For 40 years, the most complicated decision about transit fares has been how much to charge for a token. This week, as Herald Square becomes the last of New York's 69 busiest subway stations to receive electronic turnstiles, the transit system is on the threshold of a brave new world of pricing possibilities that some say could transform the role of mass transit in the city's economy.
But nobody is sure just how, and the Metrocard electronic-fare system is for now a shiny $700 million tool that no one has decided how to use.
This summer the board of the Metropolitan Transportation Authority plans to begin choosing among a variety of options, from monthly passes to off-peak discounts, that it hopes will increase mass-transit ridership by tens of millions of people a year.
"This is not merely an electronic token," said Tito Davila, an M.T.A. spokesman. "This is a product that will help us to offer the discounts that will attract additional riders and make the system more convenient."
But transit planners say discounts will not produce enough new riders to make up for the revenue lost in reduced token sales, an amount that could reach $250 million a year. They say a multidimensional political fight in Albany is likely over the subsidies needed to make up for that revenue.
Suburban and rural interests will almost certainly oppose higher taxes to subsidize the discounts. Occasional users will oppose paying more for tokens to subsidize the monthly passes of daily commuters. If the M.T.A. offers free or almost-free transfers between the buses and the subways, people who buy monthly tickets on the Long Island Rail Road and Metro North will want the same.
The fight could make past battles over a 10-cent increase in the price of a token seem like a high-school debate.
At least there will be no battle over charging by the mile; the new system controls only entry, not exit, so it cannot price the ride by distance, as Washington and other cities do.
But with the computerized fare card system, the Transit Authority could, for instance, offer monthly passes, at a price equal to 90 trips, or 50, or maybe just 38. Transfers from bus to subway could be discounted 25 percent, or even be free. Fares could be adjusted for the time of day.
To justify the sacrifices that taxpayers or less-frequent riders would have to make, planners are venturing into the uncharted territory of trying to determine the how the city would benefit financially from increased use of mass transit.
Rudimentary research has been done on the benefits of getting drivers out of their cars and into public transportation, reducing congestion and air pollution. But there is hardly any research on another development that could be more important: getting people who might otherwise have stayed home to make trips around the city, trips on which they are sure to spend money that will stimulate the economy.
Proving that may be essential to convincing the public and lawmakers that increased subsidies are justified.
"They're going to give away revenue, which is going to have to be made up somehow," said Bernard Cohen, the chief financial officer of the M.T.A., the parent body of the New York City Transit Authority and of the suburban railroads.
Experts agree that the options could have a big impact on traffic in the streets and on the economic life of the city. William M. Wheeler, director of planning at the M.T.A., is now trying to figure out how. But he is finding no studies of other cities to guide him. Other cities, he said, do not need such analyses because they are usually making only minor changes, having instituted pass systems years ago.
The system is entering a new age at a time when New York is under severe pressure to reduce auto use. Under the Clean Air Act, the State Department of Transportation imposed rules on April 6 under which big employers must take steps to lure their workers out of single-passenger automobiles.
And even without air-pollution problems, dense traffic causes congestion that raises the cost of doing business in the city and, though it is hard to quantify, lowers the quality of life.
Counting those costs and others, like accidents, law enforcement and land use for highways, the Tri-State Transportation Campaign, a coalition of environmental groups and the Regional Plan Association, recently calculated that vehicle use costs the public 25 cents a mile.
But there are other ways of looking at the economic benefits. If, say, free transfers and monthly passes lured 10,000 cars off the Gowanus Expressway every day, that would be good not only for the drivers of those cars, but also for the drivers who still use the Gowanus. And, by reducing road congestion and thus speeding up the delivery of goods and services, such a move would benefit the economy as a whole.
A Battle Over Subsidies
If a monthly pass or free transfers created a benefit by getting people out of their cars, it would not flow to the M.T.A., but to the public as a whole, leaving the M.T.A. to argue in Albany that tax revenues should finance the investment.
