The MTA is still suffering from low ridership during the weekdays due to the pandemic changing commuting patterns. It is relying on $16 billion in federal funding to balance its budget in the coming years, due to fare revenue shortfalls. But as the agency tries to bring ridership back to pre-pandemic levels, one idea we wanted to explore is what it would mean if the MTA were to make riding free?
Rachael Fauss, senior research analyst at Reinvent Albany, and Gothamist transportation reporter Stephen Nessen discussed the issue with Michael Hill, host of Morning Edition on WNYC.
There are a number of transit systems around the world that don’t charge fares. In the U.S., Mayor Michelle Wu of Boston is trying to make three bus lines that run through low income neighborhoods free. Could you see that ever happening here in New York?
Stephen: You may recall, during the early months of the pandemic, for about five months the MTA actually did make all buses free. This was in part because the fare box is at the front of the bus and the MTA wanted to avoid people getting close to bus drivers if possible. But also, at that time it was really essential workers that had to get around, and this was a great way to help them out. We also didn’t know as much about the virus then as we do now, and people believed the buses, with outdoor stops, may be safer than underground subways.
What was the effect of that on the MTA’s bottom line?
Stephen: Certainly, the MTA says it hurt, they were losing $200 million dollars a week running nearly full service on subways and buses for just a fraction of the riders it used to serve. But buses really did see higher ridership when they were free, and it dipped down again when the MTA started charging.
Ultimately, the agency relies on fares to cover about 40% of its operating costs. Let’s remember the MTA is expensive. It will need about $18 billion dollars this year to keep operations running.
Rachael, 75% of bus commuters in New York City are people of color, and typically bus riders are lower income than subway riders. Is it fair to charge everyone the same price? Is there a more equitable way to fund mass transit?
Rachael: I think one thing to keep in mind is that we have a Fair Fares program, which provides a 50% fare discount to low-income New York city residents. And that's a really important New York city program that should be expanded. One thing to consider, however, is that the MTA is already a pretty heavily subsidized state authority. State subsidies are going to be at nearly $6.5 billion in this year’s state budget for the MTA. And that's actually more than what the fares are expected to bring in. The MTA expects to get $5 billion for the subways, buses and the commuter rails in fare revenue.
I think the concern about free fares is that an unintended consequence of getting rid of fares altogether [is that] it might mean the MTA would be entirely dependent on the state for funding. And it wouldn't be able to adjust if demand increases. When riders pay some amount, when they ride, that means the MTA gets more money when there's more demand.
If we locked in a set amount of government revenue we might see some similar problems to when the fares were locked at 5 cents, because there was no political incentive to increase fares back then, state money for the MTA has to come from somewhere. So it would have to come in the form of taxes, to New Yorkers and, our elected leaders aren't very fond of increasing taxes, either.
Stephen, you’ve reported this week that the MTA is trying to bring riders back to the system by giving riders some discounts. It’s not totally free, but tell us about those?
Stephen: If you use OMNY, which is the new fare payment system there will be some interesting discounts coming at the end of the month. It does require a contactless credit or debit card, or a $5 OMNY card or a smart phone with a credit or debit card connected to it to access. That could be a barrier for some people.
But what the MTA is offering is called fare-capping. Instead of buying an unlimited weekly card at the start of the week…if subway or bus riders use OMNY, after 12 trips in one week—riders will automatically be upgraded to an unlimited card that is good for the rest of that week. It would run from Monday through Sunday.
This is just a pilot, but the MTA says if it’s popular, if a lot of people use it, it could become permanent. The agency is planning to phase out the MetroCard by 2024, and replace it with OMNY. That could mean other interesting fare discounts for commuters using the new technology.
Rachael, this isn’t the only way they’re trying to get riders back — fares will remain frozen for the year, how will that impact the bottom line and do you think it was a good decision?
Rachael: No fare increases or service cuts this year is good news for the MTA and riders. Federal aid is the main thing making this happen, they are using about $3 billion this year alone. But it will run out in a few years.
Another option is for the state to do more and give more in subsidies to the MTA because we want to make sure that when riders come back, that service is at the level they expect. To make sure that New Yorkers choose transit, we need frequent and well-funded service, [it] is an important part of that.
Stephen: And advocates with the group Riders Alliance are actually calling for no fare increase for five years. They want Governor Hochul to send more of the $1.8 billion dollars that the state gets every year from gas taxes, and vehicle registration fees to the MTA. Currently the MTA gets one third of that money – the rest goes toward fixing roads. They want it flipped so two thirds goes to the MTA.
Last, Stephen, what’s the latest on congestion pricing—the plan to charge drivers that enter Manhattan below 60th Street — that’s expected to bring in $15 billion dollars to the MTA over four years. Could that be used to keep fares costs down?
Stephen: Congestion pricing was delayed, first from the Trump administration, now it’s undergoing a federally mandated environmental review — but it could go into effect sometime next year.
One of the earliest proponents of congestion pricing, Theodore Kheel actually made the case in the 1960s that subways should be free, and funded with tolls on drivers. That didn’t happen. But still, the MTA is supposed to use the funds generated from congestion pricing to make upgrades to subways and buses.
Ideally, improving service and making it more attractive so more people will choose to take mass transit, rather than get in a car. As we said earlier, subway ridership isn’t back to pre-pandemic levels, but driving is. So, the more money the MTA has to run better service, ideally it’ll get more people out of cars and onto the more environmentally friendly way of getting around the city.
Rachael: Congestion pricing is the single largest source of funding for the latest MTA capital program. It will provide $15 billion out of a total of $55 billion. And so far, the MTA has only spent a little over a billion dollars on a capital plan, and they only have about $4 billion in the bank.
And we're actually in the third year of that capital program right now. And it's supposed to go through 2024. So it really is urgent that congestion pricing is turned on soon because the MTA needs the cash to make meaningful progress on the capital plan. And it's going to fund subway, bus and commuter rail improvements. It really does benefit the whole region and we strongly support congestion pricing starting as soon as possible.