Anderson, Ardila, Carroll, Cunningham, De Los Santos, Dinowitz, Epstein, Forrest, Gallagher, Gibbs,
Gonzalez-Rojas, Jackson, Kim, Lee, Mitaynes, Raga, Seawright, Septimo, Shrestha, Simone, Tapia,
Walker
Relates to spending by the Metropolitan Transportation Authority; requires the MTA to allocate funds received for tax years 2023-2026 in certain amounts for certain purposes; requires the authority to freeze fares, increase service frequency, and implement a fare-free bus program; requires the MTA to use certain excess monies, if available, to pay off outstanding debts.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4122
SPONSOR: Mamdani (MS) 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.
§ 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 enactment 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 disproportionately.
Further justifications 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 rider-
ship. 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 annually (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 over-
sight. The bill includes reporting language following funding allo-
cations 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 Authori-
ty'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.
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.
(1) https://www.nyi.com/nyc/all-boroughs/inside-city-hall/2022/05/06/
new-repert-examines-state-of-poverty-in-new-yorkcity
(2) https://www.cssnv.org/news/entrvimass-transit-economic-e quity-fair-
fares
(3) htts://www.cssny.org/news/entry/css-report-mass-transit -costs-
still-a-major-financial-burden-for-low-income
(4) hLtps://www.rldersalliance.orq/six-minute-service
(5) https://nvc.streer_sblod.ord/2022/10/07/six-minute-transi t-head-
ways-would-increase-ridership-l5-expert/
(6) httos://www.marc.org/sites/defalalt/files/2022-04/Trans it-Zero-
Fare-Impact-Analysis.odf
(7) https://www.osc.state.ny.us/files/reports/osdc/pdf/rep
ort-9-202:3.pdf
(8) ibid
STATE OF NEW YORK
________________________________________________________________________
4122
2023-2024 Regular Sessions
IN ASSEMBLY
February 9, 2023
___________
Introduced by M. of A. MAMDANI -- Multi-Sponsored by -- M. of A. ANDER-
SON, ARDILA, CARROLL, CUNNINGHAM, DE LOS SANTOS, DINOWITZ, EPSTEIN,
FORREST, GALLAGHER, GIBBS, GONZALEZ-ROJAS, JACKSON, KIM, LEE,
MITAYNES, RAGA, SEAWRIGHT, SEPTIMO, SHRESTHA, SIMONE, TAPIA, WALKER --
read once and referred to the Committee on Corporations, Authorities
and Commissions
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
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "MTA Freeze Fares, Fund Frequency and Free Bus Act," or the MTA
3 "Formula 3 Act".
4 § 2. Legislative findings and intent. The legislature hereby finds and
5 declares the importance of the New York Metropolitan Transportation
6 Authority (MTA) and affirms the duty of the legislature to ensure that
7 the Authority operates effectively. The MTA provides an essential
8 service: transporting millions of New Yorkers on billions of trips each
9 year to and from their places of work, worship, and gathering. For many
10 New Yorkers, however, the cost is prohibitive - particularly as
11 inflation climbs, wages remain stagnant, and the cost of basic goods
12 rises. At the same time, the MTA faces a fiscal crisis due to ridership
13 declines from the COVID-19 pandemic, the exhaustion of federal COVID-19
14 relief, and the Authority's historically high debt loads. Accordingly,
15 the legislature further finds and declares that it is the state's obli-
16 gation to solve the MTA's budget crisis, while rejecting a fare hike,
17 increasing service and making buses free. The state must intervene and
18 fill the deficit, while also charting a sustainable future for the MTA.
19 Simultaneously, it is the intent of the legislature to enhance account-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05013-02-3
A. 4122 2
1 ability through reporting measures; establish prudent and accurate budg-
2 et measures; and improve safety. All of these goals together will aid in
3 providing safe, reliable and affordable transit service to riders.
4 § 3. The MTA (the "Authority") shall allocate state funds received for
5 the tax years 2023-2026 in the following ways:
6 a. $600,000,000 in the tax year 2023; $1,190,000,000 in the tax year
7 2024; $1,230,000,000 in the tax year 2025; and $1,622,000,000 in the tax
8 year 2026 to fill their estimated deficit gap.
9 b. $114,000,000 in the tax year 2023; $193,000,000 in the tax year
10 2024; $313,000,000 in the tax year 2025; and $360,000,000 in the tax
11 year 2026 to pay down the deficit without the implementation of fare
12 increases. The Authority shall not increase fares with receipt of this
13 funding for the duration of tax years 2023-2026.
