Metro New York Transit Finance: An Analysis of Data from the National Transit Database for 2012

Another real estate bubble is underway, thanks to low interest rates, and the MTA’s real estate-related taxes are temporarily up as well.  And as has been the case for 20 years, everyone related to state and local government wants to grab money from the MTA’s future – a future that includes an almost completely unfunded capital plan, starting next year, that would consist mostly of ongoing normal replacement.

Even so, the Transit Workers Union wants raises for past years, over and above the 8 percent increase they got in the recession.  The Long Island Railroad unions are threatening to strike.  The contractors and their unions are turning East Side Access into a perpetual bonanza.  Staten Island wants more special deals to pay lower tolls, and the suburbs want more special deals to pay less in dedicated MTA payroll taxes.  The Governor has taken some of those dedicated taxes, only collected in Downstate New York, for the state’s general fund, to be spent in Upstate New York.  The MTA recently announced lower fare increases.  And everyone thinks its fine because the MTA could always just borrow more and more and more.  While Generation Greed continues to do what it does, I have compiled some facts about the financial transit situation based on the Federal Transit Administration’s National Transit Database.  Those facts are discussed in the next two posts, starting after the jump.

The latest FTA data is for 2012.  It can be found here.

http://www.ntdprogram.gov/ntdprogram/

I focus on the tables with operating cost and fare recovery ratios, and the main thing I do with them is shrink them down to a limited number of transit agencies for comparison.  Because the FTA collects data on 9,242 transit systems, some of which have multiple transit types (rail, bus), their tables are too large to get a handle on.  Below is a summary spreadsheet with data on large transit systems around Downstate New York and New Jersey, along with selected larger systems elsewhere in the United States.  It includes a series of charts on selected transit systems in New York and New Jersey alone.  The first worksheet has tables set up to print on six pages, though I’m not sure what your spreadsheet program and printer will do with it.

NTD 2012 Summary NY

One of the tables shows how high the operating costs are for different transit systems, measured several ways.

One measure is the operating cost per unlinked trip. This measure favors local urban transit, with lots of riders getting on and off and riding short distances.  It also favors densely populated, transit-oriented cities.  Thus the New York City subway’s operating cost of $1.50 per unlinked trip is the lowest among major transit agencies.  The comparable figures for the local commuter railroads are $11.40 for Metro North, $12.00 for the Long Island Railroad, and $10.70 for New Jersey Transit.  But the subway’s cost per trip is also far lower than the PATH system, $3.70 per ride, the Staten Island Railway at $6.20 per trip, and the two components of the New York City’s bus system, MTA Bus (the former private companies) at $4.30 per ride, and New York City Transit Bus at $3.10 per ride.

A second measure is the cost per passenger mile.  This measure favors high-speed commuter rail services, because fast trains travel more miles for each work hour of the employees on them.  Even so, the New York City Subway’s 40 cents per passenger mile is equal to Metro North and lower than the 50 cents for New Jersey Transit commuter rail operations, the 60 cents for the Long Island Railroad, and the 90 cents for the PATH system.  By this measure the two components of the New York City bus system are particularly inefficient because they move so slowly – stopping at frequent stops, waiting for passengers to get off and on and pay their fares, stopping separately at lights, and getting stuck in traffic.  The city’s buses cost $1.40 for each passenger to who travels a mile.

I, however, prefer two other operating cost measures that more accurately reflect how efficiently a transit service is doing its job, not the kind of service it happens to be or the type of place it happens to be in.  The first is operating cost per revenue vehicle hour.  That is how much it costs in total operating expenses to keep a bus, subway car, or rail car in service moving passengers for an hour – including the bus or train operator, the bus or train car maintainers and, for train services, the station agents and station and right of way maintainers.  For selected transit services, operating costs by this measure is shown in Chart 1.

Chart 1

The chart shows that the Long Island Railroad and Metro North have the highest costs, even though the maintenance of some of their trackage is the responsibility of Amtrak.  They cost $500 per vehicle hour. New Jersey Transit, at $381 per vehicle hour, is much cheaper than Long Island Railroad and MetroNorth, as is metro Chicago’s commuter rail system (not in the chart) at $432, Boston’s at $412, and Philadelphia’s at $349.  Costs in New Jersey and Illinois need to be taken with a grain of salt, however, as public agencies in these states have drastically underfunded their pension plans, a cost avoided in 2012 but likely to explode in future years.

What is far certainly far cheaper per vehicle hour is the New York City subway at just $189.  Among major rail transit systems only the cost of the Chicago Transit Authority is lower at $131 – though with the pension caveat above. The cost of the PATH system, at $447 per vehicle hour, is nearly as high as the commuter railroads.  That is surprising because, like the profitable Hong Kong subway system and unlike New York City transit with its low-traffic outlying subway lines and stations, PATH is a small system with lots of riders at just a few stations.

