MTA CFO Jai Patel Talks Ridership Recovery, Fare Evasion

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The MTA runs New York City subways, buses, and commuter trains that six million people rely on each weekday, and on Monday, board members approved close to a two billion dollar contract to expand the Second Avenue subway line into East Harlem. Jpitzel is the CFO of the MTA. She's charged with quite the task, which I think is fair to say many would find unenviable, charting a sustainable path through one of the agency's most financially trying periods in

I'm good, how are you? Tim?

Thank you for having me.

Yeah, thanks so much for joining us. I want to start with the numbers and just ridership here. Weekday subway ridership is still twenty five percent below pre COVID levels in your modeling, does that ever come back to where it was?

I you know, we have a financial plan that's a five year period, and originally we were projecting that we would see our subway ridership up to ninety percent, but a couple of years ago we revised that because we weren't seeing that, but we're hopeful we see an eighty percent by twenty twenty nine ridership.

Recovery for subways.

But on the railroads, we're seeing that recovery even higher. Today we see eighty five percent ridership recovery on our railroads, which is amazing, something that we thought was going to be slower our railroad customers than our subway customers originally coming out of pre pandemic.

So is there a way to tap into that growth financially, perhaps with higher prices for those commuters rather than here in the city for subway and bus riders.

So you know, what we have is very small, predictable far increases that help balance the financial plan, and so we don't want to burden one rider or over another. It's really about distance space and commuters, and so we keep that equitable.

You know that we do two.

Percent fare increase every other you know, every other year, and that keeps our financial plan and balance.

How do you plan to get that number, I think you said eighty percent ridership? How do you bring people back into the subways?

We bring writers back by providing reliable on time performance. Right, our service matters to customers and delivering the service that we promise and schedule is something.

That we strive for. But also safety.

Our customers need to feel safe safe, and our customers feel that right. We've had the lowest safety you know numbers or crime numbers in July, and so our customers are telling us.

That by taking the subway, but also.

Our customer surveys right tell us that customers are satisfied with the service that we're providing.

The MTA phases it combined one point one billion dollar deficit over three years starting in twenty twenty seven. It already owes close to fifty billion dollars. It needs to spend sixty eight billion dollars more for vital improvements. There's some federal aid that's up in the air. The Trump administration is trying to roll back congestion pricing. What's the backup plan if the aid EVE operates and the President is successful in rolling back congestion pricing.

You know, Tim, I would be remiss if I didn't mention that. Back in twenty twenty three, we were the first transit agency to solve our fiscal cliff thanks to Governor Holcal, chairliber and the legislature, we were able to come out of a deficit unlike any other transit agency today. You've heard SEPTA's facing deep cuts Chicago, but we were the first to say we need state, federal and local aid, and we got our state federal funding for us. We

We were talking a little bit about the base fares of subways increasing regularly. I'm wondering if there is there a set area within the MTA that that revenue goes toward. Because the base fare for a subway in New York City it's expected to increase to three dollars in January.

Correct, So our fares help our operating budget, right, So they seventy percent of MTA's cost our labor and fringe, and so that pays for seventy thousand employees and then the small fraction is for the non labor contract, so every fair contributes to operating cost.

On our side, let's talk about fares and fair evasion. Usually when we talk fair evasion, I think of people jumping over subway turnstyles, and I know there have been some mitigation efforts in place. But I took the bus to LaGuardia on Thursday. It was a great experience. But when I got on the sp Bs and Queens, I got on it was like an articulated bus, so you know,

What are the numbers there?

So it's not optional right to pay the fair. We are encouraging every customer to pay our pay their fair share.

To but there's no enforcement on the bus.

So there's a couple of things that we're doing for fair evasion. And our chair has been tackling this first when he became chair. So on the subways you've heard of us talking about we're doing fins, sleeves, gate guards enforcing the exit gate, which is the fair you know, evasion highway. And so we've made great strides on the subways. We've reduced fair evasion in over a year by thirty percent.

We've decreased fair.

