Mass Transit

UPDATED: Here's Why $19 Billion $43 BILLION Won't Fix New York's Subway—or Your Local Transit System

Until riders pay most of the cost of public transit and operators are directly answerable to their customers, nothing will get better.

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New York Post cover

Updated, May 24, 7:45 A.M.: Late yesterday, The Wall Street Journal reported on the MTA's plan to fix the New York City subway system and provided a fuller accounting of costs that had been deleted from the version discussed below. It turns out that the MTA estimates a total cost of $43 billion to upgrade the subway and bus system over 15 years. The agency says it will also require an additional $50 billion in capital improvements. "The plan publicly presented by [MTA chief Andy] Byford on Wednesday didn't include [full] cost estimates," notes the Journal. Spokespeople for Gov. Andrew Cuomo and the MTA are claiming the other is responsible for deleting the full cost estimates.

When New York City's subway opened in 1904, a ride cost a nickel. Today the system is breaking down in virtually every possible way and boasts the worst on-time performance of any major transit system in the world.

Last summer, the system was declared "in crisis" and got an $800 million infusion in emergency cash and repairs. A year later, the head of the MTA, which operates the system, is now pushing a plan to fix the subway that carries a jaw-dropping price tag of $19 billion—about the same amount as nearby Connecticut's total state budget. The fixes will take decades, promises MTA head Andy Byford, but the first few years will focus on the signal system, which breaks down all the time, causing backups, jams, and delays. The New York Times reports:

There have been serious delays in installing a new signal system, which is known as communications-based train control, or C.B.T.C.

Of New York's 22 subway lines, only the L train has the advanced signal system. An effort to install the technology on the No. 7 line is years overdue.

Mr. Byford has said he hoped the No. 7 line signal upgrades would finally be completed this year.

That promise—and a nickel—gets you nothing but delays on today's subway. The L train is a major line that goes between Manhattan and Brooklyn and the East River tunnel it uses was damaged by "Superstorm Sandy" in 2012. As a result, the tunnel will be be shut down for at least 15 months starting next year, massively disrupting service for hundreds of thousands of people and leading to fears of what is colloquially dubbed the "L-pocalypse." So it's especially dank that the L is the city's only subway line with advanced technology.

Don't expect this new fix to work, even with those $19 billion. (If passed, the plan will almost certainly cost much more.) The MTA has an almost perfectly uninterrupted history of failing to get any job done well, on time, or effectively. Importantly, the plan doesn't address the core issue with the NYC subway and many other transit systems around the country: The people who operate it are not responsible to the riders who use it. The riders who use it also pay a smaller and smaller share of the operating costs, thanks to subsidies from tolls levied on drivers using bridges and tunnels. Last year alone, those tolls kicked more than $1 billion to MTA buses and subways. And then there are the endlessly proliferating taxes and fees on people who purposefully avoid the subway.

As Jim Epstein and I explain in the Reason video "How to Fix New York's Totally F*cked Subway System,"

These include a special sales, corporate, and payroll tax, plus fees on real estate transfers, car rentals, drivers license renewals, and vehicle registrations. And the state just imposed a brand new surcharge on taxis and ride shares coming into Manhattan, with the money going to the MTA.

The predictable result of such subsidies is rotten service, periodic bailouts, and out-of-control costs ("subway workers on average make $155,000 in total annual compensation, or more than twice the passengers they serve").

The rambling wreck that is the New York subway isn't just the MTA's fault. It's the result of a dysfunctional management system, borne of earlier crises in cash flow and operating failures, that centralizes a huge amount of power over the system in the governor's office in Albany.

Any reform plan that doesn't fundamentally alter how the subway generates and uses its revenue is doomed to failure. The single best practice for any transit system, says Reason Foundation policy analyst Baruch Feigenbaum, is to have its riders pay as close to the full cost of the system as possible. Low-income riders, students, and other special cases, he notes, can get special fares or rebates. "That is the most efficient system," he explains, and it's "also the best system for the rider, because if the rider is the one paying the cost, then the transit agency is serving the rider. If Albany is bailing out the transit system, then it's going to be whatever Albany wants."

