Fare Hike Is Inevitable……

The big talk of lately in the transit world revolves around the eventual fare hikes that will come our way. Yesterday morning, MTA Chairman Joseph Lhota spoke at a breakfast forum sponsored by Crain’s New York Business.

At the forum, he spoke of what us in the know already knew, rising health care & pension costs along with debt service issues inevitably will lead to fare hikes. From what he spoke about, it looks like straphangers who depend on unlimited MetroCards or discounted cards will bear the brunt of it. Here is more via Andrew J. Hawkins of Crain’s New York Business:

Straphangers who use unlimited-ride MetroCards or other discounts may bear the brunt of next year’s fare increase, Joseph Lhota, the Metropolitan Transportation Authority’s chairman and CEO, warned Wednesday at a breakfast forum sponsored by Crain’s New York Business.

He added that the city should have another conversation about ideas like congestion pricing and bridge tolls because the transit system will need new revenues. But changing the fare structure is something the agency can do on its own.

“We have enormous discounts in the system. And I think we need to look at those discounts, and we need to have, on the entire fare issue, a public debate,” Mr. Lhota said to a packed audience of nearly 500 business people at the Plaza Hotel across from Central Park. “There’re a lot of people in New York who think our pricing system is mystifying. It shouldn’t be.”

The MTA recently announced that it would delay a planned 7.5% fare hike until March 2013 and would restore some of the service cuts made to subways and buses in recent years. But Mr. Lhota said debt service and rising health care and pension costs makes a fare increase unavoidable.

“Pensions, there’s nothing I can do about them. And that’s what’s driving my costs up. And that’s the direct reason why we’re having a fare increase,” he said.

The MTA will release its projections in October, Mr. Lhota said, and then convene a series of public hearings. The MTA board is expected to vote on the proposed hikes in December.

The base fare for subway and buses is $2.25, but Mr. Lhota said the MTA receives an average of $1.63 per trip. The agency offers reduced rate cards for seniors over 65. Seven-day unlimited cards currently cost $29, while 30-day unlimited cards go for $104. “Do we need a discount that deep?” Mr. Lhota asked.

But even if the MTA completely eliminates discounts, it would still fall short of its targeted $450 million increase in net revenues, he said. “The discounts aren’t enough to not have a fare increase,” he said.

Click here for the complete report.

Just a short time ago, the agency released more of what he had to say via a brief press release which stated:

MTA Chairman and CEO Joseph J. Lhota yesterday called on business leaders to support stable funding for the Metropolitan Transportation Authority, which he said “is New York’s common denominator” and the “lifeblood of our city and our entire region.”

“No mass transit system in the country supports itself on fares alone,” Lhota told a crowd of 500 at Crain’s New York Business breakfast forum Wednesday. He noted that the MTA carries more customers per day – 8.5 million – than any agency in the country yet receives less per trip in public financing.

“That’s incredible to me, considering we’re the economic backbone of this region, a region that represents 11% of our entire country’s economy,” Lhota said, noting that 90 percent of all people in Manhattan’s Central Business District get there on the MTA’s network of subways, buses trains, bridges and tunnels.

Speaking about a recent state court ruling in Nassau County that found the Payroll Mobility Tax and four related revenue streams unconstitutional, Lhota warned that the loss of $1.8 billion per year would be catastrophic to the region’s economy and lead to extreme service cuts and fare hikes.

Lhota acknowledged that the PMT has undermined support for the MTA in the suburbs.

“But it’s not my job to make tax policy. That’s Albany’s job. My job is to run the service,” Lhota said.

The PMT was created by the Legislature in May 2009 to address a budget gap caused by the collapse of the real estate market at the beginning of the current recession. For years, the MTA’s operating budget was bolstered by a transit-dedicated tax called the mortgage recording tax. In 2007, before the real estate bubble burst, the MTA received $1.6 billion from this dedicated tax. Last year, revenue slipped more than a billion dollars to just $597 million from the mortgage recording tax.

Lhota called on business leaders to “become advocates for transit.”

“We need you on our side,” Lhota said. “We need you fighting for the MTA.”

“Tell your Congress members, tell your State Legislators, that the MTA not only deserves their support, but needs a stable operating budget, needs a credible Capital Program to maintain our 100-year-old system and needs to be funded to continue providing great service … to continue to allow our region to grow.”

He noted that for the first time in 60 years, the MTA network is growing. Three huge construction projects – the No. 7 subway extension to the far West Side of Manhattan, the Second Avenue Subway on Manhattan’s East Side and the East Side Access project to bring Long Island Rail Road service to Grand Central Terminal – are pumping money into the economy through their construction and will fuel the regional economy’s growth after they open.

Honestly none of this comes as a surprise as the writing has been on the wall for quite some time. The next couple of months will be interesting to watch. Next month we will get the official details of what the fare hike will be & in November will be the public hearings. One thing I can guarantee is many politicians will come out rallying against the agency for the ever famous “constituent brownie points” yet will have no legitimate funding ideas to help the agency.

xoxo Transit Blogger

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