BILL NUMBER: S4024
SPONSOR: GIANARIS
 
TITLE OF BILL:
An act in relation to spending by the Metropolitan Transportation
Authority; and requiring the Metropolitan Transportation Authority to
freeze fares, increase service frequency and establish a permanent fare-
free bus program
 
PURPOSE OF BILL:
To bring fiscal stability to the MTA, while establishing universal poli-
cies that create high quality public transit that is accessible to all
New Yorkers.
 
SUMMARY OF PROVISIONS OF BILL:
Section 1 sets the short title to be the "MTA Freeze Fares, Fund
Frequency and Free bus Act," or the MTA "Formula 3" Act.
§2 sets forth the Legislative findings and intent.
§ 3a fills the MTA operating deficit by $600 million in the tax year
2023; $1.19 billion in the tax year 2024; $1.23 billion in the tax year
2025; and $1.622 billion in the tax year 2026.
§3b pays down the deficit without the implementation of fare increases
by allocating $114M, 193M, 313M, and 360M respectively for tax years
2023-2026 and affirms that the MTA will not increase fares with receipt
of this funding for the duration of tax years 2023-2026.
§ 3c adds $350M each year for tax years 2023-2026 to account for return-
ing to only 73% of 2019 ridership totals, and includes reporting
language to ensure accountability to this section.
§ 3d adds $150 million each year for tax years 2023-2026 for union
contract wage increases, and includes reporting language to ensure
accountability to this section.
§ 3e adds $300 million each year for tax years 2023-2026 to run subways
and the 100 most heavily used bus lines at least every six minutes,
every day of the week at least every six minutes at least 17 hours per
day. It includes additional parameters to achieve six minute or better
service and reporting requirements upon receipt of funding
§ 3f establishes $488 million each year for tax years 2023-2026 to
increase bus service across the system by 20%. It adds language clarify-
ing any duplication between 3e and this section must be accounted for,
and related savings must be used to pay off outstanding debts with no
prepayment penalties.
§ 4 creates a fare free bus program, including express buses, phased in
by borough over four years. In year one, $147.8M is is allocated to
establish free buses in the Bronx; in year two, $342.3M is allocated to
establish free buses in Brooklyn; in year two, $575.7M is allocated to
establish free buses in Queens; and $778M is allocated to establish free
buses across all five boroughs in year four. The section includes
reporting requirements upon receipt of funding.
§ 5 adds $500M in 2023 for one-time 'operating money to cover associated
costs with increased train and bus service, such as: personnel needs,
rolling stock procurement and facility costs.
§ 6 Establishes a qualification that if ridership levels recover beyond
73% of 2019 levels or if MTA workers' contracts are less than 3.5% of
the projected raise, savings must be used to pay off outstanding debt
with no prepayment penalties.
§ 7 Requires that the MTA must only issue bonds with level debt service
requirements from the establishment of the bill on, with the exception
of expansion projects - which still must be approved by the Office of
the State Comptroller.
§8 Sets the effective date.
 
