“Pataki’s Budget Leaves Transit Projects In Doubt” read the headline in the New York Times online. (In the newspaper itself, the article, with a slightly different headline, was the lead story of the day).
Of course, many of these projects have long been in doubt, even as more and more people become convinced of their importance. A report released recently by the Rudin Center at NYU on commuter rail and subway expansion needs (in pdf format) concluded that, “Expanded transportation capacity is of vital importance to enable future economic and employment growth in the Manhattan central business district.”
It has been clear that one of the two major issues for transportation in 2005 will be financing the operation and expansion of the transit system. (The other is doing the same for the highway system.) The question has been: Where is the money going to come from?
As summarized here two months ago, the city’s Independent Budget Office and a respected civic group, the Regional Plan Association, discussed a range of ways to raise the money.
Last month, Peter Kalikow, the chairman of the Metropolitan Transportation Authority, called on Governor George Pataki to support increased taxes and fees on businesses, gas and mortgages that would keep the transit system in good working order and also fund such expansion projects as the Second Avenue Subway and the connection between the Long Island Rail Road and Grand Central Terminal. Stepping forth in more of a public leadership role than any MTA head during Pataki’s tenure in Albany, Kalikow warned that failure to fund at least the $17 billion core program would begin the transit system’s “descent” toward deterioration and financial crisis.
When the governor released his budget on January 18th, he proposed adopting two of Kalikow’s specific recommendations: an increase in the mortgage recording tax and increased motor vehicle fees. Pataki also asked for legislation to authorize innovative financing opportunities. He cited three examples from other states. Two involve the sale or construction of toll roads (in Chicago and Virginia), and thus are financed by motorist tolls. The third involves private investment in the Las Vegas monorail.
Overall, however, the governor’s budget came up well short of the MTA’s needs. The governor proposed to cover $15 billion of the $17 billion that transit officials consider essential.
Some transit advocates were cheered that Pataki proposed new fees to pay for transit improvements, while others criticized him for inadequate funding. The budget, which is subject to revision after a public hearing, is perhaps best viewed as the opening gambit in Albany’s long budget game, plagued for years by late budgets. Anyone keeping a scorecard on the progress of budget discussions might look for the following:
As New York struggles with how to pay for its transportation needs, a number of other cities around the country moved forward on major transportation expansion projects. In the November elections, voters approved new taxes to pay for system expansions, meaning that new, “real” money will be available for real projects. The Center for Transportation Excellence, a non-partisan policy research center in Washington DC, reports that:
Each of these metro areas suffers from high levels of traffic congestion and are turning to transit expansions to help alleviate gridlock on their highways. Perhaps New York, blessed with the most extensive transit system in the country, can take inspiration from voter approval of higher taxes in other regions. New York can not only maintain the existing system but also fund forward-looking system expansions.
Bruce Schaller is head of Schaller Consulting, which provides research and analysis about transportation, and is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.
Public funding for transportation goes back further than the eye can see, from building the Erie Canal to construction of the New York City subway and Interstate highways. In each case, the decision to expend public monies was based on pressing public needs for expansion of canal, transit and highway systems and the belief that public investment would pay dividends in economic growth.
New York and New Jersey officials are now faced with deciding whether privately operated ferries should be next in line for public funding. New York Waterway, which currently carries 32,000 passengers a day, primarily from New Jersey to Manhattan, is experiencing acute financial difficulties. The company’s president, Arthur Imperatore, announced this month at a City Council hearing that, “New York Waterway is dying.” The company has closed some routes and is planning to shut down additional routes later this month.
As with the region’s bus, subway, rail and highway systems, proponents of public subsidies argue that ferries provide a vital transportation service and spur economic development, in this case, along the New Jersey waterfront. Without the ferries, as many as 5,000 cars now parked near the New Jersey shore might travel into Manhattan each day, further burdening already congested tunnels and bridges into Manhattan. And ferries provide important redundancy in the transportation system, a fact graphically highlighted on September 11, 2001.