Buses tend to have lower costs per vehicle hour, since their operating costs do not include the maintenance of the streets or stations.  Individual buses also carry somewhat fewer passengers than individual subway and railcars.  New York City’s paratransit vehicles have the lowest cost per vehicle hour of all, but their low capacity and inefficiency mean they cost an amazing $71.60 per ride in 2012.  Westchester County’s Bee Line and Nassau County’s NICE service are purchased transportation (PT), not directly operated (DO) by public employees.  Nassau County’s bus system, and metro Boston’s commuter rail system, were privatized during the last few years.

The operating costs of area bus systems in 2012 were about $170 per vehicle hour for New York City Transit buses, $134 for MTA Bus Company buses, $133 for New Jersey Transit, $149 for Westchester’s Bee Line, and $116 – lowest in the metro area – for Nassau County’s privatized bus network.

The MTA’s commuter railroads are expensive because of featherbedding in their maintenance operations, and multiple conductors on every train.  In contrast New York City’s Transit’s car and track maintenance operations have seen substantial productivity gains over the years.  Commuter railroad workers also get paid more in total compensation than New York City subway workers, as shown in Chart 2.

Chart 2

This chart shows total operating costs per employee work hour.  Not all of that cost is for the employees:  some is for energy, contracts, and maintenance materials.  But employee wages and benefits is the biggest part of it.  For New York City services, the total cost per work hour was $74.40 for the subway, $70.50 for the Staten Island Railroad, $78.80 for New York City Transit Bus, and $81.80 for MTA Bus.  This compares with the much higher costs of $90.10 for New Jersey Transit commuter rail operations, $89.10 for Metro North, and $98.30 for the Long Island Railroad.

Higher still are the $127.40 for the PATH system, $134.80 for the Staten Island Ferry.

The city had wanted to contract with private ferry operators to provide more frequent overnight service, but the ferry operators’ political patrons have demanded that the city’s huge boats be run more frequently – and mostly empty – instead. Meanwhile, the high operating cost per work hour for the PATH system reflects the idea that the Port Authority was making lots of “profits” from tolls back in the day, and that these should be shared.  Port Authority police officers make far more than New York City police officers for the same reason.  But now the Port Authority is so deep in debt – after keeping fares and tolls lower than MTA services in the 1990s in a political deal to benefit New Jersey at New York’s expense, and after 9/11 and the cost over-runs associated with rebuilding – that it is unable to properly maintain its infrastructure.  The roof of the Port Authority Bus Terminal for example.  But the higher labor costs remain.

For the people, the cost of transit service hits them in two ways:  in the fares paid to use them, and in the operating subsidies funded by taxes and tolls.  The additional capital spending transit requires is funded exclusively by current and future (due to borrowing) taxes.

Chart 3 shows the percentage of total operating costs covered by fares.

Chart 3

The data shows that the New York City subway covered 73.2% of its operating costs with fares in 2012, more than any major transit system other than San Francisco’s highly-automated, higher fare BART system (at 75.0%).  The subway covered a much higher percent of its costs than the NY metro area’s other “subway” system, the PATH at 40.0%, due to its lower costs.  For the suburbs, MetroNorth covered 62.5% of its costs with fares, and New Jersey Transit covered 58.1%, but the Long Island Railroad covered just 50.0%.  Aside from the small Staten Island Railway, which covered just 17.4% of its costs, New York City’s rail system was far less costly to taxpayers by this measure than the suburban commuter rail systems.

For buses, on the other hand, the suburbs covered more of their operating costs with fares, despite operating in lower-density, less transit-oriented environments.  New Jersey Transit’s buses covered 45.6% of their operating costs with fares, Nassau County’s NICE system covered 41.9%, and Westchester’s Bee Line covered 37.6%.   This compares with about 34.7% for the two components of New York City’s bus system.

One factor in the low fare cost coverage ratio for New York City buses may be the division of fare revenue between buses and the subway for trips involving both, given the free bus-to-subway transfer introduced in the 1990s (One City One Fare).  Based on the National Transit Database instructions, the division could be done in several ways, but is most likely a 50-50 split.  If done by distance traveled, the share of fare revenue allotted to the subway for joint subway-bus trips might be even higher.

The most heavily subsidized services, in fare revenue as a percent of operating cost terms, are those on Staten Island.  The Staten Island Ferry is free.  The Staten Island Railroad is free for those traveling between stations other than Tompkinsville and St. George.  The Staten Island buses, less intensively used because of he lower population density of that borough, cover less of their cost than the buses in the other boroughs.  And, of course, Staten Islanders pay less for MTA tolls that other residents.

MetroNorth covers more of its operating costs with fares than the Long Island railroad, despite about the same operating costs per vehicle hour, due to higher fares, as shown in Chart 4.

