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Sustainable Financing for Mass Transit in New York

One of the key elements of the New York City metro area's dynamism is its mass transit system. Destroy that critical infrastructure and you begin to destroy the entire region's economy.
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One of the victims of the economic downturn in New York is state support for mass transit. Unfortunately, this is not simply a result of the recent decline in state tax revenues, but rather a long-term trend that was exacerbated by over-borrowing for mass transit during the Pataki era.

One of the key elements of the New York City metro area's dynamism is its mass transit system. Destroy that critical infrastructure and you begin to destroy the entire region's economy. Efficient mass transit is necessitated by New York's high population density. The region's businesses need a well-functioning mass transit system to bring in workers and customers. Our environment is better served by mass transit than by personal transit, and our patterns of land use development have largely followed mass transit routes. The economic importance of New York's mass transit system is an example of the close relationship between economic development and environmental sustainability. Its presence helps make New York City the most energy efficient city in the country.

Mass transit in New York has always suffered from financial difficulties. The original New York City subway system built at the start of the 20th century was operated by private but heavily regulated franchisees. The insistence on the nickel fare and the Great Depression ultimately resulted in a public takeover of the system in 1940. The post World-War II era saw the removal of many of the remaining elevated lines including the Third Avenue line on the East Side, which was demolished to make way for the still unfinished Second Avenue subway. In the 1960's and 1970's, capital disinvestment caused the system's near collapse. According to the New York State Metropolitan Transportation Authority:

By the early 80s a third of the fleet was typically out of service during the morning rush hours, cars broke down or caught fire, trains derailed on hazardous track, and graffiti covered virtually every car. In 1982 the MTA began to rehabilitate the subways through a series of five-year Capital Programs, the largest public transportation rebuilding effort in national history. Over $39 billion has been invested since the program began.

During the 1980's and 1990's, the city's subway system came back from the brink of ruin due to the effective leadership of people like former head of the MTA and current Lt. Governor Richard Ravitch, former governors Hugh Carey and Mario Cuomo, and Mayors Koch, Dinkins and Giuliani. These leaders instituted the range of tolls and taxes now used to subsidize mass transit. Unfortunately, under Governor Pataki, the mass transit capital subsidy was sharply reduced, forcing the MTA to use more and more of their budget to pay debt service on transit bonds. Even worse, during the current $6.8 billion state budget crisis, Governor Patterson has further reduced the state's subsidy for the MTA, contributing to the transit agency's $400 million budget gap.

The MTA's response to Patterson's proposed funding reduction was the same one we often see when school board budgets are voted down by local communities. It's what I call the football team gambit: Cut the most visible and popular expenditures and hope to stimulate a public outcry that results in budget restoration. In this case, the MTA started by announcing that they would cut free metro cards for schoolchildren. For a variety of reasons, there are very few yellow school buses in New York. It is far more cost effective for public school kids to use the same public buses and subways used by other commuters. The MTA has long subsidized these fares and estimates that the subsidy costs them $175 million per year.

The next highly visible cut proposed by the MTA is to put out of service some buses and trains now running late at night and on weekends. Twenty-four/seven mass transit has long been considered an essential right in the city that never sleeps. New Yorkers know that subways that close at night are for small towns like Washington D.C., where dinner starts at 6 PM, or Miami, where early birds dine at 4:30 in the afternoon.

From the perspective of sustainability and energy efficiency, we want to do everything we can do to make mass transit safe, fast, comfortable and cheap. But in order for it to compete with the private auto, mass transit must be subsidized, and some of those subsidies should come from private autos to help raise the cost of driving and reduce the cost of riding.

Of course, all of these service cuts are merely proposals. Now, we begin the political Kabuki dance known as the New York State budget process. You can bet that New York's schoolchildren will not end up paying for their transportation to and from school. Many of these proposed service cuts will be miraculously restored. Some of the cuts will remain. The most endangered part of the budget is the long-term capital budget. The crucial dollars that are needed to keep the system in good repair and to continue its expansion will be cut. We've been down that road before, and, as everyone knows, deferred maintenance increases long-run costs even while providing short-term budget relief.

Maybe now the New York State legislature will take another look at congestion pricing for New York City's midtown and downtown business districts. A charge on vehicles entering south of 59th street could generate the funds now being cut and also reduce traffic, energy use and air pollution. Perhaps the stark choices ahead for New York will result in some creative and imaginative policymaking after all. Of course, we could always follow California's lead and simply close the store.

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