Ironically, NY Waterway, established in 1986, has long been hailed as a model of private entrepreneurship. Imperatore’s father set up the company to provide easy access to Manhattan for his New Jersey residential developments. The company offered not only ferry service but also bus service in Midtown to access West Side ferry terminals.
At first glance, ferry service might seem to be an ideal candidate for private operation. Ferries serve a niche market of customers who lack ready access to New Jersey’s bus and rail networks or who prefer the ambiance of waterborne transportation to the crush of PATH trains. Ferry riders are generally well-paid professionals. And by increasing access to Manhattan jobs, the ferries make private residential developments on the Jersey side of the Hudson River more attractive and valuable.
NY Waterway’s current troubles were spawned by decisions intended to build on its own success. Ferry ridership doubled after the 9/11 attacks, which closed the PATH system’s World Trade Center station. Both the company and public agencies leapt at opportunities to increase ferry services by adding routes and revamping ferry terminals. But after NY Waterway took on $33 million in debt to buy new boats, PATH reopened ahead of schedule, Manhattan job losses produced a drop in the number of commuters, ridership fell off after the Hudson River froze for two weeks last winter, fuel prices doubled and the company spent $4 million in legal fees over a dispute with the federal government over billing practices for post-9/11 service.
Some officials are now calling on government agencies to keep the service running. Hudson County (NJ) officials formulated a plan to buy the company and operate it in concert with Hoboken and Weehawken. But state officials last week nixed that plan.
Some Hudson County and New York City Council officials are calling on the City of New York and the Port Authority of New York and New Jersey to step in. New York City Councilmember David Yassky urged the city to waive docking fees that total $1.5 million a year. Council members also urged the Port Authority to authorize subsidies amounting to $16.6 million a year. Tom Fox of New York Water Taxi, a competitor to NY Waterway which is putting together a plan with three other ferry and sightseeing cruise companies to take over NY Waterway routes, said subsidies are needed to compete with the heavily subsidized PATH lines.
The City Transportation Department responded that the Council would need to offset the revenue loss if landing fees were waived. The Port Authority was noncommittal, calling for a “multiagency review of ferry service throughout the region.”
The Port Authority also pointed out that it has invested, or plans to invest, more than $100 million in ferry terminals, roadway upgrades and other infrastructure costs. Thus, the issue is not whether privately operated ferries should receive public subsidies, but what form of subsidies, and how much, and who will pay.
The most fundamental question is whether public agencies should subsidize specific ferry routes to keep them running. On the one hand, equitable treatment of commuters suggest that the public should subsidize ferry travelers. After all, the PATH system and NYC bus system only recover 41 percent of their operating expenses and even the NYC subway, which leads all transit systems in the U.S. in farebox cost recovery, only pays 67 percent of its expenses from fares, according to federal data (In PDF Format) summarized in a Brookings Institution study.
On the other hand, would political considerations overwhelm business decisions about which routes to keep, which to close and which to expand, leading to an inefficient and heavily subsidized ferry network that drains the public till?
The reticence of the Port Authority and NYC Transportation Department to agree to operating subsidies is well founded. The Port Authority has increased its funding for PATH while keeping PATH fares relatively low. Under pressure from Staten Island voters and elected officials, the Giuliani Administration abolished the Staten Island ferry fare. The average trip on the S.I. ferry costs $2.95, all of which is paid by the city, none by riders. The City Council recently adopted a bill to increase late night service and some rush hour service at an additional cost of $5 million a year.
The test for public officials is now to find a way to support continued ferry service where it provides substantial public benefits while maintaining the market-driven sensitivities to both changing demand and opportunities for service that are the hallmark of private companies. This is a difficult task, made more so in the current crisis-driven environment, as NY Waterway totters on the brink of closure.
Bruce Schaller is head of Schaller Consulting, which provides research and analysis about transportation, and is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.Â
As the Metropolitan Tranportation Authority struggles with its newest round of financial and political woes, the agency is failing to consider a ripe opportunity for peripheral economic development: providing wireless Internet access, commonly called Wi-Fi (for wireless fidelity) on its commuter trains, the Metro-North and Long Island Railroads.
