-thirds. The Metrocard discounts started after 1996, when fare revenue was $1.35 per unlinked trip, and cut that revenue to $0.86 per unlinked trip by 2007, despite subsequent fare increases. Capital subsidy funding jumped after 9/11, as the federal government poured in non-FTA money to rebuild damaged infrastructure, and has been falling ever since. Regular federal FTA money has also been lower in most years since 1997, measured per trip, than it had been before.
Non-fare operating funding rose after 2000 and soared in 2007, as attempts were made to “save the fare.” Most of the increase was made possible by the housing bubble and related real estate transfer tax revenues collected by the MTA. According to data produced by the firm where I am employed, New York City office and apartment building sales in dollars are currently running at about one-sixth the peak level of 2007, and New York has done very well relative to other real estate markets to achieve even that. That one-time only housing bubble windfall has already been spent, to benefit people who were only concerned with being better off immediately, with additional money borrowed on top of it. Now the windfall is over, and non-fare operating subsidies are likely to fall, even with a new payroll tax on workers (but not retirees and investment income), even with capital funding cut off, even as more and more of what ever money is available goes to debt and pensions.
Those are the revenue trends per unlinked trip. But as I’ve mentioned in previous posts on FTA data, I believe revenues and expenditures per revenue vehicle hour is the best measure of a transit system’s efficiency. Measuring expenses per trip will always make transit systems in dense locations, such as the New York City subway, look better, because many people hop on and off. Measuring expenses per passenger mile will always make transit modes that move faster, such as the Long Island Railroad, look better, because more miles are covered per hour the employees are paid. As for fare revenues, one could argue (if one avoided looking at evidence to the contrary) that all the fare discounts added since 1996 didn’t really cost NYCT anything, because they pulled in extra trips that would not have occurred on otherwise underutilized buses and trains. The cost of those additional trips, therefore, was zero so it didn’t matter that the revenues were also zero.
Chart 3 in the spreadsheet shows that for NYCT this wasn’t so. Instead, it shows that the 100-year history of “save the fare” pandering, leading to deferred maintenance and then massive fare increases, has been repeated yet again. Fare revenue fell per revenue vehicle hour as well as per trip. In the early 1990s fare increases by this measure did not keep pace with ridership declines and inflation. The chart shows that Pataki’s large fare increase in 1995-96 merely lifted fare revenues per revenue vehicle hour to a little more than in 1991. Subsequent Metrocard discounts, however, sank fare revenues relative to inflation significantly until 2002, falling farther and farther behind labor costs such as wages, pensions and health insurance. In 1996, NYCT collected $96.74 in fares per hour one of its revenue vehicles (bus or subway) was on the road, slightly more than in 1991, but by 2002 that had fallen to $75.47, a decrease of 22 percent decrease.
A few minutes after Pataki and the state legislature were re-elected in November 2002 a fare increase was proposed, leading to accusations of “two sets of books” and “hidden billions” that meant the fare increase were not need “right now.” A real set of books would have shown a growing hole, with more and more debt added each year. The 2003 fare increase merely restored fare revenues per revenue vehicle hour to the level of 1995. Even in 2007, the fare revenue NYCT received for running a revenue vehicle an hour is far below the level of 1991or 1996, at $79.14. And it doesn’t matter what the fare is raised to now. All the revenues not collected in the past, so people wouldn’t have to pay them, have translated into debts that must be repaid in the future. With interest. Forever.
As for the service cost of the additional free rides, off peak trains aren’t nearly as empty as they once were. In many cases they are jammed. But with no additional fare revenues and less subsidy available, NYCT can no longer absorb the cost of the additional riders in subsidy by increasing service, even though the infrastructure would permit it to do so. It will eventually have to cut off peak service, leading to rush hour crowding or worse, or cut maintenance and reinvestment, leading to increasing breakdowns and a downward spiral. Or, more likely both.
As Chart 4 shows, operating expenditures per revenue vehicle hour did fall from 1991 to 1996, in part due to productivity gains. They flattened out afterward. Changes that NYCT management proposed to cut costs – one person train operation, fewer booths open, station agents walking the station and occasionally picking up litter before it hit the tracks rather than staying on the booths – were successfully opposed by Transit Worker’s Union, backed by state legislators and city council members who receive their contributions. In some cases the TWU had a point. As a result, however, investments in automated ticket machines, automatic train operation and signal master towers that were supposed to save money, didn’t. A massive project to cut down on managerial and administrative work, ATS, ended up way over budget and behind schedule, another source of savings that didn’t materialize.
After 2002, expenses per revenue vehicle hour started rising as a result of the pension enhancement and past under-funding. Although the TWU hasn’t succeeded in getting their retirement changed to age 50 after 20 years of work from age 55 after 25 years of work, the plan has passed the state legislature without a single “no” vote, only to be vetoed by the Governor. Once that passes costs will soar and the system will collapse, as it did after a similar pension deal in 1965. All it takes is a midnight deal, and $billions of dollars are irrevocably handed over to the generations who are seeking to cash out and leave New York in ruins. Most current discussions of cost cuts at NYCT aren’t really productivity gains, as defined by more work done per hour spent working. They are either quality of service reductions, or employee pay and benefit reductions.
