Spurred on by numerous articles this past fall detailing the money the MTA loses to fare-baiting, the State Senate on Monday approved a bill that could hike fines to $500 for those who do not pay their fares. Sponsored by Charles J. Fuschillo of Merrick, the measure increases the cap on civil fines for violations of NYC Transit’s Rules of Conduct from $100 to $500 and could go into effect if the state Assembly and Gov. Andrew Cuomo approve of the measure. The bill also raises the penalty for failing to pay a fine from $50 to $100.

“The MTA and its fare-paying riders shouldn’t have to spend tens of millions of dollars more each year paying for other people’s illegal free rides. At a time when every dollar counts, the MTA needs stronger tools to discourage fare-evasion. Higher fines would create a stronger deterrent and remove the incentive which actually encourages people to try and beat the system. I’m pleased that the Senate has passed this legislation and I urge the Assembly to join us,” Senator Fuschillo, Chairman of the Senate’s Transportation Committee, said in a statement.

In his statement touting the bill’s passage, Fuschillo references the Daily News reports that noted 50,000 straphangers a day entered the subway system without paying in 2010. Ostensibly, the MTA lost out on $31 million in revenue, and the News found that a scofflaw could come out ahead by receiving a $100 ticket every six to eight weeks rather than ponying up for a $104 monthly pass.

I have to wonder though if Fuschillo’s measure won’t get to the root of the problem (or if there’s even a problem). Those 50,000 straphangers per day represent approximately 1 percent of the MTA’s daily ridership. Thus, the authority’s bleed rate is exceedingly low for any business. Without cops stationed at every station at any hour — a terrible use of NYPD manhours — people will find a way to ride the rails without paying. The new fines are certainly high enough to serve as a deterrent, and yet, a $500 fine for a fare jumper strikes me as just a wee bit excessive.

After passing through the Senate yesterday, Joe Lhota is now the MTA CEO and Chairman.

No one will ever accuse Albany of moving quickly. Two months and three weeks after Gov. Andrew Cuomo nominated Joe Lhota to serve as the next MTA CEO and Chairman, the State Senate finally voted to confirm him to the position. The vote, replete with two short committee hearings and plenty of grandstanding from Senators, carried with no nays, and Lhota will officially assume his role atop the beleaguered authority.

After the confirmation vote, as politicians issued their perfunctory congratulations, the governor was so happy that his nominees were approved that he didn’t even mention Lhota by name. “New York will benefit from the leadership and experience of these dedicated public servants,” Mr. “I Am The Government” said of Lhota and two other public authority nominees. “These new members of the administration will transform the state’s transportation and energy infrastructure while creating jobs for New Yorkers. I thank Majority Leader Skelos and Senators Fuschillo, Dilan, Ranzenhofer, Perkins, Maziarz, Parker, and DeFrancisco for the expeditious confirmation process.”

Lhota, who, as an executive at Madison Square Garden, rode the subway daily from Brooklyn Heights to Manhattan, pledged to be a “rider-chairman” during his hearings and said as much after the fact. “As a life-long New Yorker and transit rider, I understand the importance of the MTA to New York’s economy and the responsibility of being chairman,” he said. “I’m grateful to Governor Cuomo for his nomination and to the Senate for its support, and I look forward to creating a more efficient and effective MTA for our riders and New York taxpayers.”

In a sense, efficiency and effectiveness were the key words that emerged from two hours of Senate confirmation hearings. Lhota stood before first the Senate Transportation Committee and later the Senate Finance Committee as he withstood petty complaints from some of the more narrow-minded Senators and bigger-picture concerns from the few representatives in Albany who seem to understand the importance of and current problems with New York City’s transit system. From complaints about weekend service changes to rats to particularly groans about specific stations, the Senators in Albany basically reenacted what would have happened had 20 random straphangers gathered in a room to grill Lhota. Both the new Chairman and the State Senators tried their best to avoid controversial big-picture topics of government structure.

A few moments from the hearings, though, are worth our attention. The first key moment involved an exchange between Lee Zeldin, the Long Island Republican so hellbent on ripping away billions from the MTA budget, and Lhota. Every the payroll tax avenger, Zeldin said he wanted the MTA to be so accountable “for the taxpayer dollars so there isn’t a need to use taxpayer dollars at all.”

Lhota would have none of it. “There is no way the MTA can operate without taxpayer dollars. The entire operation of the MTA cannot be paid for from the riders,” he said. “It was never envisioned that way.” Throughout the hearings, Lhota repeatedly had to inform State Senators that the MTA is likely the most transparent authority in the state with voluminous budget materials available for all to see and constant audits and oversight from the city, state and federal government. These are things State Senators should know.