14 c. $350,000,000 each year for tax years 2023-2026 to account for 73%
15 return to ridership based on 2019 ridership totals. Upon receipt of such
16 funding, the Authority shall issue a public report which shall include,
17 but not be limited to, ridership numbers and fare revenue, with fare
18 revenue inclusive of all subsidies paid on behalf of riders for discount
19 programs. This report shall be released no later than 60 days after the
20 end of each state fiscal year.
21 d. $150,000,000 each year for tax years 2023-2026 for MTA workers'
22 contract wage increases. Upon receipt of such funding, the Authority
23 shall issue a public report which shall include, but not be limited to,
24 comparing raise percentages to actual salaries, including the effect of
25 changes to steps, work rules or any other impactful policy.
26 e. $300,000,000 each year for tax years 2023-2026 to run subways and
27 most buses at least every six minutes, every day of the week.
28 (i) As soon as practicable and without compromising the availability
29 of express subway service or the reliability of subway and bus service,
30 and upon receipt of such funding, the Authority shall operate subway
31 service and bus service on the 100 most heavily used bus and all
32 subway lines at least every six minutes at least 17 hours per day,
33 seven days per week.
34 (ii) Until such time as the Authority is able to make any capital
35 improvements necessary to operate subway lines and the 100 most heavily
36 used city bus lines at least every six minutes during off-peak hours,
37 the Authority shall provide on those lines the same frequency of service
38 during off-peak, non-overnight hours, as it does during the peak or rush
39 hour period.
40 (iii) Existing rush hour service and service on less heavily used bus
41 lines shall not be reduced in order to fund additional service pursuant
42 to this subdivision.
43 (iv) Upon receipt of such funding, the Authority shall issue a public
44 report which shall include, but not be limited to, cost and schedule
45 projections by line, with target timing for headways broken down by each
46 line, and if spending targets are missed, explanation for missing
47 targets.
48 f. $488,000,000 each year for tax years 2023-2026 to increase bus
49 service across the system by 20%.
50 (i) Upon receipt of such funding, the Authority shall issue a public
51 report which shall include, but not be limited to, cost and schedule
52 projections by line funded by this increase.
53 (ii) The Authority shall conduct a study to identify routes included
54 in both the fulfillment of the six minute headways policy and the
55 20% increase across the bus system in order to identify duplicate
56 routes. It must then report on the savings from eliminating said
A. 4122 3
1 duplications, and allocate the cost savings of said routes to pay off
2 applicable, outstanding debts with no prepayment penalties.
3 § 4. The Authority shall implement a permanent fare-free bus program
4 for buses operated by its subsidiary entities commencing no later than
5 January 1, 2024. From January 1, 2024 until December 31, 2024 the
6 Authority shall implement an initial phase of the program in the Bronx
7 including identified bus routes with a cumulative operating cost of no
8 more than $147,800,000. From January 1, 2025 until December 31, 2025 the
9 Authority shall implement a phase of the program in Brooklyn including
10 identified bus routes with a cumulative operating cost of no more than
11 $342,300,000. From January 1, 2026 until December 31, 2026 the Authority
12 shall implement a phase of the program in Queens including identified
13 bus routes with a cumulative operating cost of no more than
14 $575,700,000. From January 1, 2027 until December 31, 2027 the Authority
15 shall implement a phase of the program in Manhattan and Staten Island
16 including identified bus routes with a cumulative operating cost of no
17 more than $778,000,000. The Authority shall promulgate any rules and
18 regulations to implement the program.
19 Upon receipt of such funding, the Authority shall issue a public
20 report which shall include, but not be limited to, ridership, a break-
21 down of operating costs for the program, selected routes, and cost and
22 schedule projections by line.
23 § 5. $500,000,000 in the tax year 2023 for one-time operating money to
24 cover associated costs with increased subway and bus service, including
25 but not limited to, personnel needs, rolling stock procurement and
26 facility costs.
27 § 6. Should ridership in any tax year from 2023-2026 be greater than
28 73% of 2019 ridership totals or should MTA workers' contracts be less
29 than the 3.5% of the projected raise accounted for in subdivision d of
30 section three of this act, the excess monies shall be used to pay off
31 applicable, outstanding debts with no prepayment penalties.
32 § 7. The Authority shall henceforth be required to only issue bonds
33 with level debt service payments, with exception of expansion projects;
34 provided, however, that this exception shall only be granted if the
35 Authority puts forth a proposal for approval to the state comptroller
36 that the project qualifies for an expansion project.
37 § 8. This act shall take effect immediately.
