With the largest metropolitan labor force in the nation, and one of the densest concentrations of employment in the world, New York requires an extensive mass transit system as well as a large network of highways to bring its workers from their homes to their jobs and back. If its transportation system is not well maintained and does not expand to meet future needs, then the New York economy will not thrive.

This report examines the financing policies for passenger transportation services in the New York-New Jersey metropolitan area. Included are 25 entities consisting of the states of New York and New Jersey, the Port Authority of New York and New Jersey, the Metropolitan Transportation Authority, New Jersey Transit, four additional authorities operating or financing toll roads, the City of New York, and 15 counties. The combined annual operating expenditures of these agencies for transportation services are approximately $13 billion. This is the first comprehensive, fiscal analysis of these agencies.

The recommendations call for a public enterprise approach to organizing and financing transportation. Similar to water systems, transportation systems have individual customers who should pay appropriate fees (fares, tolls, and others) to benefit from the services. These fees should be dedicated to supporting transportation facilities with subsidies from general government limited in size and purpose but provided in a predictable manner. By combining predetermined subsidies with strong reliance on user fees, transportation agencies can operate more like independent businesses, able to plan and deliver services that their customers want.