“What are you smoking?”

— Mayor Bloomberg, in an interview with The New York Sun, upon being asked if there’s a role for a privately run subway.

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Well, we found ourselves this weekend remembering Mr. Bloomberg’s comment, published in our inaugural issue. It was Thursday that City Council members and leaders of the union that represents subway workers came out strongly against a fare hike. What they favor instead, they said last week, is a restoration of the commuter tax on those who live out-of-city and work in the city. And it was Friday that Thos. Golisano, one of the candidates for governor, met with our Benjamin Smith, who reports at page one today that Mr. Golisano wants to remove the toll booths from the Empire State’s roads, bridges, and tunnels.

All of which raises the question of just who should be paying for the state’s transportation system. Before considering potential fare or tax increases, it’s worth finding out exactly who pays for the bridges, tunnels, and subways right now. The city’s subways and buses, it turns out, are big money-losers. They took in about $2.3 billion in operating revenues in 2001, according to the audited financial statements of the New York City Transit Authority. That includes about $2.1 billion in fare income and another $80 million in advertising and other revenues. But it costs about $5.3 billion a year to run the transit system.

Who makes up the difference? Part of it comes from the Triborough Bridge and Tunnel Authority, which throws off about $600 million a year in net revenues. That $7 you pay to drive over the Verrazano-Narrows Bridge doesn’t all go to the bridge, which was paid for long ago — it subsidizes the money-losing subway. Same goes for the tolls at the Queens Midtown Tunnel and the Triborough Bridge.

But even the vast cash flow of those bridges and tunnels — including the Brooklyn-Battery Tunnel, the Henry Hudson Bridge, and the Bronx-Whitestone Bridge — are not enough to keep the subways and buses running. So the state has dedicated other revenue streams to subsidize the subway. These include a mortgage recording tax that hits homeowners and a tax on gasoline. Our September home phone bill from Verizon even included a charge of 15 cents labeled “NY Metropolitan Transit Auth. Surcharge.”

By the current logic — under which the subway is subsidized by homeowners who take mortgages, drivers who buy gasoline, travelers who take bridges, and callers who use telephones — it’s not too much of a stretch to extend the burden to “commuters.” But as Mr. Bloomberg has pointed out in other contexts, “If we were to raise taxes it would be sending exactly the wrong message.” He said, “all you will really do is drive people out of this city,” and he advised against making taxes even higher in what is already “the highest tax city.”

With a tax increase off the table, what’s left is a fare hike. There are several traditional arguments for keeping the subway fare at artificially low levels — that’s how we arrived at the existing network of subsidies. The strongest are probably environmental and traffic-related. The weakest are redistributional. After all, there are plenty of wealthy Manhattanites who ride the subway (ask Mr. Bloomberg about the Lexington Avenue line). Why should some poor Queens or Bronx or Long Island resident have to pay more for a mortgage or gasoline or bridge tolls to subsidize the mayor’s ride? To the extent that there is progressive taxation in this country — and we’re not big fans of it in general — it would be more direct and efficient to do it through taxes on income or consumption, rather than back-door subsidies of the subway system.

All of which underscores the case for privatization. If one bidder wants to turn the C train into a luxury line, with leather seats and waiter-service at $5 a ride, let him try. If another thinks that he can make a go of it at the current $1.50 fare by running fewer trains and closing during the late-night shift, let that be tried, too. These lines were built by private industry. With the current ferment over fares, the subway is at a juncture in the tracks. In one direction is the chance to embark on basic reforms. In the other, an effort to find another group in addition to homeowners, gas buyers, bridge-users, and telephone callers from which to wrest a subsidy. And to those who would drive the trains in that direction — well, that’s what made us recall the mayor’s line about operating under the influence.