NYC Congestion

Three agencies are key players in NYC-area transportation. Unfortunately, they all have trouble paying for basic upkeep--let alone upgrading and expanding services.

The Metropolitan Transportation Authority (MTA) is key to solving congestion problems because it controls the subway, local and regional buses, and commuter rail lines, as well as the Brooklyn-Battery and Queen-Midtown Tunnel and the 7 MTA bridges. The MTA needs enough money to cover the costs of both operating the system (about $14 billion a year) AND investing in system replacement and improvement. Operating costs are pretty much covered by fares and tolls plus money from a set of miscellaneous taxes dedicated to mass transit. (See CBC Report PDF p.3-6). The problem comes in how to pay for capital projects--which are especially important given the age of components like the subway system, the current volume of use (1.751 billion people rode the subway in 2014, making it the busiest in the U.S.), and the importance of extending capacity and services to reducing congestion.

The MTA's 5-year capital plan lays out what it will spend on (i) keeping existing facilities and equipment in a "state of good repair" (SOGR)--basically, what's necessary for safe, reliable service that keeps customers satisfied; (ii) system improvement/modernization, like Communications-Based Train Control technology (see an MTA video explaining CBTC); and (iii) network expansion that creates new lines and services. Unsurprisingly, people disagree about how MTA should prioritize as between SOGR and improvement of existing facilities vs. adding new facilities and services. And questions have been raised about high project costs. But what almost everyone agrees on is that there's been a big hole in MTA's capital funding.

The initially proposed 2015-2019 capital plan called for spending $32 billion over the next 5 years--but existing revenue sources would cover only about half that amount. A recent deal between the Governor and the Mayor promises state and city money to cover MTA capital funding. But there are two problems (CBC statement PDF): First, the amount of planned capital spending has been cut to $29 billion--which is much less than many experts think is needed (See ESTA fact sheet PDF), and which will force hard choices between SOGR and improvements vs. new lines and facilities. Second, no one is sure where the $10.5 billion promised by the state and the city is going to come from.

In a recent development, MTA announced that the decline in taxi ridership (see Topic 2) has meant a 10% decrease in revenue from the 50-cent per ride surcharge. This surcharge, which goes directly to MTA, does not apply to e-hail rides; those rides do pay sales tax, but MTA gets only a small fraction of that revenue. The total amount isn't large, compared to MTA's overall budget, but raises even more questions about where the money is going to come from to expand existing transit services and build new lines.

Want the nitty gritty of MTA finances and revenue problems? See CBC Report, PDF, p.3-10 and Move NY Fair Plan, PDF, p.13-16, 23.

The State DOT (NYS-DOT) has authority over most of the heavily used highways, expressways and parkways, including the 6- and 8-lane routes. The City DOT (NYC-DOT) is responsible for most of the other streets and highways; the Brooklyn, Manhattan, Williamsburg, and Queensboro bridges plus hundreds of smaller bridges and tunnels; and the Staten Island Ferry. A combination of age, volume of traffic, and deferred maintenance has left a lot of roads and bridges in the metropolitan area in pretty bad shape. (See Topic 6.5: Roads & bridges).

Money to deal with these basic infrastructure problems is scarce. Much federal and state money for highways, bridges, and surface transportation comes from gas/diesel fuel taxes. More fuel-efficient vehicles, leveling-off of vehicle-miles traveled, and not raising gas tax rates for inflation has pretty much exhausted the federal Highway Trust Fund, and Congress can't agree on a reliable alternative funding plan. The NY Dedicated Highway and Bridge Trust isn't in much better shape, and other state and city funding sources are unstable over time. (These same problems affect money for MTA's bridges and tunnels, more than half of which are over 70 years old and need full-scale rehabilitation).

For details of highway and bridge funding problems, see Move NY Fair Plan, PDF, p.11-13, 14-15.

►The funding issues are complex and confusing, are there any questions you'd like answers to?

Additional funding information is likely to become available during the discussion. We will continuously update; if you know something we've missed, please contact us.

The deal between the Mayor and the Governor to cover the MTA capital plan funding gap doesn't solve the money problem. No one is saying where the $10.8 billion will come from--and reducing planned capital spending by several billion dollars leaves a lot of important work undone, or significantly delayed (e.g., extending 2d Ave. subway to East Harlem). Here are the most frequently discussed ideas for raising more money for NYC area transportation needs:

Fare increases to back more borrowing. When the MTA borrows money for capital projects, it uses fare and toll revenues as security that creditors will be repaid. Critics of getting more money through this method point out that fares have increased 5 times in the last 8 years, for a total increase of 29% since 2007. The MTA is budgeting at least 4% fare increases every other year to cover rising operating costs, and it already owes $34 billion in debt. According to the State Comptroller, each additional billion dollars MTA borrows means about a 1% fare increase.

As experts point out, rising transit fares will produce some drop in ridership--and some of those commuters will switch to private vehicles, worsening congestion. Also, since lower income households tend to use public transit over expensive private vehicles, this method of funding NYC's transportation needs puts the cost of reducing congestion on those who can least afford it. MTA saw bus ridership decline from a combination of rising fares and congestion-slowed trip times, which particularly impacts the elderly and the poor. Reducing fares, to make public transit more attractive, is on many people's list of desired transportation improvements. See Topic 6.