In another moment of candor, Eric Adams from Brooklyn’s District 20, which ends across the street from my apartment, placed much of the MTA’s problems on Albany’s shoulders. “If we want to get New Yorkers out of cars, then we need a first-class transportation system. Albany has not done enough,” he said.

Yet, as Streetsblog’s Noah Kazis noted, it wasn’t clear what would be enough. Lhota, who wasn’t there to take controversial stances, declined the opportunity to argue for bridge tolls with dedicated transit revenues. Albany, he said, determines the MTA’s funding equation, and those are decisions for state representatives to address. Instead, Lhota pledged to do the most with what the MTA has and be a better communicator — noble, if bland, goals.

Of course, no day in Albany would be complete without unnecessary references to a tired cliche, and here Lhota acquitted himself nicely. During the Finance Committee hearing, Lhota said it was time to cease repeating eight-year-old claims proven false about two sets of books. “It needs to end,” he said. “It was nothing more than a marketing gimmick by a former state controller who didn’t know what he was talking about.”

Later during the full Senate meeting on Lhota’s nomination, Velmanette Montgomery praised Lhota for the wrong reasons. She said she was pleased to hear that the MTA would no longer be keeping two sets of books because the incoming chair said “it needs to end.” That is, of course, a gross distortion of Lhota’s words but a clear sign of the kind of inept representation we enjoy in our state capital. Why listen today if you’re not going to listen for the next decade?

After the hearing, Lhota even had to clear up Montgomery’s SNAFU. “There were never two sets of books,” he said adamantly to reporters. “There will never be two sets of books.”

Ultimately, Lhota emerged from Albany displaying a measured sense of calm and a keen understanding of the MTA’s system and the challenges it faced. I was originally skeptical of his appointment as he was an executive with little background in transit, but if he’s willing to be more than a Cuomo “Yes Man,” I think he could do a good job as the new MTA CEO and Chairman. I might not be a true believer yet, but as Lhota walked away with the nomination, I was impressed. He handled himself well in the face of the same old, same old in Albany. If anything, it was a good start to a tough job.

One of my favorite books while a little kid was a simple and clever story by Laura Numeroff called If You Give A Mouse A Cookie. It isn’t some tale of horror about NYC Department of Health inspection grades. Rather, it is a nicely-illustrated tale of a young boy who befriends a mouse by giving him a cookie and the consequences of that cookie. If he has a cookie, the mouse want some milk, and if he has milk, he wants to check the mirror to see if he has a milk mustache, but then he notices he needs a hair cut. And on and on and on.

While this mouse, which went on to spawn numerous other titles in the If You Give a ____ A ____ series, isn’t meant to be some parable for politicians passed on to little kids, the same thing applies. If you give a politician even a tiny slimmer of something he or she wants, she’ll demand the rest until there’s nothing left. Lately, the MTA has become a victim of just such a demand.

Our story begins a few years ago, when Albany approved a controversial package of taxes and fees designed to boost the MTA’s sagging bottom line. Instead of tying in a congestion pricing or bridge tolling plan with transit dollars, the state punted on the more sensible solution for a piece of legislation that included a substantial payroll tax on businesses in the counties served by the MTA. It was immediately unpopular, and numerous Republicans campaigned on a pledge of repeal.

Symbolically this year, the repeal passed the State Senate, but it was DOA in the Assembly. Despite his opposition to congestion pricing, Sheldon Silver knows the MTA needs money, and he wasn’t even going to entertain the idea of a payroll tax repeal. But then Gov. Andrew “I am the government” Cuomo got involved. In a comprehensive tax code overhaul, he jettisoned approximately 20 percent of the revenue from the payroll tax by eliminating the tax on businesses of a certain size. Somehow, he claimed, the MTA would get its money.

“Victory!” proclaimed the usual band of anti-payroll tax voices. As we know, they are cheering on the wrong thing, but they’ll learn the hard way once the MTA must cut services to make up the budget differential. After the initial euphoria of achieving this success wore off, it was time to fight anew. After all, if you give a representative a tax break, he’ll want another one.

And so now we have folks from Orange County issuing dire proclamations. “Not one business should be paying for this tax,” Chester Supervisor Steve Neuhaus, Crawford Supervisor Charles Carnes and Deerpark Supervisor Karl Brabenec all said in a joint statement. “Not one taxpayer should be paying this tax. Unfortunately, until this law goes away completely, they will continue to suffer.”

And we have folks from Hauppauge and Rockland County who want the tax fully repealed. Lee Zeldin, the voice of the repeal movement who has never had a better idea for MTA funding, held a victory rally and pledged to push forward for a full repeal. If you give an inch, someone will try to take a yard.

