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Transportation

The MTA's Numbers Don't Add Up


The Metropolitan Transportation Authority is facing a crisis of credibility. In just a few days, subway and bus riders will be hit with the largest fare hike in history. Earlier this year, when talk of a fare hike was growing, I urged the MTA to delay consideration of an increase and open its books – so all New Yorkers could know if such an increase was necessary.

Had the MTA heeded my call, their integrity would not be in question.

After three months of analyzing the New York City Transit Authority’s finances, I have concluded that the MTA has broken its public trust and misled New Yorkers with unclear and inaccurate reporting of its financial position.

The issue is clear: Straphangers should not be asked to accept a fare hike without accurate evidence detailing its necessity. That is currently not the case. We have found that the books used by the MTA’s Board to determine the need for an increase were incomplete, misleading and obfuscating. There is simply no way these books could have provided the board with the basis for sound policy making.

My audit made five key findings:

• Specifically, it found an undisclosed $300 million account that was characterized as an “investment pool.” What this money was for, how it was spent and when it was spent remains a mystery, because the MTA refused to disclose this information.

• Furthermore, the Transit Authority’s numbers just did not add up. For example, in 2001 and 2002 financial reports, the Transit Authority overstated its operating expenses by more than $850 million. This kind of accounting error gave the impression that the authority’s operating deficit was actually larger than it was – and exaggerated the need for a fare hike.

• The Transit Authority’s 2003 operating budget proposal was woefully incomplete. It lacked basic, critical information, such as the costs associated with the recent collective bargaining agreement and the additional revenues that transit officials believed a fare hike would produce. Conveniently, the board voted to approve a revised budget that included this information three weeks after approving the fare increase. The agency even tripped over its own numbers. The proposal contained conflicting deficits – on one page it put the deficit at $1.632 billion and, on another, $2.009 billion. The public, elected officials, and the MTA Board put their faith in a document that told two different stories.

• The Transit Authority overestimated the drop in ridership due to the fare increase, contrary to its own historical data. This served to deflate future revenues and further justified their call for a 33 percent fare hike.

• My audit confirmed that New York City subway riders get shortchanged by paying a larger share of their system’s budget compared to their suburban counterparts, who ride the MTA’s commuter lines.

The MTA Board should re-examine the need for an increase, this time using clear and accurate financial information. At least then, all New Yorkers could be confident that a hike of this magnitude, while painful, may also be necessary.
Yet there is a larger issue at stake. We need to change the culture that leads transit officials to believe that the system belongs to them – and that they are accountable to no one.

The city’s transportation system belongs to the people. The people have a right to understand its finances and make judgements about its policies. It is the responsibility of the MTA to ensure that it answers not only to its board but also to the public and their elected officials.

William C. Thompson, Jr. is the Comptroller of the City of New York

 

Responding To The Terrorist Threat


With the government’s official “threat level” up a notch and the war in Iraq under way, New Yorkers know they are potential targets of international terrorists. Transportation facilities such as the region’s airports, the city’s subway system, Grand Central Terminal, seaports and ferry boats rank high on the list of potential targets.

How unnerved should New Yorkers feel about the threat as they move about the city? How comforted should they feel from the extensive measures the authorities are taking?

Answering these questions is very difficult. Since terrorists value surprise, they often strike at times and places that people do not expect. In addition, police and security officials are understandably secretive about their diagnosis of the risks and the steps they are taking.

Nevertheless, published news reports show that the New York Police Department’s strategy is focused on international terrorist threats such as that posed by al-Qaeda. This threat is characterized by very carefully planned attacks. Therefore, the department dispatches heavily armed police officers day and night throughout the city in unpredictable patterns. The department’s aim is to disrupt terrorists’ reconnaissance and planning efforts. Police Commissioner Ray Kelly explained the strategy on CBS’s 60 Minutes, saying, “We know that any change in the security pattern can be disruptive of their plans. So if you change the pattern of normal security or normal enforcement, we believe that can be disconcerting and disruptive.” For the same reason, checkpoints are established without warning at bridges, tunnels and highway exits, where vehicles are tested for radioactive material.

These steps illustrate the deterrence part of Kelly’s strategy. Equally important are monitoring and reporting. The NYPD has set up posts in Tel Aviv, London and Lyons, France, to monitor overseas threats. A command post in the city monitors foreign television reports. Within the city, the police department monitors video images from 100 cameras at landmarks, bridges, tunnels and the subway system.