It took decades for New York's subway to upgrade its turnstiles and to modernize its payment systems away from tokens to electronic cards. Such laggard behavior was always justified in the name of New York exceptionalism. (When I lived and worked in New York in the 1980s, people would seriously claim that subway tokens were somehow as integral a part of the greatest city in the world as bagels, street crime, and public urination.) To this day, the service doesn't charge riders based on the length of their trip or whether it's rush hour, as most other systems do. When riders, who currently pay around $2.75 a trip, are bearing the actual costs of the system, they will be motivated to demand top-flight service; if there's something New Yorkers are exceptional at, it's bitching and moaning about bad service. The difference under Reason's plan is that the MTA will also be in a position to use its revenue wisely and directly, rather than answering to an overlord who lives 150 miles north of the city.

Watch "How to Fix New York's Totally F*cked Subway System":

Links and details here.

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43 responses to “UPDATED: Here's Why $19 Billion $43 BILLION Won't Fix New York's Subway—or Your Local Transit System

  1. I blame Gene Friedman.

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  2. If riders pay the full cost, they won’t use them. Mass transit systems are never economically viable. They only way they exist is by the government subsidizing them so people don’t pay for the full cost of using them. So, if your goal is to make riders pay the full cost, you might as well skip the middle part and just shut them down because that is going to be the result if they are ever expected to compete on their own.

    1. It seems to me the problems of full cost is a function of government running the operation. That always devolves into a vote buying pension racket, which taxpayers foot the bill for. – whether they use the subway or not. The NYC system being so aged, there are alot of pensions to pay for with each click of the turnstile. I wonder what percentage could be shaved off of costs if cities controlled the easement, but leased operations with maintenance obligations [other than tunnel structure maintenance] to a private entity. If the city controls the tunnels, then regular police patrols maintain a foot in the door as their interest in the property is maintained [on top of being a public accomodation] and probable cause burdens are generally lightened. The non-riding public would have a little more money in their pocket at the same time, which might make some more likely to ride?

  3. Looks like the only profitable public transit systems are in Hong Kong, Japan, Taiwan, Singapore, and London. The least profitable ones are in the US. Americans love their cars too much. What is interesting is that this correlates with the collective-individualist scale of different cultures, with the exception of London.

    1. It correlates even better with the How Many People Can We Cram Into This Tiny Piece of Land scale.

    2. They really are not profitable there either. They still get subsidies and they also benefit from their governments making car travel cost prohibitive. One toll I used to go through in Japan was 40 bucks one way for example.

      1. “”One toll I used to go through in Japan was 40 bucks one way for example.”‘

        Damn it, don’t tell the MTA and Port Authority that. I’ll end up paying 40 bucks to get across the east river.

        1. Ha very true.

    3. You completely made up everything you wrote.

    4. “Americans love their cars too much.”

      Well we’ll just have to fix that eh?

      /Prog.

      1. You do not know how right you are. Ending Americas use of POV has been a goal of theirs for decades. Everything was going great for the progressive cause as the masses were huddled into dense urban areas their political machines controlled. Their dream of progressive utopia was within their grasp. But the working class left them at the alter after WW2 moving to the burbs. They have been trying to get us back into the cities ever since.

    5. Tallinn Estonia claims that it turns a profit on its public transport – and it is FREE to ride for residents.

      A bit of a tax game though. Munis get a flat $1000 from Estonian income tax based on their residents. And a lot of people moved there once they made public transit free. That said – what free ridership did was eliminate traffic congestion, eliminate operating costs (fare booth operators and some audit/inspections/police). So it is hard to know what part of their spending now is just the original capital costs v what is operating costs.

      That said – it’s not just a tax game for Tallinn either. They are extending the basic idea nationwide on July 1. No surprise it is one of the few countries that has a Land Tax (NOT a property tax) – which is what pays most muni/local capital costs.

      1. Whoops. screwed up the html for the above link

      2. And Estonia is not some socialist basketcase either.

        Tax Foundation ranks it as the most competitive tax system in the world – well ahead of Switzerland, Luxembourg, New Zealand – with the US in the dust at #30.
        #1 on corporate taxes (flat 20%), #1 on property taxes (because its a land tax not a prop tax), #7 on individual taxes and tax rules, #10 on consumption taxes

    6. London is decades ahead in automation – US rail service remains in the stone age by comparison: 20th century car design loosely adhering to a19th century mindset.

    7. Um, in which of those cities are traffic jams common “because [their citizens] love their cars too much”? What percentage of NYC residents even HAVE drivers’ licenses?!

      A year or two ago, we took a taxi from Heathrow to a hotel near the City center. 1.5 hours, one third of which was spent going from the airport to the City Limits. The remaining hour was spent, for the most part, parked in traffic for the rest of the trip, despite tons of futile laws and fees designed to get people “out of their cars and onto public transport.”

