Investing in the Region’s Mass Transit

This summer I wrote about the need for increased public subsidies for mass transit and about the importance of keeping transit fares as low as possible. Due to over borrowing for capital improvements during the Pataki administration and the reduction in revenues from the City’s real-estate transfer tax, estimates of the size of the Metropolitan Transportation Authority’s budget deficit continue to grow. The most recent estimate is for $1.2 billion in red ink next year. The MTA has proposed a "doomsday budget" of massive fare increases and widespread service reductions. They are hoping that the prospect of higher prices for less service will somehow scare the courageous and forward-looking leaders in Albany into action. It’s like the School Board that threatens to cancel school bus service if they don’t get their budget passed – a desperate and typically ineffective strategy.

The one slight hope that something positive may happen is the Governor’s Commission on MTA Financing now working to address the MTA’s deficit. Appointed by Governor David Patterson and chaired by former MTA chair Richard Ravitch, the commission has already started reporting early word of its recommendations. The three ideas for generating revenues now making the rounds are: a smaller fare increase, tolls on the East and Harlem River bridges and a payroll tax of less than half of 1 percent on businesses within the 12 counties served by the MTA.

According to William Neuman reporting in The New York Times, the payroll tax would:

"…be designed to raise $1 billion a year or more. It would be coupled with the new bridge tolls, which would generate about $600 million a year, after the cost of maintaining the bridges and collecting the tolls is accounted for."

The fare increase, though clearly a political requirement for any additional transit taxes, remains a mistake. While it is true that we are in our current financial mess because everybody is looking to get something for nothing, cheap mass transit makes the city more efficient, productive, environmentally sound and equitable. The MTA’s financial troubles were a predictable part of the fantasy financing of transit infrastructure brought to us by the infamous three men in the room of New York State government – George Pataki, Sheldon Silver and Joe Bruno. The government’s subsidy for mass transit in New York and its suburbs is too low to meet the system’s real needs. Just as Wall Street had its dream world of finance built on ever-inflating housing values, and George Bush funded his multi-trillion dollar war in Iraq with a tax cut, New York State lived beyond its means, and today we must pay the price. If we don’t pay the price we will destroy the transit system that was nearly destroyed by the fiscal crisis of the mid-1970’s.

Ravitch must have wondered, (as Bob Dylan did in Stuck Inside of Mobile with the Memphis Blues Again) "what price you have to pay to get out of going through all these things twice." Ravitch led the effort to save the mass transit system once before. It must seem like déjà vu all over again, or perhaps like the famous radio alarm in the movie Groundhog Day (remember that Sonny and Cher tune?). Can’t we ever get this right? The Time’s Mr Neuman correctly observes that one element of that rebuilding effort was Ravitch’s skill at politics and negotiation. Another element was the leadership of Governor Hugh Carey. It turned out that a critical piece of the puzzle from 1975 to 1982 was Carey’s ability to forge political consensus and his willingness to take political heat. It has been a long time since we had a governor with the political courage needed to address a crisis. New York State has slowly deteriorated over the past half century from the "Empire State" to two states: a dynamic region in and around New York City, and a declining depression zone just about everywhere else.

One of the key elements of the New York City metro area’s dynamism is its mass transit system. Destroy that piece of critical infrastructure and you begin the process of destroying the region’s economic well-being. Mass transit is needed because the region is simply too congested to have everyone move around in autos, and it also helps make the region energy efficient and less polluted.

Macroeconomists will point to the danger of raising taxes in an economic downturn. This is generally true. Tolls on East River bridges have been resisted by generations of Brooklynites. It’s hard to believe that the same dysfunctional state government that couldn’t even take a vote on congestion pricing will have the courage to finally face up to the MTA’s true financial crisis. The argument I would make for these taxes is that they are likely to be less expensive than the alternative. The region’s businesses need a well-functioning mass transit system to carry workers and customers to them. It will cost more to rebuild the system after it collapses then if we pay the cost needed to maintain it today.

The argument for tolling the bridges is the same as it has always been. If people need to occupy the scarce space on Manhattan’s streets with their cars, they should pay for it. If they can’t afford the price, there are excellent mass transit options open to them. With modern technology, the MTA could easily offer off-peak and hardship pricing for people who must drive but cannot afford the tolls. In fact, the state should give every car owner in New York City a few free toll passes each year, to make the toll more politically acceptable.

With the imminent release of the Ravitch Commission report, the transit system’s financial crisis will reach its carefully designed boiling point. We have the MTA’s "doomsday" straw man plan, and with the commission’s report we will have the new proposal for a more stable revenue stream for the region’s transit. Will we have a government with the talent to meet the challenge?

The early signs look pretty bad. The State Senate cannot get organized and Shelly Silver continues his traditional "rope a dope." While I am hopeful about Governor Patterson, the jury is still out. Then of course, we have MTA CEO Lee Sander, who claims to ride mass transit to work every day but is caught in a hilarious video by John Deutzman on Fox 5 New York climbing into his chauffeured auto on numerous occasions. It really makes you want to invest your increased transit tolls and taxes with this guy, doesn’t it? I don’t usually go for this type of reporting, but when will our public officials learn that it is really better just to tell the truth?

Investing in the Region’s Mass Transit