The public is also asked to be involved. The Metropolitan Transportation Authority is running an advertising campaign with the headline, “If you see something, say something.” As the New York Times reported, focus groups shown the ad felt that they would know what “something” is if they saw it. People are taking the cue. The police department is now getting 100 to 150 tips about suspicious activity a day, up from 30 to 40 calls per day before the war began.

Internally to the transit system, New York City Transit has put 2,500 front-line employees like token clerks through a two-hour training session with a focus on “Identify, Notify and Evacuate,” reports the Queens Times-Ledger. (Newsday reports, however, that some subway workers objected to receiving an abbreviated 20 minute version that instructed workers to flee rather than help passengers in case of an attack.)

Another aspect to the strategy is presence. The police department’s anti terrorism task force has over 1,000 police officers, many of whom patrol the subways, some with bomb-sniffing dogs. Seven hundred National Guard troops and New York State troopers have been deployed to transportation sites in New York State that include Grand Central Terminal and commuter trains. Ferry boats are carrying armed escorts to ward off suicide attacks. And as any air traveler knows, every bag is now run through a $1 million scanner or swabbed for explosive traces, or both, and some travelers are asked to take off their shoes when passing through security.

”Tightening the protective net around New York City,” Commissioner Kelly’s declared goal, is a costly enterprise, with the city’s Operation Atlas costing an already budget-strapped city government $5 million a week.

Sometimes it seems to pay off. The Williamsburg Bridge was closed from 8 a.m. until 10:20 a.m. on March 28 after three men were seen on top of the bridge. It turned out they had spent the night drinking and somehow decided that climbing the bridge cables would be a suitable capstone to the evening. Mayor Bloomberg said the situation showed the effectiveness of the city’s heightened alert for potential terrorists.

But authorities cannot be everywhere and security appears to lag in some areas. The New York Times reported that only two percent to three percent of the millions of truck-size shipping containers arriving in New York harbor each year are inspected -- "just a slight increase from before Sept. 11.”

The public seems both unnerved and reassured. In press interviews, randomly chosen members of the public express appreciation for the efforts to protect the city. But they also recognize the perceived threat. Interviewed at Grand Central Terminal by the Christian Science Monitor, John Pena commented, "I saw military guys with machine guns in the mezzanine. To some degree it makes me feel safe, but also, not safe at all."

In a USA Today poll, 78 percent of air travelers said they feel safer as a result of the efforts to tighten airport security. About the same percentage said they are growing accustomed to enhanced airport security and do not mind it.

They might not feel safe if they thought about shoulder-fired missiles. Shoulder-fired missiles can be launched from as far away as 30 miles and reach altitudes of up to 18,000 feet. Heat-seeking technology directs the missiles toward an aircraft. The weapons weigh 35 pounds and typically cost $25,000 to $80,000 each. American intelligence and law enforcement agencies say that al-Qaeda and affiliated terrorist groups are thought to have an arsenal overseas of dozens of shoulder-fired missiles, some left over from the American-backed guerrilla effort in Afghanistan in the 1980s.

The Washington Post reported that in May, a Russian-built SA-7 missile was fired at a U.S. military plane taking off from an air base in Saudi Arabia. It missed. In November, two similar missiles nearly hit an airliner full of Israeli tourists after it took off in Mombasa, Kenya. The Transportation Security Administration administrator said that the Kenya incident "was outside the confines of the normal 'combat zone' and underscores how this threat has grown and now must be taken very seriously, everywhere."

Another newspaper, the Sun-Sentinel of southern Florida, reported that federal inspections showed that several of the nation's largest airports would be vulnerable to attack by terrorists using shoulder-fired missiles. A spokesman for the Port Authority of New York and New Jersey, which manages Kennedy, La Guardia and Newark Liberty International airports, said it was aware of the missile threat and was responding to it, but would not discuss any details of its security planning.

Threats like heat-seeking shoulder missiles illustrate how difficult it is for the city to protect its transportation networks. Yet they may also suggest a reason not to be unnerved all the time. International terrorists go after high visibility targets. They went back to the Trade Center after failing to topple it with a bomb in 1993. Most of us, standing on our neighborhood subway platform, are probably pretty safe, after all.

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.

The Two Dollar Fare


 

Transit officials approved an increase in subway and bus fares for the same reason that Jesse James once visited banks: they needed the money. The Metropolitan Transportation Authority expects the fare increase to generate over $350 million a year, helping to close a billion dollar budget shortfall.