Invasion on our buses as well in the last year from fifty percent to forty four percent because all the tactics the President of New York City Transit is employing.

We have eagle teams that are looking, you know.

On different bus routes to make sure that they are enforcing the pay your fare right.

Our bus operators.

Do their due diligence, but really our eagle teams are enforcement out there riding different routes and making sure customers fair pay their fare or they're getting a summons or they're getting off the bus. And that's how we're working.

How does that work?

Because I heard of a friend who was on a bus and someone had come around and like scanned their phone to see if they had paid the fare. Is that how it works explained to us.

So right now what we are doing is if you're boarding the bus, you have to pay, because there's two different ways you can pay right today is the Metro card and the OMNI, and when we go to full OMNI next year, there's going to be proof of payment. And so what you can do is European style proof of payment for customers is you can tap their phones or credit cards the method of payment to see if they pay their fare and if they didn't pay their fare.

I want to talk a little bit about proposals from mayoral candidates or in Mumdani. For example, it's proposal to make all New York City buses free. What do you think of that and does it create a sort of a two tiered mass transit system where people who ride buses don't pay for it, but then people who ride the subway do and then kind of offset like people not necessarily taking the right mode of transit for their destination.

So we've heard the maurial candidates proposal for a fair free buses. What I'd like to emphasize again is fairbox revenue is important to the operations of the MTA. It's twenty six percent of our revenue, and buses is about a billion dollars in the out years of revenue for the MTA bus for the MTA, excuse me, and that's important to us, and so we want to make sure revenues equal service. And that is something that's hypothetical right now, but we rely on fairbox revenue.

So you said a billion dollars in revenue is what it brings in. Mom Donnie estimates that's about seven hundred and fifty million dollars annually to make buses free. Is that an accurate assessment on his part.

I think there's pieces that he's he's looking at just the New York City Transit bus fair We have MTA bus that we also run that the city contributes to, and that is also fairbox revenue for buses.

So what would take away that revenue from the MTA due to the authorities finances or would it just be I mean, look again, it's a proposal, you said, it's something that you know is not a plan yet. But to be fair, he is by far the favored candidate, and there are a lot of questions about what power he has to actually follow through with a campaign promise such as this. But this is certainly a central part of his campaign, so you got to be looking at it closely.

We are looking at it. But one thing that I would like to emphasize right right now in New York City, fares are affordable. We make transit and buses the most affordable at two dollars and ninety cents, and it's affordable with fairfares, reduce fair for our customers. But you know, it is something that we will look into as the mayoral candidate has proposed.

What about mitigating climate issues that affect particularly the subway stations. You go online, you see videos of flooding in station, trying to.

Get home and on a rainy day.

Right and water in the subway station. Do you guys have, at least as part of the upcoming capital plan, a plan in place to update the infrastructure.

A couple of points on that right, A couple of the issues that arise in the subway systems are not the MTA's fault. New York City right contributes to the flooding issues that we face in the subways, whether it's through dep manholes, the sewage. So that is one aspect of the flooding that you see on the New York City Transit. But our historic capital plan that sixty eight point four billion dollars does have climate resiliency of hardening the system in certain stations in proposed And therefore.

Let's talk a little bit about congestion pricing. Not as hot of a topic as it was a few months ago, it seems like it's died down a little bit in your view.

Is it working?

Congestion pricing is working. It is reducing traffic by eleven percent.

What does that mean?

Seventy thousand cars are off the road every single day.

What else is it doing.

It's moving our buses faster, it's moving people faster. We've seen a change in ridership, but also we've seen safety increases.

There's a fourteen.

Percent decline in pedestrian crashes. And on top of it all, it is bringing in the revenue that we had projected originally.

It's being watched very closely, not just by proponents and opponents of it, but also by other cities that might want to put this into practice. Have you or has the MTA heard from other cities about congestion pricing, about the model and about questions about implementing it in their own cities.