      I’d venture that one reason Americans “love our cars” is that most of the country is immensely larger than the ones you list and public transportation could not possibly create an efficient, effective, flexible enough and economical alternative to the automobile.

      Consider, also, that, while the rural populations just might tend to have a cultural tendency towards ‘self-sufficiency,’ when you have a large urban population in a relatively small area, there’s almost nothing any citizen can DO in terms of ‘self-sufficiency’! Nearly every product or service must be provided by some outside agency and the “natural” source of those things is “the government,” right? Not necessarily, from most libertarian views, but the ‘culture’ doesn’t understand or buy that argument!

  4. “The difference under Reason’s plan is that the MTA will also be in a position to use its revenue wisely and directly, rather than answering to an overlord who lives 150 miles north of the city.”

    That “overlord” is named Chris Cuomo, and he ain’t about to give up shit.

    1. Andrew Cuomo; the governor, not the reporter.

      1. Who cares? The whole Cuomo family is a pack of imbeciles.

  5. Any reform plan that doesn’t fundamentally alter how the subway generates and uses its revenue is doomed to failure. The single best practice for any transit system, says Reason Foundation policy analyst Baruch Feigenbaum, is to have its riders pay as close to the full cost of the system as possible. Low-income riders, students, and other special cases, he notes, can get special fares or rebates. “That is the most efficient system,” he explains, and it’s “also the best system for the rider, because if the rider is the one paying the cost, then the transit agency is serving the rider. If Albany is bailing out the transit system, then it’s going to be whatever Albany wants.”

    Couple of things, one if NY is anything close to DC they have no idea how to even calculate that number(and if they were it would be so prohibitively expensive it would have next to zero ridership). Secondly your making the mistake that they want this program to be transparent. They don’t. Its a jobs program, whose original purpose was a racket created to enrich real estate developers as an end around to easily rezone land. if cost savings and transporting underprivileged people were their primary goal they would stop spending on trains immediately and use that money to subsidize uber rides and revamping bus lines as routes/stops can be easily changed depending on demand and overall efficiency.

    1. It also amazes me to see how little reporters know or understand about this subject in the dc area. I have never ever seen or heard of a single one asking anybody how much it costs to transport a rider one mile on the system or what a metric of success is or where the billions of dollars in maintenance went over the last 40 years when no maintenance actually occurred or why realestate developers are so interested in where the new stops go. Just once I’d like to hear one DC councilman or a Member of the Metro Transit authority answer one of those fucking questions.

      1. If a councilman asked such questions, someone might ask them how they are connected to the real estate developers. And no one wants that.

        DC is a southern city. It didn’t need a metro. It needed roads. Building the metro did nothing but get a few people rich and artificially skew development to areas around the metro stops.

        1. Don’t forget the transit unions. Meanwhile they run half empty to almost totally empty buses out to the far suburbs as an excuse to tax them for the Metro.

        2. Traffic’s bad enough. I can’t imagine it with no Metro.

      2. I couldn’t find a single source. I mixed 2017 CAFR and 2018 budget to get estimates:

        Metrorail: $983.4M (55% fares, 37% subsidies, 8% other), 1,475,685,198 passenger miles ($0.67/pm)
        Metrobus: $698.8M (23% fares, 73% subsidies, 4% other), 399,016,612 passenger miles ($1.75/pm)
        Metroaccess: $120.5M (8% fares, 92% subsidies), 18,903,137 passenger miles ($6.37/pm)

  6. “”but the first few years will focus on the signal system, which breaks down all the time,””

    They just replaced most of the signal system.

    1. Your point?

  7. “”but the first few years will focus on the signal system, which breaks down all the time,””

    They just replaced most of the signal system.

  8. “…Until riders pay most of the cost of public transit and operators…”

    I think I have a better chance seeing a Samsquanch fucking a unicorn on the hood of a car than ever seeing that.

  9. Until riders pay most of the cost of public transit and operators are directly answerable to their customers, nothing will get better.

    Bullshit. LANDOWNERS need to pay 100% of the capital costs of transforming that public land into a particular mobility system. They are the beneficiaries of the existence of that public infrastructure – or the ones harmed by some negative-value infrastructure. And likewise, they are the ones who should be making the main decisions about the specifics of what that mobility system looks like (within the constraint that it remains a PUBLIC mobility system).