Prior to the fare increase, the MTA faced sharp criticism from newspaper editorial boards, transit advocates and even the city and state comptrollers for not fully disclosing its finances and demonstrating the need for the fare increase. But there was no broad public uprising against the fare increase, which upped the cost of a single ride by 33 percent, from $1.50 to $2.00. The new fare takes effect on May 1.

One reason for the relative public quiescence is a widespread view that avoiding cuts in transit services is more important than avoiding a fare increase. Riders would rather have their pocketbooks squeezed than be any more squeezed while riding subways and buses. This preference partly reflects how crowded the transit system has become with rapid ridership growth over the past half-dozen years. It also reflects memories of cutbacks three decades ago that led to a downward spiral in both service and ridership. In fact, the public complained far more extensively about the proposed closing of 177 token booths and cutbacks in their staffing, and the authority backed off of that proposal; it now plans to close just 62 token booths instead, the biggest change from the MTA's initial proposals.

Another factor in the public receptivity to a fare increase is the MetroCard fare incentives. Riders have saved millions of dollars as a result of the various fare discounts implemented in the mid to late-90s. The MTA points out that even with this fare increase, the average fare will still be lower than it was after the last fare increase -- $1.30 per ride after this increase compared with $1.38 in 1995.

A third factor is the passage of time. With almost eight years since the last fare increase, many riders figured that their time has come.

Since this was the first fare increase since the fare discounts were put in place, transit officials faced important decisions about the structure of the new fare. They chose to make incremental extensions to the fare innovations begun in the mid-1990s. Most notably, the 30-day unlimited ride pass will be more attractive. At a price of $70, the 30-day pass will be 42 times the cost of a bonus per-ride MetroCard, down from 46 times under current fares. Riders will save money with the 30-day pass if they use transit in order to commute and an occasional additional trip.

The new fare also increases the discount for bonus MetroCards. Currently, riders get 11 trips for the price of 10, making the effective cost per trip $1.36 instead of $1.50. The new fare introduces a 6-for-5 bonus (or 12 for 10), making the per-trip cost $1.66 instead of $2.00. The threshold for getting the bonus is also reduced from $15 to $10.

The one area where transit officials backed away from MetroCard discounts came with the one-day pass. This so-called "Fun Pass" is becoming a more expensive lark, rising from $4 to $7. Some officials considered the $4 Fun Pass to be underpriced when it was first introduced. It is also used fraudulently by enterprising folks who buy several passes and re-sell trips to people at subway turnstiles. The new $7 price makes that fraud a little less profitable.

The new fare also incrementally addresses issues raised by transit advocates who sought to make the MetroCard discounts more accessible to a wider range of riders. Reducing the threshold for getting the bonus to $10 is one step in this area. Another step is the MTA's plan to begin offering this fall to replace lost or stolen 30-day passes for an unspecified "insurance" fee.

Another innovative step is a pilot "City fare" on the commuter railroads for off-peak travel in the city. Riders will be able to travel within the five boroughs on the railroads for $2.50, thus opening additional opportunities for rail travel.

Even with these steps forward, the effects of the new fare are likely to be regressive across income groups. Low-income riders are the group most likely to pay the base fare, which will cost 33 percent more. High-income riders are the group most likely to buy the 30-day pass, the cost of which increases by only 11 percent.

The overall fare increase for transit riders is 25 percent, the same as for the commuter railroads. Drivers will be less affected by the MTA actions since bridge and tunnel tolls are increasing by only 15 percent.

The new fare is likely to affect individual riders in several ways. First, a fare increase always reduces ridership - the MTA estimates by more than 70 million annually for this increase. The subways and buses are likely to be a little less crowded as a result.

Second, riders will be recalculating what they want to purchase. It may make sense to buy a 30-day card instead of a 7-day card. The $70 is a large up-front cost but the savings will be larger. For those not buying a pass, it will make even more sense to take advantage of the bonus, which will be twice as large and available for smaller purchases.

A RECAP OF THE KEY NUMBERS

Base fare: $2.00 instead of $1.50

Bonus MetroCards: 6 rides for $10 instead of 11 rides for $15 (or $1.67 per trip instead of $1.36)

7-day pass: $21 instead of $17 (you save money with the 7-day pass compared with the bonus MetroCard if you make 13 trips a week - no change from the current situation)

30-day pass: $70 instead of $63 (you save money with the 30-day pass compared with the bonus MetroCard if you make 43 trips a month, down from 47 trips currently)

One-day pass: $7 instead of $4 (you save money with the one-day pass compared with the bonus MetroCard if you make 5 trips a day, up from 3 trips currently)

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.



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