NYCT capital expenses per revenue vehicle hour are also higher. Part of this is due to a peak of rebuilding following 9/11. Part of it is due to new starts such as the Second Avenue Subway, or at least studies and designs of new starts. But most of it, as discussed previously, is due to higher contractor prices. After years of massive over-runs during a period when construction costs were high, construction costs are falling. But as a result of all the debts run up in the something for nothing, era the MTA capital plan is going to be slashed, perhaps to zero, in the near future. So once again infrastructure reinvestment will have been limited to years when the public was ripped off. Like the TWU, the MTA’s contractors are politically active in a practical, non-ideological way, in Albany. When MTA managers negotiate with unions and contractors on behalf of riders and taxpayers, they see their bosses — the politicians — standing behind those on the other side of the table. Unwilling to be “flexible?” You don’t get the job.
While NYCT revenues per revenue vehicle hour were 9.3% lower in 2007 than in 1991 once inflation is taken into account, LIRR revenues were 26.8% higher. Aside from one data point that looks like an error (a too-high figure of LIRR revenue vehicle hours in 2000 that is also in the annual data from that year), LIRR fare revenues didn’t fall as much during the 1990s, and were 12.0% lower in 2007 than in 1991, as shown by Chart 5. After all, LIRR riders already had an unlimited ride monthly deal in 1991. In addition LIRR operating and capital subsidies have soared since the early and mid-1990s, whereas for NYCT such subsidies have plunged since 1991, all on a per revenue vehicle hour basis.
Like its subsidies, LIRR capital spending per revenue vehicle hour has soared since the early 1990s, with substantial variation from year to year, as shown in Chart 6. This can be explained by the massive East Side Access project, which has a cost that is a multiple of the three-station Second Avenue Subway extension city residents will be lucky to see, and by the replacement of the M1 rail cars, purchased as part of the original MTA capital plan in the late 1960s, which wore out 10 years earlier than the typical NYC subway car as a result of poor maintenance.
As at NYCT, LIRR operating costs per revenue vehicle hour were on a downward path through the 1990s, perhaps due to deferred pension contributions, and have been on the increase this decade, as retiree costs explode. The cost gap between NYCT and the LIRR, however, was and is large. One would expect the LIRR to cost more per trip because nearly all of its riders get a seat and the trips cover more distance, something LIRR riders pay extra for compared with subway riders. In 2007, however, it cost the LIRR $491.31 for each hour one of its train cars were operating in revenue service, compared with just $151.92 for NYCT subway cars and buses. That’s 3.2 times the cost, compared with 3.0 times the cost in 1991.
Yes the NYCT figure includes buses with lower passenger capacity and no inclusion of maintenance for the right of way and stations, but according to another FTA table the operating cost of the subway system is $155.50 per revenue vehicle hour, still less than one-third the cost of the LIRR. And yes commuter rail throughout the country is generally higher than heavy rail costs (see next post), but whereas NYCT is among the lowest in operating cost per vehicle revenue hour, the LIRR is much higher than other large systems in suburban Chicago, Boston and Philadelphia. Perhaps this is because LIRR workers get disabled at ten times the rate of other railroad workers at retirement. Or because the attitude that lead to a 97% disability claim level is present from the first day on the job.
As we face two decades of soaring fares, deteriorating conditions, increasingly unreliable service, and broken promises, anger at the MTA is likely to go on increasing. It’s a easy whipping boy for politicians looking to become popular by being against the government they in fact oversee. Those soaring fares, however, are the flipside of lower fares in the 1990s. The extra MTA taxes are the flip side of tax revenues previously taken away. The reductions in spending are an offset to retiree costs enriched pay off already privileged transit workers, and deferred to the future. The system will deteriorate in the future because capital funds were squandered in the past, when it seemed they didn’t matter because they were paid for with borrowed money. No one worried about them because in the short run no one had to pay.
Lots of people got a piece. How many were against lower taxes, lower fares, richer pensions, and higher contractor payments, more consultant contracts, and the most expensive solution possible for projects like East Side Access? I was. I’ve been upset about this for more than a decade. But I ride a bicycle to work most days now, and that makes me feel better. Generation Greed can cash in its winnings and move out or die off, but it can’t stop be from getting around, unless one of its members runs me over it their SUV.
Imagine if the funding of the Greater New York Hospital Association was cut by 35% per patient and 42% per hospital room adjusted for inflation over a series of years. If the Medicaid mills don’t get an increase over inflation ever year, in fact, they threaten to let our babies die. Imagine of New York State’s schools suffered a similar reduction per child and per classroom. Outside NYC, spending there is already off the charts, and its heading that way in NYC, with all the extra money going to the retired. There is one part of our government I’d love to see cut by 42% relative to inflation. The state legislature itself.