The MTA has heard from other cities and transit properties and engaged with them to have conversations about the process that New York implemented for the successful congestion pricing program that we're having, So they're looking at it at us as a model.

We have to ask about the second Second Avenue subway expansion as well. Just walk us through some of the plans and the timeline here, because this has been something that's been in the work, something that any New Yorker who's lived in New York for.

The last ford how many years, forty decades.

Fifty yards fifty I think we've talked about that at our special board meeting on Monday.

You know, the contract that our board just approved.

Is almost one point nine billion dollar contract to start boring, right, what does that mean? It's starting the tunneling for the three stations that are vital to Second Avenue Subway Phase two. And we are committed to expanding Second Avenue Phase two here at the MTA, and we think it's going to be a great service to our customers. It's going to serve about one hundred thousand customers in addition to the two hundred thousand customers that's Second Avenue Subway Phase one serves today.

Do you have a timeline or an expected timeline.

I think the twenty thirty two was the service date that we have said publicly.

It's a very like I said at the beginning, it's an enviable task that you have ahead of you. Some people would argue, I would imagine that you spend quite a bit of time studying other transit systems around the world's worked and what hasn't worked. If you could waive a magic wand here in New York City to overcome some of the barriers that the MTA has experienced, whether they're financial barriers, whether they're CAPEX barriers, what.

Would those be like?

What is the biggest obstacle to making the service even better here?

So I think tim one thing that I would say is MTA is a leader and being the largest agency in North America, other agencies look to us. I think I said this before we led with the fiscal cliff, we lead with our capital program as well. We have started to do things differently since Janel Lieber took over for CND and now Jamie Torres Springer. We do design, build,

I want to go back to congestion pricing and some financial questions around at specifically about selling debt off of revenues? Do you have plans to sell debt off of revenues from congestion pricing?

So, as you know, the congestion revenue is dedicated to the twenty to twenty four capital program. It is expected to generate fifteen billion for that program, and once we see a stable market in the revenues coming in.

We do plan to issue debt. We've talked about it.

That's not sometime until twenty twenty six for US. Once we see a comfortable stream of revenue. We've projected five hundred million for the next three years and we want to make sure that we see that revenue and the markets are comfortable issuing that debt for us.

You've talked about fare increases on MTA services, what about increases in congestion pricing?

And what is the timeline for that?

So, as the governor has said to us, right, it's the toll will continue to be nine dollars for three years, then it'll increase gradually to the next three years at twelve dollars, and then in the final the seventh year, it'll be a fifteen dollars. SI is a toll, So we've already had that phased in based on the schedule we approved.

Can you just bring us I know there's litigation around this with the federal government and with the state, but can you just take us into conversations that you've had with counterparts at the Department of Transportation over the last few months about making sure that the MTA stays on a sustainable financial path.

So I think you know what I would say is the federal government contributes two billion dollars to the MTA, and that's a revenue source that we rely on to keep the system in a state of good repair, and so we would continue to want that funding. You know, MTA moves forty percent of riders across North America but receives only a fraction of federal dollars from Washington. And so we continue to rely on the federal dollars that we get and it's important for us.

But what's the backup plan if that evaporates.

Yeah, we're confident, right that the MTA and the federal government, the federal judge that is designed, right, we we're confident that we would win that lawsuit. You know, Judge Lineman issued a positive finding for the MTA just a few months ago. And congestion pricing is, you know, continuing to operate and we're generating the funding.

I imagine.

You know, you get a lot of people who hear these numbers. Congestion pricing is on tractoris five hundred million. They say, wow, that sounds like a lot of money. Why are you know, why are the subways still the way that they are? Delays, crime on cleanliness? Help us

So I'll give you context.

Our operating budget every every year is about twenty billion dollars, right, That is to on subways, buses, commuter rails and the services for six million commuters every day. But in order for us to keep that system running, you have to maintain it, right, and so sixty eight point four billion dollars a good majority of that funding is to keep

Jpittel, CFO of the Metropolitan Transit Authority, joining us here in the Bloomberg BusinessWeek studio