A State Senate with its sights set on the payroll taxBy
For all of its criticism, the state’s Payroll Mobility Tax delivers $1.3 billion a year to the MTA, and without that tax, the authority would have to either cut a tremendous amount of services or jack up the fares well beyond any acceptable level. We’ve long heard how New York Republicans in the State Senate would like to repeal the payroll tax, and now, as Streetblog’s Noah Kazis reported today, a splinter group of State Democrats has joined the repeal efforts.
The Independent Democratic Caucus, a splinter group consisting of Diane Savino, David Valesky, David Carlucci and Jeffrey Klein have already called the payroll tax a Democratic failure, and now they will join the Republicans in seeking a repeal. From their full agenda comes this gem:
MTA Tax Reform: Gross mismanagement is blamed for 1/3 of the MTA’s current fiscal debt. Our goal is to conduct a comprehensive forensic audit of the MTA to find areas of waste and corruption and determine the need and the efficacy of the current MTA tax.
As Kazis says, there’s a lot to be concerned about in this two-sentence statement. He writes on Streetsblog, “It’s the phrase “determine the need” that’s most threatening, with its suggestion that there may be no need at all. Remember, the transit agency’s capital program — which covers expansions and badly-needed repairs — is a staggering $10 billion short and the agency just went through a painful round of service cuts, fare hikes and layoffs to make its operations budget add up. Even a deal that exempts the suburbs from the payroll tax but not the city would cause some combination of more service cuts, higher fares, and deferred maintenance.”
I have two takes on this development. First, enough with the threats of a forensic audit. For two years, since the payroll mobility tax first found its way to the legislative docket, representatives have been threatening forensic audits, but none have been forthcoming. At some point, these politicians must take responsibility for the fact that they have direct oversight over the MTA. If they want a forensic audit, then they should do one. My belief is that they’ll find out that far, far less than one-third of the MTA’s current fiscal debt is a result of “gross mismanagement” and will lose their ability to scapegoat the MTA for their own failures of government. Bring on the audit.
That said, the payroll tax should go. It’s a crazy way to subsidize transit, especially in a bad economy, and repeal seems all but inevitable. That said, as I mentioned earlier today, if the payroll tax goes, it must be replaced with something else. The MTA can’t afford to see a $1.3 billion revenue stream dry up, and even congestion pricing — the ideal trade-off for the end of the payroll tax — would generate only between $400-$500 million a year for the authority.
Again, we’re seeing State Senators playing a game of Russian Roulette with the MTA’s finances, and for the city’s 5 million subway riders, this story almost can’t have a happy ending.