Despite recent fare and toll hikes and continued high ridership, the Metropolitan Transportation Authority (MTA) continues to face significant future budget gaps. The picture is complicated by an ill-advised 2002 debt refinancing that left the authority with an overhang of $1 billion in debt service over the next 30 years. To help with the underfunded capital plan, the Legislature is poutting a 42.9 billion transportation bond issue on the statewide ballot this year.

While the authority obviously has a pressing need to economize, city and state officials continue to turn a blind eye to one of the most promising possibilities for saving money — competitive contracting of bus transit services. As explained in this Manhattan Institute study:

• The use of competitive contracting in major transit systems in the U.S. and Europe has produced reductions in operating costs ranging from 20-51%, with savings in excess of 35% being the norm.
• Replicating even the least impressive of those results, a 20% cost reduction, would save New Yorkâ??s bus transit system the $340 millionâ?” enough to nearly eliminate the city and state operating subsidies.

(Note: the idea was recognized in a recent New York magazine article, “How to Fix the Subway.”

The opportunity for competitive contracting is even greater now that the MTA has taken over responsibility for privately franchised bus lines previously overseen by the city Department of Transportation.