Why Mamdani’s ‘Free’ Buses Will Be Costly

It’s clear from Mayor Zohran Mamdani’s first weeks in office that his campaign pledges are on his actual to-do list — most recently with reports that he will push for free city buses during this summer’s World Cup matches. That would be a good deal for those, including hordes of tourists, getting to ride fare-free. If it becomes a permanent change, though, it will be costly for those who ride any of the MTA’s subways, trains and buses — or for those who rely on other state services. That’s because even if bus riders no longer have to pay $3.00 to board, the revenue those fares have generated will have to somehow be replaced — or its loss felt elsewhere in the transit system.“There are a lot of issues with the idea of free buses”, the MTA chairman, Janno Lieber, has said. His reluctance is important because unlike Mr. Mamdani’s anti-Israel executive orders or pledge to freeze regulated rents, Hizzoner won’t be able to fulfill his promise to make city buses fare-free without help from the Metropolitan Transportation Authority or Governor Kathy Hochul.Governor Kathy Hochul, left, and the MTA chairman, Janno Lieber, on February 26, 2025 at New York City. Michael M. Santiago/Getty ImagesMr. Lieber’s most immediate concern: a loss of $600 million to $1 billion in fare revenue will cut into his agency’s budget for upgrades and maintenance — including of buses. He worries, too, that free rides will boost demand so much that the agency will need to buy more of the vehicles.Mr. Mamdani has suggested his typical tax-the-rich ways to make up for the loss of fares: an increase in New York state’s corporate tax rate to match New Jersey’s 11.5 percent, along with an additional 2 percent income tax on those earning more than $1 million.Both of Mr. Mamdani’s tax proposals risk killing New York golden geese by asking them for too many eggs: both businesses and high-income individuals are free to move. Many of both already decamped to Florida. New Jersey’s corporate tax may be 11.5 percent, but Pennsylvania’s is just 7.49 percent and is slated to decline to 4.99 percent in 2031. Connecticut’s is just 7.85 percent for most businesses. For high-income individuals, the marginal tax rate for city, state and federal taxes combined already tops a staggering 50 percent for city residents. All this means that expected tax hike revenue could well fail to materialize.An MTA bus on the Q10 line operating at Queens. Via Wikimedia CommonsFree fares without new revenue would be no small problem for the MTA. It already incurs significant operating expense losses for every bus trip — and those expenses are not going away. The current fares provide some $654 million for the transit agency but don’t come close to covering the average bus ride operating expense of $5.47. Keep in mind that seniors, the disabled and low-income “Fair Fare” riders already get fare discounts and students ride free.Without current fare revenues, the MTA will either have to scrimp on maintenance and upgrades throughout the system or cut service. Or looks for more funds from general state tax bills, which already cover 43 percent of MTA operations. That would mean less for other state services, in light of Mrs. Hochul’s pledge not to raise state taxes.The MTA’s costs are driven in significant part by what it pays for labor. NYC Transit Authority employees pay averages $93,208, but that doesn’t count generous health and pension fringe benefits. Per the MTA budget, the agency spends $1.2 billion on fringe benefits (including health insurance for retirees) along with its $4.8 billion on salaries and overtime. In other words, taxpayers’ subsidies are currently paying for union labor’s guaranteed benefits most taxpayers don’t enjoy. The average New York City taxpayer has income of $99,582, while the state average is $85,820.Mr. Mamdani’s pro-union inclinations mean that, as with the overall city budget, he’s far from likely to urge the MTA to look for labor cost savings, even though that’s an obvious “pay for.”The MTA could, alternatively, look for revenues from its trains and tunnels. It’s not likely to raise Metro North and Long Island Railroad fares, Metro North riders are more affluent — with an average annual income of $138,000 — than bus passengers, but their fares have gone up 8 percent in just the past year. Yet the MTA’s regulations permit it to transfer funds among its various transit lines — meaning that bridge toll and commuter rail revenues could be quietly moved to NYCTransit to cover lost bus fares. Maintenance elsewhere could suffer as a result.Subway riders at the Fulton Center station, February 27, 2019 at New York City. Drew Angerer/Getty ImagesMr. Mamdani’s push to make free buses is predicated on the idea that bus riders are poor and should not have to devote their income to getting to work. Yet the city’s unparalleled bus and subway system is itself a kind of anti-poverty program; in many transit-poor cities, especially in the Sunbelt or Los Angeles, it’s hard for anyone to get by without a car. The cost of owning and operating a new car is an estimated $12,000 a year. In New York, with the country’s lowest population percentage of car owners, it’s much easier.There are other cities with “free” transit. Yet someone always has to pay. Miami has what it calls an Omni Loop that connects its downtown with other parts of the city and its bus routes — and charges no fare. To cover that freebie and other parts of its transit system the city in 2002 added a half-cent to its tax levy, dedicated just to transit.The “free” buses would just be another example of the lesson socialists hate to learn: free public services aren’t really free. The mayor just wants to pay with the socialists’ favorite form of capital, popularized by the 1991 Danny DeVito film: “Other People’s Money.”

Why Mamdani’s ‘Free’ Buses Will Be Costly

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