Chart 4

The average MetroNorth fare is $7.60 per unlinked trip, compared with $6.00 for the Long Island Railroad and $6.22 for New Jersey Transit commuter rail operations.  The New York City subway reports an average fare per unlinked trip of just $1.07.  However, New York City Transit reports 2.5 billion unlinked subway trips to the FTA, whereas it reports just 1.65 million subway rides on its website.

http://www.mta.info/nyct/facts/ridership/#atGlance_s

For National Transit Database purposes, the MTA may be counting a transfer between subway lines, or between the old IRT, BMT and IND systems (which were unified in 1940), as more than one unlinked trip.  If it counted each subway trip just once, the average fare revenue per trip would be $1.66 and the average operating cost per trip would be $2.26.  Those measures seem more reasonable, given the cost of a Metrocard.

The average fare is $1.42 for Westchester’s Bee Line bus system, and $1.44 for Nassau County’s NICE system.  The average fare is lower for New York City Transit bus routes at $1.08, perhaps because of revenue shared with the subway, and higher for MTA Bus routes at $1.50.  Because of its high costs, PATH only covers a low share of its operating costs with fares despite an average fare of $1.58.  The PATH does not offer a free transfer to the New York City subway, with revenues divided, or a discounted combined commuter rail/PATH ticket, like MetroNorth and the LIRR do with the New York City subway.

Measured by the percent of operating costs covered by fares, the New York City subway is close the least subsidized transit system in the country.  But there is another way to measure subsidy level: the total subsidy level required.  A relatively small transit system, such as Atlanta’s MARTA subway system, doesn’t cost taxpayers much despite covering only 40.4% of its operating costs with fares.  Its total operating subsidy was only $107 million in 2012.  A very large transit system, such as the New York City subway, can cover most of its operating costs with fares and still require substantial subsidies from taxpayers and tollpayers, in this case $1 billion.  Because of its large size, and because so many people use it, the total subsidy burden of New York City’s transit system on taxpayers is in fact higher than in other, less transit oriented areas, despite NYC’s higher fare recovery ratio.

The total subsidy level is shown in Chart 5.

Chart 5

Together, MetroNorth and the Long Island Railroad carry about one-tenth the passengers of the New York City subway.  Despite higher fares, however, the total operating subsidy of commuter railroads is $935 million, or almost as much as the New York City subway.   And the LIRR’s total operating subsidy is far higher than MetroNorth’s, despite the two agencies carrying about the same number of passengers. (The State of Connecticut also helps to pay for MetroNorth, reducing the burden on New York State taxpayers further).

The largest single taxpayer cost of operating transit in Downstate New York, however, is New York City’s surface transit (bus and paratransit) system.  Its total operating subsidy was $2.4 billion in 2012, divided between New York City Transit buses, MTA Bus buses, and NYCT Paratransit subsidies.

Since New York City residents had $472 billion in personal income in 2012, according to the Bureau of Economic Analysis, the operating subsidy cost of the city’s surface transportation system (paid for in taxes and tolls) was 0.51% of city residents’ income that year.  Adding in the operating subsidy of the subway, the total transit subsidy cost was 0.73% of city resident’s income.  And add in the cost of the capital plan, and the total taxpayer subsidy cost of New York City’s mass transit system, in taxes and tolls (and debt backed by future increases taxes and tolls), was 1.4% of city residents’ income in 2012.

That is probably close to the highest cost of transit subsidies as a percentage of people’s income in the U.S., but how much is it really?  As I noted in this post, the average state and local tax burden in the United States was 10.3% of personal income in FY 2011.  It was 15.8% in New York City, or 5.4 percentage points higher.  So the cost of taxpayer mass transit might explain about one quarter of New York City’s higher tax burden.

https://larrylittlefield.wordpress.com/2013/07/30/the-state-and-local-tax-burden-fy-2011/

But there are offsetting savings.  In 2012, according to the Consumer Expenditure Survey as reported by the Bureau of Labor Statistics, 88 percent of U.S. households had one or more motor vehicles, and the average number of motor vehicles per household was 1.9.  The purchase, lease, financing, insurance, maintenance and repair of those motor vehicles cost the average U.S. household about $5,700 per year, even without variable costs such as gasoline and parking.  That was 11.1% of the average household’s total spending, and 8.7% of their total income.  Savings from not having their own motor vehicle, or from owning one motor vehicle rather than two or more, may more than offset the higher taxes required to fund mass transit in New York City.

Consumer Expenditure Survey 2012 quintile

That was the situation in 2012.  In my next post, I’ll use the same data to analyze the trend from 2007 to 2012, during and after the Great Recession, and see how transit riders and taxpayers “fared” relative to the transit agencies and their workers.

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