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Transportation Industry

Riding out a transit tempest: they may fuss about fares, but New Yorkers are getting an increasingly safe, swift, and steady run for their money on an urban railway of staggering dimensions - and growing

Railway Age, June, 2003 by Luther S. Miller

If you care at all about the New York Metropolitan Transportation Authority--and millions of New Yorkers care passionately--you know that it has recently been nursing a self-inflicted black eye and a severely bruised image. This public transit giant, which operates three large passenger railroads, stands accused of cloning its books--one set for the boardroom, another for the public--to justify a steep fare increase before it may actually have been needed. The MTA ended up in court, the fare increase ended up in legal limbo, and the three railroads went efficiently about their business.

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Two of MTA's Big Three operations are the Long Island and Metro-North commuter railroads. This is a story about the third and biggest-officially, MTA New York City Transit but known to generations of New Yorkers (it is 15 months shy of its 100th birthday) simply as "The Subway." To put that story into context requires a look at the story of its adoptive parent, which 15 35 years old this month.

The New York MTA, a state agency, rules a domain of daunting physical and financial dimensions. Earlier this year, MTA Executive Vice President and Chief Operating Officer Katherine N. Lapp went to the New York City Council to talk about the agency's checkered life and changing times. She testified as a proposed 33% increase in the basic transit fare (sidebar, p. 30) was beginning to raise eyebrows as well as questions about MTA's closed-door decision making. Lapp said she wanted to dispel "myths, misstatements, and falsehoods" about the MTA, and she did a good job of it. Her chart presentation described a mass transportation system of a complexity not easily grasped by its customers (nor even by professional auditors not privy to the small print).

"The MTA's annual operating budget," said Lapp, "is $7.2 billion and the five year capital program is roughly $18.9 billion. The MTA employs an estimated 65,000 individuals, each of whom support our daily operation of transporting over eight million people in the metropolitan region. In three days, the MTA moves more people than Amtrak does in one year; in 11 weeks, we move more people than fly with our nation's airlines in one year. Our operating budget alone is substantially larger than that of most cities in the United States, including Boston, Chicago, Miami, Philadelphia, and Atlanta."

Where does the money come from? MTA's 2001 operating budget of over $7 billion shows 42% ($3.137 billion) generated by fares and other operating revenues; 12% $915 million) from tolls; 3% ($217 million) from state subsidies; 4% ($324 million) from county subsidies; .05% ($39 million) from other subsidies; 22% ($1.63 billion) generated by state and regional taxes; and 16% ($1.2 billion) from various other sources, such as surpluses from prior years.

Where does the money go? About 60% ( $4.487 billion) went to NYC Transit; 26.46% ($1.976 billion) to commuter rail, suburban buses, Staten Island Railway, and MTA headquarters; 3.86% ($288 million) to bridges and tunnels; and 9.6% ($717 million) to debt service and other expenses.

Noting that the MTA had come under attack for practicing "accounting magic" and using "foggy finances," Lapp proceeded to give the City Council a "plain English" description of what has been going on at NYCT:

"NYC Transit has experienced a boom in ridership of 37% in the last several years-- almost three million more customers each day--bringing the average daily [rail and bus] ridership today to 7.5 million. NYC Transit's fare revenue since 1996 has increased but it has not risen nearly as fast as ridership, only 5.2%. The reason is that the MetroCard system has attracted new and more frequent riders to the system; however, the discounted passes and free transfer policies have actually reduced the average fare from $1.38 to $1.04 today. We would have to raise the fare by one-third to get back to where we were in 1996. It stands to reason that more riders mean more trains and more buses. In fact, since 1996, we have increased subway and bus service by 2.8 billion seat-miles, costing $293 million annually. More and better service, along with the effects of inflation, means our operating costs grow faster than ridership. Operating costs at NYC Transit increased 46% while ridership grew 37%. As we expand our capital investment in the transit system by maintaining the system in good repair, investing in new-technology subway cars, buying clean-fuel buses, and expanding our service lines, our debt service costs increase commensurately. Our expenses and debt service costs at NYC Transit increased at a flu- higher rate (56%) since 1996 than operating revenue (7.4%)."

Lapp said revenue at NYC Transit went from $2.2 billion in 1996 to $2.4 billion in 2003, with expenses and debt service rising from $3 billion to a projected $4.3-$4.5 billion in 2003 and 2004. The operating deficit climbed from $767 million to almost $2.26 billion. A projected 2003 surplus of $83 million became a deficit of $236 million.

Transportation Industry

Riding out a transit tempest: they may fuss about fares, but New Yorkers are getting an increasingly safe, swift, and steady run for their money on an urban railway of staggering dimensions - and growing

Railway Age, June, 2003 by Luther S. Miller

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