NY Senate, under GOP control, aims for payroll tax

By · Published in 2010

The future is not looking bright for the MTA’s balance sheet. Facing the spectre of looming raids on its supposedly dedicated funding, the state Department of Taxation and Finance confirmed that they did indeed overestimate the payroll tax revenues. While the MTA has long since adjusted its budget projections to align with state totals, the payroll tax is increasingly coming under fire.

This development, first reported in February, drives home the need for a better and more reliable source of revenue for the MTA. Tom Namako at The Post reports:

The latest jostle for commuters is that the wide-ranging “bailout” package of fees and taxes approved in 2009 is coming in about $400 million short of projections that were established earlier this year, statistics show. The controversial business tax — which hits all business owners in the MTA region with a 34-cent levy for every $100 of payroll — appears to be $321 million under expectations, MTA data show. Overall, it will bring in about $1.34 billion instead of the $1.66 billion that bean counters projected.

And the “MTA aid” levies — like a 50-cent surcharge on every yellow-cab ride along with car-rental, garage-parking and license fees — are under projections by $60 million, the numbers show.

“The riders have done their part with service cuts and fare hikes, but motorists aren’t doing their part,” fumed Andrew Albert, an MTA board member. He added that the bailout bill “is not a good package” and that city’s free bridges should be tolled to help finance mass transit.

A state Division of Budget spokesman confirmed that the MTA had already been prepared for this shortfall. “The $320 million drop reflects current projections for 2010 against what the MTA had in its February plan,” said Erik Kriss said. “The MTA’s February plan numbers are based on the payroll projections the state made in December 2009.”

Meanwhile, as Republicans have reclaimed the New York State Senate, Newsday brings us some alarming news: Because so many Republicans campaigned on anti-payroll tax platforms, the GOP members in the Senate will try to repeal the tax. “It’s such an infamous, self-explanatory tax that is has to be addressed,” Sen. Kemp Hannon (R-Garden City) said to Newsday. “Will [the Assembly and Gov. Cuomo] go along with it? I’m not sure they know what they’ll go along with.”

It’s basically impossible for the state to overturn the payroll tax because of the massive crisis it will create. If the state were to revoke $1.3 billion in MTA financing, the authority and our transit system would simply collapse. Until Republicans propose a better way to generate this revenue, their attempts to overturn the tax cannot be supported. Albert’s proposal won’t be popular amongst drivers, but it’s high time for a renewed attempt to toll the East River bridges.

Categories : MTA Economics

13 Responses to “NY Senate, under GOP control, aims for payroll tax”

  1. Marc Shepherd says:

    I assume the Senate will have a “symbolic vote” to repeal the payroll tax, but I don’t see it going anywhere in the Assembly.

    The payroll tax was a very poor idea, but it was implemented only after two better ideas (congestion pricing and East River bridge tolls) didn’t have the votes to pass.

  2. DMIJohn says:

    How high would tolls have to be to make up $1.3-$1.6 billion?

  3. Tsuyoshi says:

    Why not just eliminate the tax in the suburbs, and make equivalent cuts to LIRR and MNR service?

    • Farro says:

      Because people use those services a lot, even off peak ones (Hell, the off-peak LIRR trains that I usually take have almost always been fuller tha nthe peak ones)

    • Bolwerk says:

      They should make staff and administrative cuts.

      Any cuts need to retain the current workforce, or they don’t pass political muster. 😐

  4. ferryboi says:

    “The riders have done their part with service cuts and fare hikes, but motorists aren’t doing their part,” fumed Andrew Albert, an MTA board member.

    The more they jack up tolls, add to parking taxes and licensing/registration fees, the less people will drive in, which is what many NYers have been asking for. Well, you got it. Less drivers into Manhattan = less tolls/fees coming into MTA coffers.

    I’ve been driving in about 2x per month, down from 8 or 10 times, and I’m glad for the change. Got tired or subsidizing my own subway rides by paying $5.50 a pop on VZ Bridge and Battery Tunnel. Been saving a ton of money and reading a book a week on ferry/subway commute. Judging by crowds on off-hour ferries, I’m not alone in this.

    • Andrew says:

      This is actually the first threat I’ve seen to switch from driving to transit. Most of the threats I’ve seen lately are in the opposite directions, due to the upcoming fare increase and the recent service cuts. Obviously, most of them are empty threats, but if you choose to switch modes, that’s your business.

      Drivers may (or may not) subsidize transit riders when they cross toll bridges, but they’re subsidized by transit riders basically everywhere else they go. As a transit proponent, I certainly won’t complain when somebody switches to transit.

      (If you do choose to drive, you do realize that you can reduce that $5.50 to $4.57 by signing up for EZPass or to $2.74 by registering for the Staten Island resident discount (I gather from your posts that you are a Staten Island resident; if that’s not correct, then, sorry, no $2.74 for you). Of course, you really pay twice that per eastbound trip but nothing per westbound trip, but I assume you make round trips, so it works out the same in the end.)

      • ferryboi says:

        Yes, a SI resident, and the $5.50 toll is WITH the EZ Pass discount–it would be much higher without it. If more folks do as I did and leave the car at home, there’s just that much less cash coming into the MTA. Drivers do subsidize a big chunk of the MTA budget, while as a subway/bus rider, the MTA loses money on every ride I take.

        • Alon Levy says:

          The MTA makes money on some rides, which include yours if you ride the IRT north from South Ferry. Reverse-peak trips are nearly free to provide, so they’re profitable; the IRT has a dominant southbound direction in the am peak, so northbound trips are effectively reverse-peak.

          In addition, some bus routes are profitable if you only consider their avoidable costs, i.e. labor and fuel, without allocating systemwide operating costs like administration.

  5. JK says:

    DMI John, the Ravitch report from Dec 08 says East and Harlem tolls at the same level as other MTA crossings would raise $600m. The PMT is budgeted to bring in $1.5B in 2013. Given reduced driving due to high tolling, you’d have to figure that bridge tolls would have to increase by 4x other MTA crossings or somewhere between $15 and $18 per crossing and double that or more for trucks. This is why the PMT can’t be eliminated, and tolls or a pricing zone have to be imposed to raise enough funds for some kind of capital plan.

  6. Kai B says:

    At least income from the MTA tax on real estate transactions seems to be slowly rebounding:

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