Dec
06

Cuomo deal cuts MTA payroll tax revenues, but…

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As New York state leaders in Albany look to reform the tax code, the payroll tax that, in part, funds the MTA will be cut, Gov. Cuomo announced this afternoon. The new plan, which enjoys the support of a bipartisan coalition of lawmakers will see the state directly reimburse the MTA for last payroll tax revenues, but I’m wary of any plan that weakens the MTA’s dedicated revenues.

The payroll tax cuts are part of a larger plan that relieves the tax burden on middle class New Yorkers while targeting the upper classes instead. It’s also designed to spur job creation through infrastructure investment, although the transit part of that picture appears to be missing. For more on the overall package, feel free to browse through the Governor’s press release. The following bit buried at the end of the release though is important:

The Governor and the legislative leaders have agreed to reduce the MTA payroll tax on small businesses while maintaining the necessary funding for the MTA from other sources. The payroll tax would be eliminated or reduced for 294,900 taxpayers overall. The tax would also be eliminated from an additional 415,000 taxpayers by raising the self-employment income exemption. In addition, private elementary and secondary schools, as well as parochial schools, would be exempt from the tax. The State would compensate the MTA for the $250 million in lost revenue.

When the original plans for a payroll tax overhaul were leaked earlier this week, the reimbursements were backwards. The state was going to reimburse tax payers for the monies they had to pay out under the payroll tax, and the MTA would see no loss in revenue from the state. Now, the state will use “other sources” to ensure that the MTA gets its $250 million while the taxpayers won’t need to pony up the dough any longer.

Of course, we know how that story ends. Without a steady stream of money from the payroll tax, the state will suddenly be unable to find the $250 million it owes to the MTA, and legislators will blame the MTA when the authority comes forward with a budget deficit. It’s unclear right now if that $250 million payment would cover just 2012 or would be implemented on an ongoing basis. As it stands now, the MTA’s budget projects long-term deficits with over $1.5 billion in payroll tax revenue. Reducing that figure by $250 million a year would increase the MTA’s deficits as well as the pressure on the public to carry that debt through fare increases, service cuts or both.

Furthermore, this move by the state highlights the need for the lockbox legislation. Not only would it make it more difficult for the state to rearrange MTA finances, but it would require the state to explain what $250 million in loss subsidies would mean for the MTA. Instead that legislation has languished on Cuomo’s desk.

The MTA in a statement was diplomatic: “”We are grateful to the Governor, Majority Leader and Speaker for reaching an agreement that ensures the MTA will continue to receive the level of funding needed to keep New York and its economy moving.” I can’t help but feel pangs of fear that the $250 million will disappear, and the MTA will slip further into the red as time goes by. A healthy MTA can spur the economy just as much as a reorganized tax code. Just ask these guys.



Categories : MTA Politics

13 Responses to “Cuomo deal cuts MTA payroll tax revenues, but…”

  1. Frank B. says:

    Thanks a lot Governor Cuomo! You lousy DINO!

  2. Sharon says:

    $250 million could come easily from work rule changes. Opto alone would save way more than $250 million. When you calculate employee cost you need to include non cash benefits which amount to nearly $30 an hour. Duomo needs to take a hard line with mta unions. Cut out the job padding not worker salaries

    • Alex C says:

      This I agree with. As much as it pains me to suggest that certain people be let go, there are enough bad conductors out there who don’t care about their job that I’m fine with it. There are also enough good ones to salvage and place in other jobs throughout the system. But it is important that salaries don’t get cut. Don’t punish the good workers.

      • pea-jay says:

        ASIDE from work rule changes, does the MTA need to make any infrastructure investments to to eliminate the conductor position? I know OPTO won’t work with the R-32s and some of the real curvy stations will have to have the monitors moved but what else needs to happen?

        • Alex C says:

          Cameras. Lots of cameras on the platforms since the person at the front now has to see the whole train at curved platforms. Holding lights (the three amber lights you sometimes see at certain stations) at the front. Basically, the set-up stations on the IND Crosstown have. If we had any MTA workers post here I’m sure they’d give more detail on this, but that’s all I can think of. The gap fillers at Union Square IRT are automatic, so wouldn’t need anything new there.

          • nycpat says:

            When the cameras or monitors fail, as they will occasionally, what happens? Bypass the station? Discharge the train? Wait untill a TSS can flag you?
            Getting rid of C/rs will lead to hiring more supervisors.
            One rule that will have to change is that the Train Oerator will probably no longer go to the roadbed to investigate the cause of a “Brakes In Emergency”, you can’t have a train with no employee on it. Just wait there for a TSS to show up. Sure hope there is no one under the train.

    • Alon Levy says:

      OPTO would save $160 million on the subways, and I believe about the same amount on the commuter railroads. 320 > 250, but not by a large margin.

      And Cuomo needs to take a hard line with over-expensive bridges first. Cut the Tappan Zee replacement boondoggle first, then worry about train staffing.

  3. Alex C says:

    Sigh. 1970s here we come. Because tax cuts always magically help budget deficits.

  4. Vroom says:

    Cuomo has turned out to be as bad for mass transit in New York State as any Republican governor.

  5. pea-jay says:

    I don’t get the math. How is cutting income & MTA taxes going to increase revenue AND pay for the increased public works spending discussed in the same memo. I get that other taxes may go up and loopholes will be closed but the basic premise doesnt compute. But from what I understand, the MTA is going to be made whole from the decrease in payroll revenues for the time being.

  6. ltrain952 says:

    I almost read the last paragraph as, “Mighty Leader and Speaker”; thought (hoped) they were getting snarky. But no, this is an unmitigated disaster as far as MTA funding is concerned.

Trackbacks/Pingbacks

  1. [...] Kabak is the editor of Second Ave. Sagas, where a version of this post previously appeared. Kabak has been covering all things related to New York City’s vibrant public transit network [...]

  2. [...] the new tax proposal was to cost the MTA $250 million in annual revenue, but that number has since increased to $320 million. No one is happy. The Times editorialized [...]

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