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New York Considers Legalizing, Taxing Weed to Save Its Ailing Subway System

Legalized pot is great. Taxing it to pay for public transit is not.

Wing Travelling/Dreamstime.comWing Travelling/Dreamstime.com

The New York City subway system has fallen on hard times. Decaying infrastructure has led to overcrowding, service cuts, fires, declining on-time rates, and an exodus of riders. The system is atrociously inefficient, and the state and local officials who share responsibility for it seem more interested in swapping barbs than fixing problems.

Enter three New York University (NYU) transportation experts. In a new report, they argue for a novel way of fixing the failing subway: legalizing marijuana.

"Subways need a dedicated revenue source with the potential for growth in future decades—one that does not divert funds from other public services, and that has yet to be tapped by the state and local government," they write. Taxing recreational pot, they argue, "offers New York State a unique opportunity" to generate that revenue.

The idea has gotten write-ups in The New York Times, the New York Post, Vox, and Curbed, with the consensus seeming to be that it would be a small step in the right direction, even if it won't generate nearly enough money to pay for all the needed repairs. (A state-wide pot sales tax of between seven and 15 percent could pull in somewhere between $110 and $428 million a year—far less than the $40 billion needed to shore up the entire system.)

Some politicians are getting on board with the plan, too. "The biggest issue we hear about as elected officials is the state of the subway system," City Council Speaker Corey Johnson tells the Times. "To be able to tie these things together is something that could be highly impactful and potentially transformative."

But there are problems with this idea. For starters, it would push New York's subway system even further away from an ideal where those who ride it pay the costs of its operation.

"Unlike the bus service in Paducah, which is going to need some type of subsidy, the New York City subway system ought to very pretty close to recouping its full cost from fare box revenue, advertising, financing, etc.," says Baruch Feigenbaum, a transportation expert with the Reason Foundation, the nonprofit that publishes this website.

The state's Metropolitan Transportation Authority (MTA)—which runs New York City's subway, its buses, and other regional rail lines—currently recoups about 40 percent of its operating expenses from farebox revenue. That's higher than most transit agencies in the U.S., but well below what could come from riders in the densest, most populous city in the country, says Feigenbaum.

He suggests the MTA try things like charging higher prices for longer subway rides—as opposed to the current flat per-ride fee—or charge variable rates on the given time of day, with higher fares for crowded rush-hour commutes and lower ones in the middle of the day.

The costs these changes don't cover could be recouped through other financing mechanisms, such as value capture financing, whereby property owners pay a slice of the increased values of their land from the proximity to subway lines toward the operation of the subway itself.

A more user-fee-oriented model wouldn't just provide more revenue, says Feigenbaum. It would also make the subway system function better.

Getting more revenue from riders would make transit officials more interested in pleasing riders, as opposed to pleasing the political actors holding the purse strings. Tying revenue to actual usage would also give transit planners better information and better incentives to run trains where and when people want to use them.

If there's surge pricing during rush hour for instance, it makes it more worthwhile to run additional trains during that time.

"If you could get the subway to operate like something close to a business," says Feigenbaum, "the fees would offer predictability in terms of how you're budgeting and in terms of how you're planning for the future."

The marijuana plan would also shift the burden of paying for the subway onto something that has no rational relationship to it. That's especially true when one considers the fact that the NYU report is suggesting a state tax, putting stoners in Buffalo and Albany on the hook for New Yorkers' commutes.

The NYU report argues that because marijuana is currently illegal, legalizing and taxing it won't take revenue from existing programs. In addition to basically treating growing government as a value-neutral proposition, this ignores the opportunity costs of spending each new dollar of cannabis tax revenue.

Every dollar of that money that goes to the subway is a dollar that doesn't go to another public program that has a more rational relationship to marijuana use—education programs designed to discourage underage consumption, say.

At the end of the day, a lot of the problems experienced by both the New York City subway system and the state's black market for recreational marijuana could be solved by treating both more like normal private businesses. That would certainly be a lot better than taxing one to pay for the other.

Photo Credit: Wing Travelling/Dreamstime.com

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  • IceTrey||

    How do supposedly intelligent people come up with such stupid ideas?

  • Longtobefree||

    They become Democrats - - - -

  • Velvet Thunder||

    Part of it might be that the "publish or perish" phenomenon in academia incentivizes coming up with two half-baked ideas instead of one good one.

  • Billy Bones||

    Because America stopped producing intelligent people decades ago. It's called government education.