Wireless Internet access is proliferating worldwide, increasing by 145 percent (80 million users!) in 2003, helped along by a propagation of new digital technologies -- WiFi is now available on laptop computers, personal digital assistants (PDAs), and mobile phones.
While users grow accustomed to having Internet access, they demand more connections, including on their commutes. Market studies repeatedly indicate that ridership would increase tremendously if Wi-Fi were provided. The resource is already being provided for public transportation and commuter rail users in such major cities as London, Paris, Seattle, the Bay Area, Tokyo, and Chennai, India. Lufthansa and other airlines are also already offering Wi-Fi upwards of six miles in the air.
New York City, in comparison, provides Wi-Fi on no transportation mode other than the Hampton Jitney and the LimoLiner luxury bus to Boston. The MTA has responded to queries that it has no intention of providing wireless Internet resources.
But the benefits to the Metropolitan Transportation Authority’s roughly 12 million monthly train riders would be plentiful. Businesspeople could increase their individual productivity during the ride, which may be up to two hours long from some locales. Sorting through a plethora of new emails on the way to work, accessing the company intranet, or using new Internet-based technologies to make discounted international phone calls, all heighten productivity - so much so that in Sweden, a group has begun advocating for employers to consider commuter rail time as work hours, since employees conduct such a large amount of work during their ride.
The MTA’s trains stop at 28 higher education campuses outside New York City proper. Because it is expected at most institutions that students receive information via email and/or course Web sites, these students surely would appreciate extra time for access. And the trains could also offer entertainment ranging from films, as provided for example by AtomFilms.com (headphones required, of course), to virtual visits to the art scene such as available at Swissart.net.
Expanding work or academic hours and providing such entertainment in this way could prove such a lure as to decrease automobile traffic into the city
Far from further isolating passengers from one another, it might actually have the absolute effect – creating a kind of on-board online community. Hooked-in passengers could participate in networked activities by sharing music (legally) using radio station-like playlist broadcast technologies, play trivia and video games against one another, or use a localized Web-based job-hunting/dating/classifieds service, in which the network matches up potential employees/singles/apartment hunters through pre-completed surveys. (With matches nearby and in-person, convergences would play out faster and more faithfully).
But What Would It Cost?
Expenses are difficult to quantify, but studies of other deployments show an investment by the MTA would hardly dent its new $200 million rainy day fund. If the project still seems too expensive, consider air conditioning, which was seen as an unnecessary investment by train operators in the 1930s and 1940s. No one now questions the necessity of having invested in air-conditioning, and the same will surely be true eventually of Wi-Fi as well.
What’s more, the MTA would quickly see a return on investments through new abilities to streamline its own processes, including enhanced train tracking, improved communications to headquarters and customers, heightened emergency communications resources (redundancy of communication modes is a key). Plus, the potential for mobile ticket collection (think a human EZ-Pass) would lessen paperwork and improve efficiency.
Revenue generation from Wi-Fi use would come in several forms. If the agency partners with one of the multiple wireless access providers, such as PointShot or Boingo, which require users to pay a relatively modest daily or monthly fee for unlimited Wi-Fi use, the agency could surely work out a financial gain. These returns are not minimal: Revenue generation from wireless hotspots is expected to reach $9 billion by 2010 according to industry research. Further income would be derived from direct online advertising, partnerships with music and movie downloading services, and subsidized Web-only discounts at locations serviced by the train line.
An investment in Wi-Fi then – both on the train and, ideally, at the stations as well – would generate revenue, increase customer satisfaction, and improve internal efficiencies. It would also help New York catch up to the other world-class cities that do this already. Is this likely to happen during its current period of fiscal chaos? No. But it would make sense to do so – for the Metropolitan Transportation Authority to show its customers it is thinking about their needs.
Sarah Kaufman is a graduate student in urban planning (specializing in infrastructure) at New York University's Robert F. Wagner School of Public Service Â