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New York City Comptroller William C. Thompson, Jr. today issued a report identifying $728 million in revenue sources to help the Metropolitan Transportation Authority (MTA) put the brakes on proposed subway and bus fare hikes.

“We simply must look at any and all sources of revenue that can be applied to eliminate – or at least to minimize – any fare or toll increase in the immediate future,” Thompson said. “Every day, we learn of yet another steep increase – whether it’s housing, fuel, even groceries - that keeps working New Yorkers from making ends meet.”

He added: “The extra cost to New York City and New York State would be recognition of the importance of mass transit as an economic engine and supports a larger vision to shift travel from private vehicles to mass transit.”

Late last month, the MTA unveiled its preliminary financial plan for the coming year. Continued extraordinary growth in transactional real estate taxes and robust receipts from other economically sensitive taxes dedicated to transit funding have eliminated a previously projected 2008 budget gap and greatly reduced the 2009 gap. In its plan, the MTA proposed fare and toll increases next year to begin to reduce out-year gaps.

Today, in a report titled “Putting the Brakes on the Bus and Subway Fare: Options for Eliminating Fare Increases in 2008 and 2009,” Thompson called for a series of revenue measures that could close the projected gap for 2009 without near-term fare and toll hikes and still fund proposed service enhancements and maintenance spending increases.

“There is no need for a fare increase in 2008,” Thompson said in the report, available at www.comptroller.nyc.gov. “Before the MTA even begins to consider higher fares and tolls, the State and the City must provide additional funding to MTA New York City Transit that it is rightly owed. And these funding streams should be in place as the MTA plans for the next phase of its capital program.”

Thompson pointed out that the Mayor’s 2030 transportation plan aims to reduce traffic congestion and air pollution, but subway and bus fare increases would have an opposite effect and discourage commuters from switching to mass transit.

All of the recommended additional revenue comes from existing dedicated tax funds or subsidy programs, primarily from restoring revenue transferred from NYCT in previous years or from formula payment programs which the State has capped at levels below what NYCT is eligible to receive. The proposals are:

1. The State of New York should resume its previous practice of funding the State share of the State Transit Assistance Program (“the 18-b program”) from the State General Fund.
   
   The State money is matched by localities. In 2002, the State started paying its share out of a separate fund financed by taxes collected only in the MTA region such as the 0.375% additional sales tax. Previously, the MTA was receiving 18-b aid in addition to the money from the separate fund. This shift meant a loss of over $140 million a year in subsidies to NYCT.  
   
   Total annual revenue: $142.4 million
   
   
2. The State cap on the 18-b Assistance Program should be lifted.
   
   Total annual revenue: $390.7 ($195.4 from State; $195.4 from City)
   
   
3. Adjust the MTA Bridges and Tunnels surplus distribution formula to reflect 39 years of inflation. Then alter the formula again to reflect the distribution of users of the toll facilities (55% city residents).
   
   Total annual revenue: Up to $83.5 million redistributed to NYCT from the commuter railroads
   
   
4. Stop using dedicated downstate regional transit tax revenue from the Metropolitan Mass Transportation Operating Assistance (MMTOA) fund to finance upstate transit system needs. Instead, fund them from upstate regional taxes or other state-wide taxes
   
   Total annual revenue: $13.3 million
   
   
5. Adjust the school fare subsidy from the City and State of New York to more accurately reflect actual use of student Metrocards.
   
   Total annual revenue: $71.5 million ($32.9 million City, $38.6 million State)
   
   
6. Resume the practice of the City funding the deficit of the Staten Island Rapid Transit System.
   
   Total annual revenue:  $26.4 million

“Together, these six recommendations would provide an additional $727.9 million in annual operating budget revenues to NYCT, along with more modest increases for other MTA subsidiaries, more than sufficient to completely eliminate the projected MTA budget gaps for 2009,” Thompson said.

He added: “The changes better reflect the predominant role of the downstate economy in generating tax revenue for the State and provide New York City and the seven adjoining suburban counties of the MTA service region with a fairer share of State transit subsidies.”

They also reverse reductions in State and City transit funding made over the last 15 years. In 2009 these new or revised subsidy levels would cover the cost of rising debt service payments and eliminate the projected budget shortfall.

“If the State and City step up their commitments to the NYCT and the economy remains relatively strong, I believe that any fare and toll increases can be delayed until at least 2010. That would give the MTA time to implement productivity improvements and other measures that would minimize future increases.”

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