  • Longtobefree||

    So legalizing weed has no relationship to individual freedoms, no relationship to the supposed harm, no relationship to the supposed good, no relationship to anything but as a new revenue source.
    And yet once again, the entire state is expected to fund the incompetence of NYC politicians and administrators.
    Sounds about right.
    Do the politicians in NY and CA get special training in secret training camps somewhere? Or is it as simple as having half their brains removed?

  • Dillinger||

    >>>Do the politicians in NY and CA get special training in secret training camps somewhere?

    Stanford. Yale.

  • Enjoy Every Sandwich||

    LOL the citizens of New York couldn't possibly smoke enough weed to fund the clusterfuck government-run trains, even if every one of them was a Cheech & Chong stoner.

  • Chipper Morning Baculum||

    Is that a challenge? Never underestimate the resilience of New Yorkers.

  • Earth Skeptic||

    "Subways need a dedicated revenue source..."

    Riders.

  • Earth Skeptic||

    And even better: NYC can rent out the subway right-of-way to a private contractor, who will run the trains as a commercial venture, charge riders what they think the market will bear, and pay workers accordingly.

    Oh, wait, this is NYC. Nevermind.

  • Chipper Morning Baculum||

    It's about time the New York rats started paying their fare share.

  • I'm Not Sure||

    Riders should pay? That's crazy talk. People loves them those free lunches.

  • Diane Reynolds (Paul.)||

    New York Considers Legalizing, Taxing Weed to Save Its Ailing Subway System
    Legalized pot is great. Taxing it to pay for public transit is not.

    But yet, there is no other pathway forward.

  • BlueStarDragon||

    At 40 billion to fix the subways to from point a to point b. It would be a lot cheaper to walk,hitchhike or get a used car.
    The only real thing that might work is to sell the M.T.A to the private sector.

  • BlueStarDragon||

    It should be 40 billion to go from point a to point b.

  • Jerryskids||

    Here's a novel idea - explain to the voters there's no such thing as a free lunch and money is limited. If you want more money spent on one thing, you're necessarily going to have to have less money spent on something else. That would require telling the truth and admitting that you've been lying to the voters for years about how government has some magical accounting system whereby everybody can get everything for free, so it's never going to happen but it is nice to fantasize about.

  • pokergeng||

    They become republic
    pokergeng

  • esteve7||

    You know who could pay for the transit system? People who use the transit system. Anyone else is a subsidy. If your public transportation was so great, you wouldn't need others to pay for it

  • lap83||

    But I was so sure that they would only legalize it because of a newfound love of freedom and libertarian ideals

  • a ab abc abcd abcde abcdef ahf||

    Nothing about cutting expenses? I bet you could cut half the government unionized workers and run a better system without them all stumbling over each other.

  • Bubba Jones||

    Even at a flat rate, more riders should translate into more trains.

  • Fats of Fury||

    Put a high speed streetcar down there and a few bike lanes.

  • Fist of Etiquette||

    ...overcrowding, service cuts, fires, declining on-time rates, and an exodus of riders.

    Seems like the last thing would take care of the first.

  • Diane Reynolds (Paul.)||

    It's so crowded, no one rides it anymore...

  • DenverJ||

    I never understood why Charlie's wife wouldn't pass him a nickle through the window when she passed him his lunch.
    Poor Charlie.

  • Longtobefree||

    Damn. You must be as old as I am.
    I always wondered that too. But it would ruin the song.

  • I'm Not Sure||

    Grew up listening to the Kingston Trio. Not the only old one here, I guess.

  • Ken Shultz||

    Anybody who opposes legalizing weed if doing so provides tax income to the New York's subway system is being childish.

  • Rich||

    it would push New York's subway system even further away from an ideal where those who ride it pay the costs of its operation.

    Obviously the solution is to provide each rider with some free weed when xi pays the necessary fare.

  • Juice||

    Ride the DC Metro and sometimes you can get a free contact high.

  • BlueStarDragon||

    In truth, It should be your allowed the M.T.A to sell weed and let the costumer smoke weed on the M.T.A . Then make sure there a goodie cart with a bunch of over price snacks. The profits made would be pretty good then. Oh I almost forgot some slot machines and pretty call girls with love on a real train playing in the back ground. Then the profits would sky rocket.

  • C. S. P. Schofield||

    I frankly astonished that it has taken this long for the subway to get to this point. The core problem with public transportation is that politicians are almost never willing to allow it to charge what it needs to charge to maintain its infrastructure. In some places, this doesn't matter too much because the potential riders won't pay that anyway. But even where there exists a real market need, the politicians are sure to bollux it up by 'keeping fares low'. And in those areas where the politicians are willing to admit that the public transportation must be subsidized to get any significant ridership, there's always something sexier to sped public funds on. Maintenance always sucks hind-tit.