JUSTIFICATION:
The MTA's operating funds are in crisis because:
-Ridership has not recovered to projected levels since the start of the
COVID-19 pandemic
-Federal COVID-19 relief is running out
-The Authority's historically high debt loads
In response, the MTA has proposed a rate hike. This is unacceptable,
especially when New Yorkers are being crushed by inflation. The MTA
Freeze Fares, Fund Frequency & Free Bus Act, or The MTA "Formula 3" Act
would address the fiscal crisis while freezing fares, funding frequent
service and making buses free. These are universal programs which will
benefit low-income New Yorkers and New Yorkers of color disproportion-
ately.
Further justification's for each provision are below.
Freezing fares:
New York City is deep into an affordability crisis whether looking at
rent, utility prices or the rising costs of basic goods due to
inflation. As we lead the state in unemployment at 5.3% - close to
doubling the rate of the next region - many New Yorkers cannot afford a
fare increase.
For the 1.4 million New Yorkers living in poverty (1), a fare hike could
be catastrophic. These New Yorkers already forgo essential activities,
like medical care and job opportunities, because of the high cost of
subway and bus fares (2). And means tested programs have not helped: in
2021, the Community Service Society found that 48% of eligible New York-
ers hadn't applied for the Fair Fares program and 14% didn't know how
to, mostly in the Bronx (3)
Our bill rejects the proposal to increase fares and holds at the current
$2.75 for subways, and will cost an average of $245M/year.
Funding frequency:
New Yorkers are waiting too long for the buses and trains that help us
to access our city. Our bill creates:
6-minute headways (or better) for subways and a 20% increase in service
across the bus system (4). Together, these will cost $778M/year.
A more frequent, reliable transit system will increase ridership (by
about 15%)which will in turn increase safety for all riders (5)(6).
We are also allocating $500M as one-time operating money to cover
personnel needs, rolling stock procurement and facility costs associated
with this increase in service.
Prudent budgeting measures:
The MTA has been budgeting based on McKinsey's midpoint projection of
retaining 80% of pre-pandemic ridership. Given the fact that McKinsey's
previous ridership projection was overly optimistic, prudent budgeting
should account for risk and not repeat the same mistakes. Accordingly,
we are budgeting for McKinsey's low estimate of 73%, which the Office of
State Comptroller estimates will cost an additional $350 million annual-
ly (7).
Meanwhile, unions representing transit workers will be negotiating their
wages this year. The MTA has currently accounted for inflation of 5% in
year one and 2% for the following three years. As the MTA uses pattern
bargaining, the Transit Workers Union (TWU) contract traditionally sets
the bargaining terms across all union labor within the MTA, hence the
terming of this in the bill as union contract wage increases. Comparing
the data for the past 20 years for TWU raises and inflation, we see an
average of 2.75% for the former and 2.0% for the latter. This historical
data shows us it is reasonable to expect TWU will get a raise higher
than inflation. Given this, and our accounting for 3% inflation, we
think it is more realistic to assume at least a 3.5% raise for TWU. The
calculator then derives from the MTA estimating that "each 1 percent
wage increase over the budgeted amount costs $100 million annually."
(8)
(We want to make clear this is not a political stance on what raises
workers deserve, but an accounting for macroeconomic forces which should
inform prudent budgeting for an Authority mired in deficit and debt.)
Reporting requirements:
Effective policy includes implementation oversight. The bill includes
reporting language following funding allocations to ensure the public,
the legislature and oversight agencies keep the Authority accountable to
the stated purposes of funds.
Level debt service requirement:
For too long the MTA has structured its debt in an unhealthy manner,
issuing debt agreements with service payments suspended for years on
end. This has ensured that the Authority's finances hide the true cost
of its debt load all while pushing significant fiscal obligations
further down the line To address this, the bill concludes with a
requirement that, moving forward, the MTA must only issue debt that is
serviced through level debt payments.
(1) https://,;ww.nyl.ccminyc/a11-1Dorcughs/inside-city-
hal1/2022/05/06/new-repoIt-examines-state-of-poveftv-innew-vork-city
(2) https://www.cssny.ora/newsientr/mass-transit-economiceQuity -fair-
fares
(3) https://www.cssny.org/news/entry/css-report-mass-transit- costs-
still-a-major-financial-burden-for-low-income
(4) https://ww.ridersalliance.orQ/six-minute-service
(5) https://nic.streetsblou.ora/2022/10/07/
six-minutetransit-headways-wculd-increase-ridership-15-experti
(6)https://www.marc.org/sites/default/files/2022-
04/Transit-Z.ero-Fare-Impact-Analvsis.pdf
(7)https://www.osc.state.nv.us/files/reportsiosdc/pdf /report-9-2023.pdf
(8)ibid
 
LEGISLATIVE HISTORY:
New Bill.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
The annual cost of this entire package - on average $3.28B per year -
amounts to just 1.5% of the State's current budget of $222B. Funding
could derive from existing sources of revenue or through the implementa-
tion of new taxes.
 
EFFECTIVE DATE:
Immediately.