The original BMT and IRT subway systems were granted franchise agreements by the City of New York. They constructed and managed these lines by the private sector with no government operating subsidies. Financial viability was 100 percent dependent upon fare box revenues.
As part of the franchise agreement, City Hall had direct control over the fare structure. For a period of time, owners actually made a profit with a five-cent fare. After two decades passed, the costs of salaries, maintenance, power, supplies and equipment would pressure owners to ask City Hall for permission to raise the fares.
Politicians more interested in the next reelection (and subscribing to the old Roman philosophy of free bread and circuses) refused this request each year for well over a decade.
In order to survive owners of both systems began looking elsewhere to reduce costs and stay in business. They started curtailing basic maintenance, delayed purchases of new subway cars, postponed salary increases for employees, canceled any plans for system expansion and cut corners to survive. (Does any of this sound familiar from the present?)
In the 1930s, municipal government forced them into economic ruin, and the owners folded and sold out to City Hall.
In 1953, the old NYC Board of Transportation passed on control of the municipal subway system, including all its assets, to the newly created New York City Transit Authority. Under late Governor Nelson Rockefeller in the 60's, the Metropolitan Transportation Authority was created.
All have long forgotten that buried within the 1953 master agreement is an escape clause. New York City has the legal right at any time to take back control of its assets, which includes the subway and most of the bus system.
Actions speak louder than words. If municipal elected officials feel they could do a better job running the nation’s largest subway and bus system and avoid any future fare increases, why not step up to the plate now and regain control of your destiny?
MTA services are still one of the best bargains in town. Since the 1950s, the average cost of riding either the bus, subway or commuter rail has gone up at a lower rate than either the consumer price index or inflation.
Like it or not, previously scheduled fare hikes in 2013, 2015 and 2017 are probably justified if the MTA is to provide the services millions of New Yorkers depend on.
In the end, quality and frequency of service is dependent upon secure revenue streams. We all will have to contribute, be it at the fare box or through higher taxes.