The City of New York Should Take Over Its Bus and Paratransit System

Metro New York’s mass transit ridership has been booming.  The condition of its infrastructure hasn’t been this good for 80 years.  Significant improvements in the quality of the transit experience continue to be added, most recently with the “Bustime” system.  And yet the metro area’s mass transit network, and thus its economy, may face a bleak future.  As I noted in this post,

for 20 years, the city and state governments (and the generations their politicians represented) have been unwilling to pay for the ongoing replacement and renewal of the transit (and road) infrastructure.  They have borrowed for it instead.  And as a result, younger generations face a choice between ending ongoing renewal and replacement, and allowing the system to deteriorate until its eventual collapse (the path the New York City Housing Authority is on), or paying twice – once for their own obligations, and a second time for the obligations shirked in the past.

We got into this situation because Generation Greed insisted on an “everybody wins” deal for itself, with big fare cuts relative to inflation, pension increases for unionized employees, tax revenues diverted to other things, and soaring payments to contractors for MTA projects.  Getting out of this situation is still possible, but it would require sacrifice across the board.  Although it is probably a waste of time, given that the same politicians backed by the same interests are still in charge, I’ve decided to write about what some of those sacrifices could be, starting with a contribution by the City of New York.

Every now and then, some candidate for some local New York City office calls for control of the city’s transit system to be returned to New York City.  But they aren’t serious, because for the most part these proposals are a joke.  The U.S. railroad industry and its suppliers are a shadow of their former selves, and the expertise required to operate systems on the scale of the New York City subway and its commuter railroads is scarce.  Much of that expertise relies within the Metropolitan Transportation Authority, not among our local politicians. 

Moreover, where would the city get the money to subsidize its transit system?  Do these politicians really believe that our state legislators would take the blame for imposing the required taxes, turn over the money to the City of New York, and have city politicians take the credit for providing the service?  We know what the New York State legislature has done since the dawn of the Pataki/Silver/Bruno era.  The reverse.  It hands out money to special interests, and forces local governments to pay for it.

While a city takeover doesn’t make any sense for the subway system, however, it makes a great deal of sense for the bus and paratransit systems.  Consider the differences between the two modes of transport.

The subway runs on a private right of way maintained and controlled by the MTA, and has stations that are also maintained and controlled by the MTA.  The buses and paratransit vehicles run on streets controlled and maintained by the City of New York, and serves bus stops that are also controlled by the city.  The fact that the City controls the space the bus system uses, but not the buses, complicates attempts to improve service, through bus rapid transit for example.

While knowledge of railroad operations is highly specialized and relatively scarce in today’s America, the transit and intercity bus industry is large and growing with expertise widely available.  Moreover, bus maintenance has a lot in common with truck maintenance.

While the New York City subway is one of the most efficiently run rail transit systems in the U.S., moreover, operating costs are relatively high for its bus and paratransit operations, as I showed in this post.

So it would be hard for the MTA to make the case that the city couldn’t do as well or better.

Finally, while the MTA provides railroad-based transit services everywhere in the MTA service area, it only provides bus transit within New York City.  Westchester’s Bee Line is privately operated but overseen by Westchester County.  Nassau County took responsibility for its bus system away from the MTA a few years ago.  Bus services in the other suburban counties are limited, and mostly county or city run.

The operating subsidy for New York City’s surface mass transit network (New York City Transit bus, MTA Bus, and New York City Transit paratransit, was $2.4 billion in 2012.  That’s a burden the MTA must carry, in part with dedicated taxes collected throughout the MTA region, including all the counties with no MTA-provided bus service and those with limited bus service overall.

Now it isn’t the case that the rest of the MTA service area is paying taxes for New York City buses, while New York City is not paying taxes for buses elsewhere.  The bus systems elsewhere in the MTA service area received $133 million in state general revenue funding, from state taxes collected in part in New York City, including $43 million for Nassau County buses, $47 million for Westchester’s Bee Line, and $21 million for Suffolk County.  Nonetheless, the fact that New York City has the MTA providing its surface transportation network but that isn’t the case for the rest of the MTA service area certainly doesn’t make the MTA popular out in the suburbs.

Where, however, would New York City come up with $2.4 billion to pay for its buses operating subsidy.  One part of the answer is higher taxes and/or lower spending on other things.  The other part is that it isn’t really $2.4 billion.

First, the City of New York pays $677 million to the MTA as it is, with the largest part of this in exchange for having the MTA take over what had been the private bus system.  Obviously that payment would cease as part of the deal. 

Second, the state could make everybody in the rest of the MTA service area happy and Governor Cuomo a hero by ending the MTA payroll tax, which puts $1.26 billion into the MTA’s coffers each year.  Instead, New York City and the suburban counties could be allowed to either get rid of the tax or keep it to pay for surface (bus and partransit) service.  I’d guess that New York City would account for at least $934 million of the $1.26 billion currently collected.  Of course, operating aid from the state of New York to bus and paratransit services in downstate New York would have to be eliminated as part of the deal, so New York City workers would not be paying local taxes for its buses and New York State taxes for buses elsewhere in the MTA service area.  That state money could be diverted to the MTA capital plan instead.

That leaves $800 million per year, net, in additional costs that the city would have to come up with, and the MTA would no longer be burdened by.  As it happens, that is about what the city kicked into the MTA capital plan, adjusted upward for inflation, in the 1980s before both the city and state cut off funding in the early 1990s recession, partially restored it, and then cut it off for good under Mayor Giuliani and Governor Pataki.  Under this proposal the MTA would use that money to pay for the ongoing normal replacement portion of its capital plan, on an ongoing basis.  Not for anything else.

As for the capital dollars to replace the city’s buses on an ongoing basis, those could come from the federal government – as they do everywhere else in the U.S.  Since every part of the U.S. receives federal money for buses, but not every part of the U.S. receives federal money for trains, bus purchase assistance is one component of federal transit aid that is most likely to be continued, even as the federal government goes broke.

For its part, the MTA would probably not want to give up control of the New York City bus and paratransit systems.  For one thing, it would then be forced to pay the city (rather than itself) for bus substitutions every time it needed to shut down part of the railroad system. 

But the metro area would probably be better off if the MTA gave up the city surface transit network.  The MTA would be able to focus completely on its most essential operations, the subway and the commuter railroads.  To an extent it already does so now.  And the city, which is responsible for the streets the buses run on, would be in a better position to upgrade surface transit without having to coordinate and get everything approved by the MTA as well.  As it is, the City of New York and it local politicians pay more attention to ferries and taxis than to buses, with their less affluent and less politically powerful clientele.  If city politicians were responsible for bus service, that could change.