    Riders need to pay the OPERATING costs of the particular transport that uses that public infrastructure. And that is where govt should stop pretending that it can operate transport. It can’t. It can be a landlord of that land. Maybe leasing out access or loading depot/nodes – or publicizing/consolidating schedules – or somesuch. Those operators – private – can then respond to their actual/potential riders. But those operators can NEVER make the decisions about how public land is distorted to serve their private needs.

  10. I just got paid 7k dollar working off my laptop this month. And if you think that’s cool, my divorced friend has twin toddlers and made over 12k her first month. It feels so good making so much money when other people have to work for so much less. This is what I do

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    1. http://www.plusaf.com/homepage…..ntenna.jpg

      Yeah, right… please note that this is a libertarian-leaning site, and how many libertarians would support a career choice where members of that group are actively recruiting competition in their own market.

      Fool! Troll some other sites, ok? Suggestion: any with “liberal” or “progressive” or “Democrat(-ic) in their site names.
      THEY’LL be the ones to buy your bullshit.

      1. please note that this is a libertarian-leaning site

        It is a rentier apologist site – and most of the R-type commenters who claim to be ‘libertarian’ here are complete economic ignorami and tools. Unlike ACTUAL past libertarians like AJ Nock, Friedman, Nolan and even Buckley who understood this issue.

        The notion that RIDERS should be paying the costs of maintaining 150+ miles of underground tunnels is fucking laughable. Fine – shut the subway and let them find their way around town on the surface. Only means adding 2-4 million cars/bikes/peds every day (which also won’t pay for 150 miles of tunnels). Shouldn’t have any impact at all on surface traffic – nosirreebob.

        Or maybe it will bring the entire city to a halt. Because a city of 8 million in an MSA of 20 million in that size area can’t remotely function with only cars/buses as transport. Maybe revert back to the pop when subway first opened making it possible for cars to take over the streets and narrow the sidewalks – 2.5 million in the city and another 2.0 million in MSA. A 75% pop drop means – empty apt buildings, empty skyscrapers, and plummeting land prices. OTOH –

        Not that that’s a bad thing – but have no doubt it’s the landowners of NYC who have benefited from the existence of the subway. Only a rentier tool can be blind to that.

  11. Tony Soprano is about to get paid!

  12. If you want to fix the subway system,,,,,,,,,, increase the budget to 20B,, pay every politician through the MTA, PA, and every represenitive in the state 5M on top of everything.. Give them theirs first… OH,,,,,,,,, and don’t forget the clit ons……

  13. New York City should turn to California where Jerry Brown is building a train system from San Francisco to LA. Perhaps NYC can learn how to build a transportation system that hundreds of European tourists will ride each year and marvel on how anything like this could have been built.

    1. I can only assume that you are being sarcastic? Otherwise, please seek medical help immediately.

    2. ….” how anything like this SHOULD have been built.”

      FIFY…

  14. I’m pretty sure the MTA pulled that $19 billion out of their butts. It’s probably a lot more than they actually think they need (aim high, right? and incompetence) and a lot less than they’ll actually need (’cause that’s how stuff like this always works).

  15. “The single best practice for any transit system,” according to the author, “is to have its riders pay as close to the full cost of the system as possible.”

    No, Nick, they should pay the full cost of the system. If that doesn’t cover it, then it should go broke and shut down. Does not the chief editor of a Libertarian publication get it? Please, quit trying to be so polite … you run the risk of sounding like Gary Johnson.

    1. If landowners do not pay for the increase in land value that they receive when this sort of infrastructure is built and instead try to make others pay for that; then, to them, it is further evidence that government is the great fiction by which everyone seeks to profit at the expense of everybody else

      Who do you think lobbies for these transport projects and has a big interest in where the access points and stations and nodes are? Why do you think they don’t give a damn when a $19 billion proposal – which may only be worth $7 billion – turns into a $43 billion actual cost? Why should they give a damn when they are also lobbying to ensure that someone else pays?

      The potential ‘riders’ don’t even exist until the project is complete – and even then their interest/stake in the system is $2-10 /use. They are irrelevant to the project itself.

  16. It turns out that the MTA estimates a total cost of $43 billion to upgrade the subway and bus system over 15 years.

    What is likely to happen is that 15 years and $43 billion later, the NY system will still suck and they’ll be asking for more money. The DC Metro system has the same issues, only they have to deal with multiple jurisdictions for oversight and funding (DC, Maryland and Virginia). And DC’s system isn’t nearly as old as the one in NY.

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