One57 won't save the MTA. (Matt Chaban)

Yesterday, MTA chief Joe Lhota was on the Brian Lehrer Show, where he almost immediately walked back his earlier radio statements that he was leaning toward a base fare hike to $2.50. But Mr. Lehrer was more interested in discussing the question on many New Yorkers' minds: Do we really need another fare hike, especially coming so soon after the last one?

Mr. Lhota said we do, because costs like pensions and debt-service have not kept up with revenue—and this was mandated in 2009 anyway, when Gov. Paterson and Richard Ravitch created their MTA bailout. But how could there not be more revenues, particularly from real estate? The economy is still mediocre, for sure, but in a year that has seen more blockbuster sales than we can keep track of, shouldn't the far-too-dependent-on-real-estate-taxes transit agency be flooded with cash?

In a word, no.

The MTA provided The Observer with a breakdown of the money it has brought in from real estate transactions, both residential and commercial.

Mortgage Recording Taxes from homes in the 12-county MTA region, in millions:

2004: $637.3
2005: $731.3
2006: $763.1
2007: $703.5
2008: $418.6
2009: $241.8
2010:  $239.1
2011:  $244.8
2012:  $256.7  (mid-year forecast)

Urban Taxes on commercial transactions within the MTA region, in millions:

2004: $322.5
2005: $551.5
2006: $669.0
2007: $883.1
2008: $523.5
2009: $150.5
2010:  $173.7
2011:  $352.9
2012:  $376.0 (mid-year forecast)

The simple answer for why revenues remain down is volume—the bubble led not only to high prices but also to a record number of sales. While values have recovered in some areas, there are still far fewer transactions, particularly for commercial properties, and that is holding down tax revenues.

The fact that a few Central Park apartments have traded for close to $100 million will never be enough to rescue the MTA (never mind these apartments may not be paying their fair share of taxes, anyway). Remember, this is a 12-county region; it's not just Manhattan, that Holy Grail of real estate. Many parts of the metro region are still suffering from the effects of the real estate bubble.

If anything, this is yet another reminder that the MTA is far too dependent on cyclical funding streams and that it sure could use a more reliable source of income to ensure better service and capital investment and prevent yet further fare hikes.

When he unveiled the new fare schemes last week, Mr. Lhota suggested that if the economy does begin to recover, we might be able to stave off fare hikes scheduled for two years from now—yes, again. But again, should the MTA's well-being really be so reliant on the ups and downs of the free market? This is a government bureaucracy, after all. It ought to be impervious to such things.

This also serves as a reminder to just how crazy the real estate bubble was. Nowadays, a few rich oligarchs and emirs may be sinking their precious dollars into our most exclusive real estate (in large part because they want to get their money the hell out of the Euro zone), but it is nothing like the buying spree before, when everyone could get a mortgage and prices were popping off in every corner not only of the city but the country.

Now, it is a different story, and until the market fully recovers, the MTA will be hamstrung, perhaps permanently, for it is unlikely it will ever see the cash spigot that was those few fiery years in the middle of the Aughts.

He's at the controls. (MTA/Flickr)

Joe Lhota made it pretty clear when he announced the new fare and toll scheme last week, and the MTA chairman has reiterated his stance once again, now on the radio: the base subway fare is liking to rise from $2.25 to $2.50.

Here is what Mr. Lhota said on WOR radio yesterday:

"The base fare will probably go up, because if it doesn't go up, it will have a huge impact on the people who take the monthly pass and use discounted fares. I think we should focus on the middle class. We need to focus on those folks and minimize the increase. The majority of people either take a seven-day pass, a 30-day pass or use the discount pass, and I think we need to focus on how to keep the cost as low as possible for them."

The problem is, lower-income riders still pay the base fare, meaning this approach could hurt them disproportionately (unless they buying single ride fares, which already cost $2.50 and would rise to $2.75 under the new scheme). But Mr. Lhota stressed last week that his job was as much, if not more, about educating riders and increasing ridership than it was about raising funds. To that end, he appears to be justifying an increase in the base fare on the grounds that any impacts will be mitigated by encouraging more riders to use the discounted fares, which would rise less if the base fare increases, somewhere in the range of $109 to $112 for a monthly pass, up from the current $104.

“It shouldn’t be 15 percent, it should be significantly lower than that,” Mr. Lhota said of riders not using the discounted fare.

