Comments on: Doomsday avoided with imperfect MTA compromise

By: The impact of overturning the payroll tax :: Second Ave. Sagas

The impact of overturning the payroll tax :: Second Ave. Sagas — Tue, 16 Mar 2010 04:01:45 +0000

[...] the MTA funding package last year with the payroll mobility tax as its centerpiece, I called it an imperfect compromise. It was a plan that, as state comptroller Thomas DiNapoli reported a month after enactment, would [...]

By: Senate approves questionable MTA package :: Second Ave. Sagas | A New York City Subway Blog

Thu, 07 May 2009 06:43:19 +0000

[...] acted at the 11th Hour and at the behest of a very unpopular governor. The resulting compromise — discussed in detail here — are far from satisfactory, and while the ink has hardly dried on the approved bill, it is [...]

By: DMIJohn

DMIJohn — Wed, 06 May 2009 16:41:25 +0000

Looking back to the conversation around congestion pricing, there were estimates that congestion pricing would raise between $400 and $500 million a year. The MTA drew up an accelerated 2008-2013 Capital Plan in response to the possibility of congestion pricing. According to those plans, congestion pricing was supposed to support $4.5 billion in bonds over five years, or approximately $1.7 bonds a year.

Now Albany’s plan is saying that it is going to use $400 million in revenue to back about $3.25 billion in bonds a year ($6.5 billion divided by two years)?

Something doesn’t add up.

By: Doug

Doug — Wed, 06 May 2009 15:39:02 +0000

No offense taken; I did exactly that.

Yes, they now have the $6.5 billion to spend on the capital projects today. The actual “leverage” can be defined different ways, and I’m no expert on it, but I would guess you would look at it as a function of the revenue they can actually generate (i.e. how much leeway do they have to pay the interest).

By: DMIJohn

DMIJohn — Wed, 06 May 2009 15:38:23 +0000

The $400 million to support bonds is better than what the MTA was doing for the past two capital plans, which was issuing bonds without a revenue stream to back them up. Revenue backed bonds are less expensive forms of borrowing.

However, the continued reliance on borrowing is still troublesome. The problem is, its now unclear whether the Ravitch Plan would have been able to stop the MTA’s reliance on borrowing since the budget deficit continued to grow. The Ravitch Plan said that the payroll tax would have provided enough money to pay down the debt and finance future capital plans. If that would have been true, even after the MTA announced that its financial situation was much worse, is unclear.

I’ve heard no mention of whether this new plan included the provision that would have given the state legislature veto power over items in the capital budget. If it does, I foresee some trouble down the line.

By: Fairness

Fairness — Wed, 06 May 2009 15:02:35 +0000

It won’t even be a year from now before the MTA is crying poverty again. It will be within the next 2-4 months.

By: Mike

Mike — Wed, 06 May 2009 14:23:31 +0000

This is insane — we pay for two years of capital program with a perpetual payroll tax? So what happens in two years? More bonds?

The whole point of the Ravitch plan was that tolls would bridge the budget gap, and the payroll tax would fund the capital plan, on a one-year-for-one-year sustainable basis. This is the worst of both worlds — we don’t get tolls, and the perpetual payroll tax gets blown in the first two years, leaving us even more screwed in 2011.

By: JAR

JAR — Wed, 06 May 2009 13:54:25 +0000

Terrible plan! It’s not a rescue, it’s more taxes.
Payroll tax: will be paid by working New Yorkers – not insubstantial. Multiply your income by .0034. Now a NYer earning $49k will, after fare increases essentially, be paying the Doomsday price for a monthly.
Car rental tax: New Yorkers will pay this, too – most tourists don’t rent cars, but plenty of transit-dependent NYers do.
Taxi tax: really hurts taxi drivers, and they don’t have a role in this fight otherwise.
Still no charges for those who drive across free bridges, even during rush hour. I wonder how the revenue of .50 per cab ride compares with charging everyone crossing a free bridge a measly $1 or $2.
And no clear requirements on how MTA will become more efficient.

By: petey

petey — Wed, 06 May 2009 13:30:15 +0000

“let’s say they pay a 6.2% interest rate”

surely less, around 5% or a little above. not being snarky, it looks like you used 6.2 to make the 400mil work, but just sayin’.

By: John

John — Wed, 06 May 2009 13:17:32 +0000

A year from now, or two years down the line when the MTA is experiencing another budget shortfall or contemplating raising fares will Albany have the fortitude to enact Congestion Pricing and/or toll the East River Bridges?