Charging equal tolls on all access points to the CDB. This is the Move NY Fair Plan "toll swap" proposal that would lower tolls on the 7 MTA bridges, but add tolls at the 4 East River Bridges and avenues that cross 60th St. Amounts would equal the tolling at the Queens Midtown and Brooklyn Battery tunnels. This would raise a lot of money from vehicles directly contributing to some of the City's worst congestion problems--$1.3 to 1.5 billion a year--and the Plan has broad support as a fair way to share the cost of needed road, bridge and transit system capital projects. Politically, it has to overcome the assumption of some officials (which Plan supporters say is wrong on many levels) that it's just rehashing the failed 2008 Bloomberg congestion pricing proposal--and drivers who currently have few transit alternatives (like Queens) will need to be convinced that promised improvements in their communities will be reliably and rapidly accomplished.

Higher vehicle fees and taxes. The Citizens Budget Commission argues that vehicles should pay 25% of the cost of public transit, as well as all of the costs of maintaining roads and bridges. (CBC Report p.11-13) This is because vehicles are creating the congestion and environmental damage that transit services can reduce. Researchers calculate that the average NYC area commuter wastes 53 hours a year in congestion delays, so all commuters benefit from more, better public transit alternatives.

Possibilities here include

• higher registration, license plate, title and driver's license fees, which are relatively low compared to neighboring states. (CBC Report p. 16,Table 8). Now, passenger vehicles in the MTA region pay a $25 MTA surcharge for registration; ESTA estimate (PDF) that raising this surcharge to $100 would generate an additional $386 million each year.
• higher gas and diesel fuel taxes. NY has one of the highest motor vehicle fuel taxes in the country, but still less than neighboring Connecticut and Pennsylvania. (CBC Report p.17,Fig. 2)
• extend the Vehicle-Miles Traveled (VMT) tax, which now affects only heavy trucks, to other vehicles--possibly as a replacement for gas/diesel taxes (which generate less as vehicle fuel efficiency rises). A VMT tax better reflects actual use of highways. With GPS technology, the tax could have a congestion-pricing element: higher rates for miles travelled on more congested roads and during peak hours. Also, adjusting rates by vehicle type and fuel efficiency could encourage purchase of more environmentally friendly vehicles. (CBC Report p.18-19)

Even those willing to consider these ideas point out some drawbacks. Unless the increases are huge, only the VMT tax could generate the amount of money needed for maintaining and upgrading NYC-area roads, bridges and public transit. (See CBC Report p.20, Table 10) It's estimated that 131 billion vehicle miles will be driven in NY State in 2015; 53% of those will be in the MTA region. (CBC Report p.18). So a VMT tax could be a major revenue source. But, politically it's probably the most difficult of the three to implement.

Increasing other MTA-targeted taxes. Now, the 12-county MTA region pays a couple of taxes earmarked to the MTA:

• sales tax surcharge of 0.375%. ESTA calculates (PDF) that raising this to 0.625% would raise more than half a billion dollars annually. The objection in general to sales taxes is that they have disproportionate impact on lower income households. A more specific objection might be that, unlike the other ideas mentioned above, there's no logical connection between a sales tax and transportation. So it's harder for taxpayers to see what their money is getting them, although ESTA points out that sales tax increases elsewhere have been more accepted when they are tied to specific improvements.
• Payroll Mobility tax. To cover the funding gap in the last MTA capital plan (2010-2014), the legislature imposed a payroll tax of 34ȼ per $100 payroll to public and private employers in the MTA region. The tax has had a rough life -- challenged in court, really unpopular with many legislators, and eventually lowered for small businesses and abolished for private schools. Efforts to increase the tax seem doomed before they even start; again, taxpayers see no direct relationship between what they are paying and what they are getting.

A different concern (which also applies to some of the taxes and fees in the previous group) is that these taxes are legally supposed to be dedicated to transportation spending. But they have been raided in recent years to relieve other areas of State spending. So, some more effective type of lock-boxing would have to be adopted to be sure the money is actually spent on SOGR, improvement, and expansion projects. (For one such effort, see the Move NY Fair Plan, which would create a new transit entity to receive new revenues and give them to the MTA and the state and city DOTs, without the money ever going through Albany and the budget process.)

Bring back the Commuter tax. For a long time, NYC collected a 0.45% tax on income earned in the 5 boroughs by non-residents--and used the money to fund police, fire, and transit services. The tax was repealed in 1999 and, despite repeated efforts by NYC officials and support by several candidates in the last mayoral election, restoring the tax brings out heavy opposition from suburban, New Jersey and Connecticut officials and commuters. Proponents of the tax argue that it's only fair that non-resident commuters pay to support the services--especially transit services--they use. (NYU's Rudin Center estimated that the net population of Manhattan increases by 1.61 million commuting workers on a weekday.) A lot of NYC residents seem to agree. The problem is getting anyone outside the metropolitan area to go along.

►Nobody likes the idea of paying more taxes, fees, or tolls. But unless people are prepared to let NYC congestion problems get even worse, something has to be done to raise new revenue. Which of these options seems the best (or the least bad), and why?

►Are there other ideas that would be fairer or easier to accomplish politically?