The Coming Fare Hike

You've been warned. The MTA is looking to raise fares and tolls, and I fully expect Mayor Bloomberg to tout this point when arguing for the congestion pricing scheme. The fact remains is that the MTA is not fully transparent on its finances and has repeatedly been shown to cook the books to suit its needs.

Officials were also expected to propose a system of regular, more modest fare increases, at the rate of inflation, every two years, as a way of stabilizing revenues, according to a person with direct knowledge of the authority’s financial plan.

Fares and tolls were last raised in February 2005. At that time the authority maintained the base bus and subway fare at $2, but raised the cost of a 7-day MetroCard by 14 percent, from $21 to $24, and the cost of a 30-day MetroCard by 8.6 percent, from $70 to $76. Increases were also made to commuter rail fares and bridge and tunnel tolls.

Officials said it was not clear what formula they would use for an increase this time. The board will be asked today to authorize the authority to begin the process of raising fares and tolls, including holding public hearings on the increase. Those familiar with the plan said that a fare increase, if ultimately approved by the board, was not expected to go into effect until early next year.

The authority has warned for several years that it would face dire financial challenges because of hefty increases in debt payments caused by major borrowing. In February, it said it would have a deficit next year of $799 million, followed by deficits of $1.46 billion in 2009 and $1.78 billion in 2010.

But it may now find itself with a different sort of challenge: convincing the public that a fare and toll increase is necessary when it is still operating in the black. Last year, the authority ran a surplus of more than $900 million, money that is being used in this year’s budget. The surplus at the end of this year is expected to be similar. The surpluses have largely been generated by higher-than-expected income from taxes on real estate sales and mortgages.

The budget surpluses also represent a marked reversal from earlier forecasts. In late 2003, the authority predicted it would have a budget shortfall this year of $1.5 billion.

A fare hike might be needed, especially with the increased fuel and energy costs borne by the agency for operating the buses and subways and a potential decline in real estate sales. However, without transparency, one cannot be assured you're getting accurate figures.

Congestion pricing also fits into this whole scheme, as it is touted as a cure-all for the transportation woes facing the City. It's curious that NYC City Councilman John Liu notes that a fare increase is tantamount to a tax hike. I've been saying the same exact thing about the congestion pricing scheme, which is designed to capture revenue from those who don't use mass transit.