Many NYC-area transit riders are reeling over news reports that the MTA may raise fares in 2009 due to skyrocketing debt payments, rising fuel costs, and reduced revenue from dedicated real estate taxes. Testifying before the NY State Assembly yesterday, MTA CEO Elliot Sander said the MTA was facing a projected operating deficit of $500-700 million in 2009. Sander testified in front of many of the same legislators who had previously promised to find additional revenue for the agency in the absence of congestion pricing.

A second consecutive year of fare increases would be a PR disaster for an agency that already has little credibility with many of its customers. The MTA is in a tight spot, however, that is largely not of its own making. While it is trying to cut costs through measures like consolidating agency back offices and bus operations management, it faces rapidly increasing debt payments. Much of the debt stems from bonds issued to pay for the 2000-04 capital plan after Gov. Pataki and the State Legislature slashed state aid to the MTA’s capital program (see MTR # 561 for a history of the MTA’s funding problems). It is up to the current governor and State Legislature to fix the mistakes of the past.

Reacting to the news, the Straphangers Campaign said in a statement that “a fare increase – without new money to operate and fix the system – would be a slap in the face to millions of riders.” Straphangers pointed out that riders pay for 55% of NYC Transit’s operating costs, compared to 40% on the average large transit system in the U.S. The full statement is below the cut:

——

NYPIRG STRAPHANGERS CAMPAIGN

STATEMENT ON A POSSIBLE MTA FARE INCREASE
Thursday, June 12, 2008

Subway and bus riders and suburban commuters were just hit with fare increases in March, three months ago! But now the MTA is warning that it’s facing a deficit of hundreds of millions of dollars next year and that the agency may have a large deficit in 2009, putting pressure on the fare and service.

At the same time, the MTA has a shortfall of an astonishing $17 billion in its next five-year rebuilding program, running from 2009 to 2013.

Governor Paterson has just appointed a 12-member panel to make recommendations on the MTA’s finances for the next decade. Their report is due December 5, 2008. Whatever action Governor Paterson and the MTA takes, they must address both the operating and the capital needs of the transit system at the same time. A fare increase – without new money to operate and fix the system – would be a slap in the face to millions of riders.

“Proposing a fare hike before the Ravitch Panel reports would be something out of Alice in Wonderland: first the execution, then the trial,” said Gene Russianoff, staff attorney for the Straphangers Campaign.

New York riders already have the highest fare box burden in the nation, paying 55% of New York City Transit’s costs. That’s compared to an average 40% of for the country’s large transit systems.

The single fastest growing expense for the MTA is “debt service,” which in plain English is money to pay off the tens of billions of dollars of bonds it issued to repair the transit system. The MTA is the fifth largest debtor in the nation, behind California, New York State and City, and Massachusetts. Each year, two billion dollars of the MTA’s ten billion dollar operating budget goes to pay off these bonds.

The MTA could close these gaps either with new government aid or fare and toll increases, along with administrative efficiencies and service cuts. “Cutting service now while ridership is swelling makes no sense,” said Russianoff.