Of course, the MTA can’t afford to see more money taken away. That’s why the agency is so diligent in its actions and yet so political in its statements concerning state subsidies. As the MTA knows, just as when a bus line is cut so too when a subsidy is cut, it never returns. The state won’t reinstate the payroll tax, and every time it removes money that’s supposed to boost transit, the MTA has to figure out a way to reorganize its budget or cut services or raise fares or all three.

A few voices of reason have tried to reach through the din. One Nassau County writer chided the Governor for failing to identify an adequate alternate revenue source for the MTA before doing away with the payroll tax, and our mayor was even more strident in his critique. “You say, ‘Why should somebody upstate be paying for mass transit in the New York City region?’” he said. “The answer is, I suppose, the city is the economic engine of the state. We export money to other counties. They don’t quite see it that way, but that is in fact the way the funds go, and we’re all in this together.”

Perhaps the Mayor should tell that to his upstate compatriots. They’re too busy, though, asking for a glass of milk now that they’ve had that first bite of the cookie.

A few weeks ago, Gov. Andrew Cuomo uttered a phrase that could go down in New York state history. “I am the government,” he said in a radio interview in early November. Since then, Cuomo has run roughshod over Albany, enforcing his whims over those of the state legislature and public, and New York City’s transit service will soon be paying a heavy, heavy price.

The fun started earlier this week when Gov. Cuomo announced an agreement forged with Dean Skelos and Sheldon Silver to reform New York’s tax code. As a favor to suburban legislators who enjoy transit access but want the city to subsidize their commuter rail service even more than we already do, Cuomo threw in a partial repeal of the payroll mobility tax. That tax, by the way, supports the MTA to the tune of $1.5 billion a year. Without it, the authority would be facing massive fare hikes or service cuts.

Originally, 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 against MTA cuts, and a group of transit advocates spoke out against the decision. In a statement endorsed by the General Contractors Association, Straphangers, the RPA and the Tri-State Transportation Campaign, the group highlighted the issue with the state’s approach:

The problem with this approach is three-fold:

• estimates of what’s needed can be incorrect, exposing the MTA to serious financial risk;
• payrolls can grow over time, subsidies do not; and
• subsidies can be lowered over time, as was the appropriation for student MetroCards;

A better way can be found in the way public schools are being treated right now. These schools now pay the PMT and then apply for reimbursement from the State.

Right now, Cuomo and state leaders claim their find $320 million through alternative funding sources, but as Streetsblog noted yesterday, the MTA’s payroll tax funding has now become discretionary. The state can remove the funding; they can fail to find it; they can do whatever they want because they are the government. While congestion pricing with dedicated transit revenues would likely generate the $320 million needed to cover this new funding gap, that option has been off the table since the fall, and leading congestion pricing advocates tell me it could be a few years before those efforts are revived.

To make matters worse, in a special session in Albany yesterday, Cuomo essentially striped the Transit Lockbox Bill of any bite. What was a strong bill with stringent requirements has now become a shell of its former self. Originally, the lockbox, which passed by the Assembly and Senate with nary a dissent, prevented the state from removing transit funding without the full support of the state legislature. It also required a public statement detailing the amount diverted from mass transit and the impact that diversion would have on the level of service, maintenance and security.

Those key provisions are now entirely gone. In the new bill, foisted on Albany by Cuomo, the governor as the power to divert funds if he “declares a fiscal emergency,” and the reporting requirements have been removed entirely. The public will not know the extent of the raids on service levels unless others report on them. This is a lockbox without a lock, and a group of union leaders and transit advocates are not happy. “We do not support the substitute legislation passed in this special session,” the coalition that saw the bill through originally said. “It does not constrain future raids on transit funds, and deletes the requirement that the of the diversion of transit dedicated funds be reported.”

The bill’s original sponsors have vowed to restore the language next year, but Gov. Cuomo never indicated that he would sign the more powerful piece of legislation. And so we are left with an MTA striped of $320 million, no clear sign from where replacement funds will originate, and a lockbox that isn’t. As Andrew Cuomo said, he is the government, and his is a government with no sense of the role transit funding plays in New York City. Sad times indeed.

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.

Now that Gov. Andrew Cuomo has pledged to overhaul New York’s tax code, Senate Republicans are chomping at the bit to do away with the controversial payroll mobility tax. As The Daily News reported last night, Senate leaders may even find a way to modify the tax without impacting the MTA’s bottom line.

“We have had some discussions about modifications on it — in certain ways for certain businesses — where it may be a little onerous,” one state source said. “It wouldn’t be money removed from the MTA because the MTA needs the money.”