    And it hardly matters what rat-hole the politicians decide to pound new revenue down; there won't be enough to satisfy them.

    So, what should concern us here is; is it worthwhile to legalize Pot in New York? And will the taxes proposed price the stuff so high that it might as well be left illegal, because the black market in it will remain as vigorous as ever?

  • philoeleutheria||

    "At the end of the day, a lot of the problems experienced by both the New York City subway system and the state's black market for recreational marijuana could be solved by treating both more like normal private businesses."

    Two things become blaringly obvious upon reading Reason.com:
    1. Reason Authors are most often highly ignorant, and
    2. Darwin was correct when he observed that: "Ignorance more frequently begets confidence than does knowledge".

    Depending on source, stats show that 80-90 percent of private businesses fail within 10 years.

    The idiots at Reason.com need to read about the Pareto Principle (aka, the 80/20 rule).
    Roughly 80% of the effects come from 20% of the causes.

    This is demonstrably similar to the business failure rate. Some 20 percent of businesses account for the successes in the business world.

    Most successful businesses engage in multiple products and/or services due to this principle. Whereas 80 percent of those products/services won't be profitable, the other 20 percent will maintain profitability.

    This is also why truly successful investors diversify their investment portfolios.
    Even the Warren Buffetts aren't clairvoyant, they choose losers along with winners, hoping to come out ahead in the long run.

    Selling one single item, like subway passes, is likely a losing prospect.
    These businesses are not successful, thus the reason they're subsidized.

  • philoeleutheria||

    Though I agree that taxing marijuana isn't a good solution for subway funding (it hasn't helped Colorado schools nearly as much as touted), once again, the illogic at Reason is highly flawed.

    As most always, there is very little true reasoning going on at reason.com.

    The morons at Reason.com seemingly know very little about the REAL world of business.

    Their own expenses at the Reason Foundation in 2016, as per their IRS form 990, were $12,379,098.00.
    Yet their true revenue was only $1,008,894.00.

    They were GIVEN $11,684,317.00 by various "Libertarian" organizations and individuals to help offset MASSIVE OPERATIONAL LOSSES, and to spread farcical "free market" propaganda (billionaires looking to avoid paying taxes, whilst forcing others to pay their share).

    (source = https://bit.ly/2G72efc)
    (original source = propublica.org norprofit explorer)

    FUNNY THAT A HIGHLY SUBSIDIZED ENTITY IS CRITICIZING OTHER SUBSIDIZED ENTITIES.

    FUCKING HYPOCRITES!

  • IceTrey||

    The subway was very successful until the government took it over. Individuals voluntarily supporting an organization is not the same as coercive taxes supporting a business.

  • m4019597||

    The MTA would be able to fund all of its improvement plans if it didn't have so much fare evasion or runaway union obligations. Fare evasion is currently unpunished and costs $100,000,000 per year. More than half of its unionized workforce is literally permitted to do nothing but sit, sleep, or drink coffee all day.

    Ironically, when they were arrested, fare evaders often were caught with marijuana. Do the NYU elitists think these free-riding dirt bags are going to spend money on weed?

  • Olga||

    I have only been a visitor to NYC, but a city as congested as NYC needs public transit. The reason it is so expensive to fix NYC's train system is it was built in the 19th Century. I have read that there might be alternatives to an expensive subway system and that should be considered, but some kind of public transit is needed in NYC.

    In Europe and even Russia, they prioritized public transit. Most people did not have cars, but every big city has public transit. They don't develop the problems that NYC and Washington, DC development. Their systems always have a reliable revenue stream and are constantly well maintained. The problem with Washington, DC was they built the system and then did not maintain it, so now they are stuck with years of back maintenance. If they had been properly maintaining it all along, we wouldn't be in this mess.

    I am not sure pot taxes are enough to fix NYC's subway system. I am not sure if $40 billion might be too high of a price tag for public transit, even in a city like NYC. However, if they forgo the subway, they will need more buses and light rail or something. Whatever the project, it won't be cheap.

    While the idea of turning the subway system into under ground roads for taxi's and uber drivers, that sounds intriguing, but probably wouldn't move enough people.

  • Brian||

    Aren't they supposed to be trying to tax rich people or something?

  • GryFalcon||

    There is an argument for taxing vehicular traffic to fund an alternative mass transit system, because the transit system is being used to remove congestion to benefit the vehicular traffic. Without mass transit, roads may be so jammed that cars can't get down the road.

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