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November 17, 2010

Maragos Lays Out Options to Save LI Bus

Study Shows MTA Unfair to LI Bus Commuter

            Nassau County Comptroller George Maragos, at a press conference in Mineola, released the results of a study his office conducted providing options to save the Long Island Bus System (LIBS) and called on the MTA to treat County commuters fairly.

The Metropolitan Transportation Authority (MTA) has threatened to cease operating the LIBS in 2011 unless Nassau County quadruples its subsidy from the current $9.1 million to $36.1 million. In response, the Mangano Administration stated that it cannot pay more and is exploring privatizing the LIBS. LI Bus press conference 

         “Nassau County residents depend on LI Bus to get to work, to school, visit doctors, shop and enjoy everything Nassau has to offer,” Comptroller Maragos said. “Nassau’s economy depends on LI Bus. This is not the right time for the MTA to pull the plug on the Nassau County subsidy.”  

The report recommended that the best option for the County is to negotiate with the MTA to continue with the current service, with a more equitable subsidy. The MTA should first decrease the LIBS operating expense by about 4%, so that no increase in subsidies is required for 2011 by either the MTA or the County. If an increase is necessary, then both the County and the MTA should proportionately increase their subsidies in order to keep the LIBS running.

However, if negotiations fail and the County is forced to contribute the full subsidy demanded by the MTA of over $36 million for 2011, then we recommend that privatization be pursued. 

The study evaluated the following options for the County to keep the LIBS running:

 

  • Stay with MTA Operation: The MTA currently subsidizes the LIBS by $21.2 million or $0.69 per commuter while it subsidizes the Commuter Rail Division by $257 million or $1.60 per commuter annually.  In fairness, if the MTA matched the Commuter Rail contribution this would result in a total annual subsidy to LIBS of $49 million, well above the current $21 million. Given the current economic situation of both the MTA and Nassau County the most equitable compromise would appear to be for both to proportionately increase their subsidies and for the MTA to continue operating the LIBS. The study also noted that if the MTA can better control costs by about 4%, then no increase in the current year subsidies would be required in 2011 by the MTA or the County.

  • Privatize Using Peer County Models: The study compared LIBS to bus systems in Rochester, Niagara, Westchester and Suffolk Counties. The study found that the privatized systems in other counties can cost about the same or more than the MTA run LIBS and can require substantially more in local contributions. Our study shows that private operators require Suffolk and Westchester Counties to pay $27.3 million and $13.8 million respectively. Using the Westchester model which approximates the LIBS in ridership, we estimate that Nassau County would have to increase its subsidy from $9.1 million to $17.2 million. Therefore this model only makes sense if the MTA option will cost the County more than $17.3 million annually.

  • Selecting one of the bidders to the RFP recently issued by the County: The third option is privatization through the current RFP process undertaken by the Mangano Administration. We understand that the Administration has received three bids from large municipal bus operators. The Administration further requested and received bids without subsidies. Our due diligence on the bidders found that there are no instances where these operators have run a municipal system without local subsidies. Additionally, these bidders may require a significant fare increase of up to 20%. Furthermore, without a County matching subsidy, New York State subsidies to the LIBS would be lost, putting further strain on a private operator and risk of an even higher subsidy or fares. For these reasons, we do not consider the current private bidders as viable long-term solutions.

             Comptroller Maragos concluded by stressing that, “Most LI Bus system riders cannot afford to lose this trusted form of transportation. The MTA and the County must find a resolution to this debate without interrupting service to a very important part of Nassau’s economic engine. Our report recommends that the MTA and the County can save LI Bus by contributing proportionately towards its operation.” 

PDF File MTA Long Island Bus: A Financial Review, Regional Comparison, and a Brief Discussion on Privatization