But the higher base fare is also far from a certainty. More than anything else, Mr. Lhota stressed last week that no decision will be made until the public is heard on this matter, and he has even taken the innovative step of creating video set-ups to allow transit riders to film their response at any time should they be unable to make it to one of the hearings.

Now class... (Matt Chaban)

Call him Professor Joe Lhota.

At MTA headquarters this morning, the transit agency’s chairman unveiled a fare and toll increase plan for next year that raises all travel costs by about 7 percent across the system, raising $450 million for the agency for the next two years.

For straphangers, this means monthly MetroCards could rise anywhere from $4 to $21, up to $125 per month. The cheaper monthlies would pair with a rise in the base fare to $2.50 and no bonus on the $10 MetroCard, while the most expensive monthly would retain the bonus and the current base fare of $2.25. Two more fare schemes, with a range of price increases across the various MetroCard offerings are also on offer, and Mr. Lhota predicts the end result will fall somewhere in between.

The key in determining exactly what the fares should be is education, he said. "There's a real education aspect to the MTA, to getting people to use the best fares," Mr. Lhota said. For example, one-third of all riders who buy a monthly pass do not reach the 50 rides it takes each month to break even on the $104 passes. Though convenience may also play a factor—buy the thing once a month or get it from work and forget about it.

What's the best fare plan? (MTA)

Mr. Lhota said he had no preference for a fare plan, nor had he conferred with the board about which plan they preferred. "We've had a number of briefings, five, I believe, and I didn't even ask. We want to respect the process and hear from the public first."

But the chairman did give the distinct impression he was leaning toward raising the base fare and keeping some form of bonus for the $10 MetroCard. "I prefer something in between," he said, also emphasizing the fact that the four plans were provisional, and a mixture of possible ideas were possible after consultation with the board and the public. Among the reasons for increasing the base fare, Mr. Lhota pointed out that only 15 percent of all riders buy a single ride, so raising it would effect the fewest people. Among riders making less than $25,000, though, 39 percent of riders

"It shouldn't be 15 percent, it should be significantly lower than that," Mr. Lhota said. It is an unusual argument, since the greater the ridership discounts, the less money the MTA makes. But Mr. Lhota said profits are not his goal. "It's important to educate the ridership so they don't have to pay the full amount," Mr. Lhota added. "I want to get as many riders using the discount as possible."

Derived in the eighties through a series of (now archived) articles in The New York Times, the Pizza Principle — also known as the "New York City Pizza Connection" — maintains that since 1960, inflation and other factors have caused the the price of both a slice of pizza and a single ride on the subway to rise at a nearly identical rate. A Times piece from 1980 cites Bronx patent lawyer Eric Bram as an authority on the matter, and the paper wrote about the phenomenon again in 1985. In 2002, Clyde Haberman charted The Times coverage from the two decades previous, and offered this retort to anyone seeking empirical scientific evidence to justify this somewhat baffling synchronicity of price: "Don't ask why. It simply is so, and has been for decades."

Seeing as it's endured for this long, the Pizza Principle will soon force pizza-minded lunch-seekers to pony up another quarter at their neighborhood Famous Ray's or whatever: the MTA announced that it has approved higher subway, bus, and commuter train fares earlier today, the New York Daily News reports. The price of a single subway ride will now set New Yorkers back $2.50, and it can only be assumed that the price of by-the-slice pizza will increase accordingly.

Though there is one more option. Haberman wrote about the Pizza Principle in The Times most recently in 2007, when subway fares were on the cusp of the $2.25 precipice. In the piece, he cited a letter to the editor written by a local school psychologist, who recommended that the city finally honor the majesty of its subway-pizza connection by simply adjusting the train fare at each station in accordance with the price of the pizza nearby. This might work, right?

OK, maybe not. Instead, it will totally suck to cough up the extra dollar or two spent daily on pie and rides. But this annoyance notwithstanding, how can you root against the mysterious voodoo of the Pizza Principle? The intrinsic connection between two completely desperate — but completely essential — New York institutions is one of those invisible forces that sews the city together. And if history is to be believed, it's here to stay.

Plus, our local pizza place knew this was coming: the slice of cheese there has already been upped to that wallet-rocking price of $2.50. That's right, Rosario's on the Lower East Side. We're looking at you. 

nfreeman@observer.com

Twitter: @NFreeman1234