That makes the lack of a way to estimate benefits a problem, said Gene Russianoff of the Straphangers Campaign, a transit riders' advocacy group, "because they're going to need extra subsidies to do what they want, and they're going to have to make a case, and they're going to need to say something."
Mr. Russianoff is hoping that the idea of providing free transfers for people who must take both a subway and a bus between home and work will prove so politically attractive that it will sweep Albany. One such part of the city, he noted, is the Lower East Side of Manhattan, which is represented by the Speaker of the Assembly, Sheldon Silver.
On the other side will be all the forces that usually oppose bigger subsidies for mass transit, people who don't want higher taxes, especially taxes that would be paid by suburbanites and others who make little use of the transit system.
Norman J. Levy, the chairman of the State Senate's transportation committee, said that the system had "exciting potential," but he added that his top priority was to avoid increasing the fare for anyone. That limits the resources available to offer new options like monthly passes.
Those options could eventually make a big difference for individuals, especially after conversion of the fare boxes in the buses, which starts next year. If it is followed by free transfers from subway to bus and back, using the Metrocard could cut in half the cost of traveling between Midtown or Wall Street and neighborhoods where the subway is beyond walking distance, like College Point in Queens or Riverdale in the Bronx.
Monthly passes would make many trips free, with customers buying a monthly pass to get to and from work, and then realizing that an extra trip to a store, a restaurant or a museum would cost nothing extra.
For years, experts say, transit use in places like New York has suffered because the economics of buying tokens is different from the economics of driving a car. The car has a high up-front cost -- car payments, insurance and registration. The cost of subsequent trips is cheap because gasoline, oil, tires and maintenance are relatively inexpensive.
Affecting Suburbanites
But a rider on the subways or buses pays the same each time. With a monthly pass, then mass transit, too, would have a high up-front cost, but the price difference between a round-trip to work each day for a month versus a round-trip to work plus two or three other trips a day would be nil.
New pricing options could even affect suburban dwellers and the way they use their cars. One option under consideration is a combination monthly pass on suburban rail lines and the subways, which could make a weekend shopping trip in the city a cheaper choice for suburban commuters than a drive to a suburban mall.
At the New York Chamber of Commerce and Industry, James P. Gifford, an executive vice president, who is a member of an advisory committee to the M.T.A. on fares, said that a monthly pass would stimulate many extra trips, on which people would surely spend money that would stimulate the economy.
"There's a little bit of larceny in most of our hearts," he said, referring to a desire to get something for nothing. "I think of my own behavior. I can well imagine there will be those extra stops you wouldn't have made."
Some options could be in effect by the end of this year, although next year is more likely, officials say.
The agency has already done extensive advance work, surveying 24,000 people by telephone and asking them what price they would be willing to pay for different fare packages. The answers were used to calculate the ridership growth -- and the revenue loss -- with various combinations of fare options.
The Authority has run about 1,000 combinations through its computer, Mr. Cohen said. He provided two hypothetical fare plans to show the kind of combinations the agency has analyzed.
If, for example, the M.T.A. sold a monthly pass for $62.50 -- the price of 50 trips -- and made transfers between subways and buses free, ridership could be expected to grow by 71.3 million, from a base of about 1.2 billion, meaning growth of about 6 percent. Counting revenue from new riders but also revenue given up from people who would formerly have paid the transfers or bought more than 50 tokens in a month, the revenue loss would be $236.8 million, or about 15 percent of anticipated revenues.
If the monthly pass cost $68.75, the price of 55 trips, and a passenger transferring from subway to bus, or vice versa, was given a 75 percent discount on the second fare, and riders could get a 10 percent discount for buying $25 fare cards, then ridership would grow by 69 million, and the revenue loss would be $232 million, the model predicts.
The M.T.A. has been thinking about discounts and potential revenue losses for years, but on a much smaller scale. In the budget for this year it set aside $17 million for discounts, and for 1995 it plans to set aside $70 million. Since it is unlikely this year's allocation will be used, the agency could roll the two together. But it would not go far toward covering the cost of a monthly pass.
