Mayor Bloomberg Condemns New York City Transit Strike, MTA Workers Hold Firm

"Gelinas was a business journalist for Thomson Financial in New York, where she covered the international syndicated-loan and private-debt markets. She also wrote a regular op-ed column for the New York Post on municipal finance; local, national and international economic issues; and public policy. Gelinas is a Chartered Financial Analyst (CFA) and a member of the New York Society of Securities Analysts."

http://www.manhattan-institute.org/html/gelinas.htm

Privatize the Buses

As the strike talks grind on, Nicole Gelinas suggests how to improve mass transit

Nicole Gelinas

Early yesterday morning, the 707 union members who work at Jamaica Buses Incorporated and at the Triboro Coach Corporation went out on strike, inconveniencing 57,000 New Yorkers and paving the way for a general New York City transit strike set to start at midnight last night. The limited bus strike is just a small taste of the chaos New York faces this week if the Transport Workers Union has gone out en masse as promised.

The TWU’s reasoning behind the early-bird bus strike was this: Jamaica and Triboro are set to be absorbed by the state-run Metropolitan Transportation Authority in 2006. But right now, the two bus lines are owned by private operators. Thus, although the workers long have been TWU members, they’re not public employees — so their strike doesn’t violate the state Taylor Law, which prohibits public workers from striking and levies heavy fines on those who do.

Fair enough. But these bus lines are private in name only. They are subsidized monopolies, awarded to their operators without any competitive bidding, and accountable to no one for the quality of their service.

New York had seven of these nominally private bus lines until Mayor Bloomberg decided that the city would start buying their assets from their private owners and transferring them to the MTA. Taxpayers have covered these bus lines’ annual operating deficits for more than three decades, to the tune of about $200 million a year now. Despite their heavy subsidies, the private bus lines have been unreliable for decades, with dirty buses and poor service.

But the failure of the city’s experiment with bogus privatization hardly means that privatized service can’t work in New York. Truly private bus lines could provide good service for New Yorkers on a day-today basis, and would lessen the chance, and the effect, of a systemwide transit strike by offering New Yorkers an alternative to MTA-run transportation. If anything, this week’s threatened transit strike should remind Mr. Bloomberg that he should take steps to decrease Gotham’s dependence on the MTA, not increase it.

How should the city structure decent private bus service? London offers one model. In London, the government designs bus routes and sets bus fares — and invites each wouldbe private operator to submit the fixed annual subsidy it would require to provide service along a bundle of routes for a three- to five-year

period.The winning bidder earns its profit by keeping costs below the fixed price paid by the government.

For nearly two decades, London has contracted out all of its bus services in this fashion. The city cut its costs by up to one-half during the program’s first decade, Baruch professor E.S. Savas has found.

New York could follow that model for some of its larger, high-traffic bus routes. The city could limit any one owner’s routes to a small percentage of the system-wide total to cut the risks of monopoly and collusion — and could open routes to small local companies as well as to international bidders. The city could even split some routes among several different companies and provide access to financing so as to offer owner-operated buses a chance to compete. Since the owners would be the drivers, they wouldn’t strike.

Private operators would run buses clearly marked as “city buses” and inspected regularly by the city for safety and emissions, and the drivers would be licensed by the city, just as taxi drivers are. Further, all of the buses would accept Metro-Cards and would be mapped on city routes, so that customers, even tourists here just for a day, would have an easy time of navigating the system despite its diversity of ownership.

The city could go a step further on routes best served by smaller buses and small fleets: service to far-flung, low-density neighborhoods, for example, or late-night services, or express routes whose customers don’t mind paying a premium for faster service from the far reaches of the outer boroughs. The city could auction medallions off for such specialized bus and van service, and allow the owners to design their own routes as demand dictated. New York could set a regulated price per mile, just as it does for yellow cabs, plus a premium for express or latenight service — and even could use money saved through competition to offer vouchers to low-income elderly or handicapped riders to ensure that they don’t lose their access to decent public transportation.

Of course, New York would have to be careful that its private-bus owners weren’t controlled — or harassed — by the mob, a constant city bugaboo. But today, New York finds itself extorted anyway — by the employees of the MTA, who don’t hesitate to use their monopoly power to strangle Gotham’s public transportation, in an effort to wring even more outlandish — and unsustainable — pay and perks out of riders and taxpayers.

Ms. Gelinas is a contributing editor to the Manhattan Institute’s City Journal, from whose Web site, city-journal.org, this is adapted.