According to the News, small businesses and parochial schools would likely be reimbursed for taxes, but even that relief doesn’t appease state Republicans who want the measure repealed entirely. That is, of course, an untenable position for the MTA. “It generates about $1.4 to $1.5 billion a year and it’s very important that we maintain that level of revenue to main our level of services,” the incoming MTA CEO and Chairman Jospeh Lhota said in an interview. “[The State legislatures] set tax policy; it’s their decision. I’m not a state legislator; I cannot support it one way or the other.”

With all of this politicking going on, Daily News columnist Pete Donohue has called upon the New York GOP to “drop the farce” of a payroll tax repeal effort. Donohue takes Sen. Jack Martins to task for his uninformed and misleading comments concerning the payroll tax.

“The idea that the MTA could provide anything remotely close to a safe and affordable service after such a financial pounding is fantasy,” Donohue writes. “That’s fitting because the whole Republican proposal is based on the fictional notion that the subway system is overly and unfairly subsidized by the suburbs.”

As Donohue notes, LIRR riders pay 47.8 percent of the railroad’s operating costs while NYC Transit riders are on the hook for 58.6 percent. Combine that reality with the fact that it’s nearly impossible to replace $1.4 billion in annual revenue, and the payroll tax should be safe. If it isn’t, that will spell trouble for our transit system.

Since earning an appointment to the MTA, Joseph Lhota hasn’t said anything at all to the press. He co-signed a letter to New York City district attorneys concerning assaults on MTA employees, but he won’t be giving one-on-one interviews to the press until after his State Senate confirmation hearing. Instead, we’re left with the public record of a one-time Giuiliani official who has little transit experience and has spent the bulk of the past decade in the private sector.

Today in The Times, Michael Grynbaum unearths a gem. During the 1999 brouhaha over a controversial art exhibit at the Brooklyn Museum, then-Deputy Mayor Lhota discussed his views on MTA control in a sworn deposition. As Grynbaum reports, Lhota espoused a view that has generated some debate over the years:

In 1999, while serving as Rudolph W. Giuliani’s deputy mayor, Mr. Lhota stated in a deposition that if he had his way, the responsibility for New York’s subways and buses would lie fully with City Hall, not with the state. “I do wish we controlled the transit authority,” Mr. Lhota said at the time. “I have gone to Albany constantly in my capacity as budget director, because I don’t think the way the transit authority works with the City of New York is very appropriate.”

Reminded of his comments in a brief interview on Tuesday, Mr. Lhota laughed, groaned and then said emphatically that he no longer held the same position. “I believed it then,” he said. “I don’t believe it now.”

…On Tuesday, Mr. Lhota cheerfully conceded that under the Giuliani administration, he was occasionally frustrated by the city’s lack of oversight of the transit system. “It is a matter of perspective,” he said. “I think that statement was consistent with what most budget directors in New York would have said.” But he added, “I do believe the management of the M.T.A. is in much better shape today than it was then, and I do not subscribe to the same thoughts.”

The context and Lhota’s comments are nearly incidental to the idea that has long since plagued New York: Who should be in control of the New York City subway system? For the first half of subway history, New York City was responsible for the subways. Mayor La Guardia oversaw an ambitious reunification plan that brought the IRT and BMT under direct city control, and the Board of Estimates set budgets and fare policies.

Although it made sense for the city to oversee its transit network, the bureaucratic and political structure was rife with problems. Candidates for office turned the subway’s nickel fare into a campaign issue, and from 1904-1948, the fare remained five cents even as inflation devalued that nickel. Eventually, thanks to overly ambitious plans to build out the IND lines and the declining fare revenue, overseeing the subways nearly drove the city to bankruptcy.

When the state assumed control of the subway system and eventually created the MTA, it did so for purposes of financing. Surplus from the Triborough Bridge and Tunnel Authority helped cover the subway operating deficit, and eventually the state folded the regional transit network — including buses and commuter rail — into the MTA in an attempt to streamline operations. Without proper legislative support and authorization, it hasn’t always succeeded.

At this point in time, we know of the problems with the MTA. The state legislature refuses to own the problems; New York City disclaims as much interest as possible. It is at once everyone’s and no one’s problem. If the city were to assume control of the subway, as Lhota proposed in 1999, the state would quickly roll back a lot of funding, and the city would have to find those dollars. On the other hand, any such rollback could come with an expansive home rule grant that could allow the city to toll bridges or institute congestion pricing without Albany approval.

For now, of course, nothing will happen with MTA control. The state will continue to maintain its oversight, and the city, which isn’t interested, won’t be arguing for a larger role in subway management. It’s been that way for nearly six decades, and it won’t change any time soon.