David Paterson taketh away, and then David Paterson giveth. Just over two weeks ago, when David Paterson unveiled his executive budget for the 2010-2011 fiscal year, it contained a shock for the MTA. Payroll tax receipts were project to be $104 million less than originally anticipated, and the MTA’s overall budget hole has grown to nearly $800 million since then.
Today, Paterson announced his 21-day amendments to the Executive Budget, and the MTA should net an additional $230 million in 2010. “The new proposal I am putting forward will provide relief to straphangers, as the MTA makes the difficult decisions necessary to balance its budget during an historic fiscal crisis that is significantly impacting all levels of government,” Governor Paterson said in a statement. “In addition, it also makes key improvements to the current tax structure, promoting regional equity and delivering relief to small businesses.”
Before we rejoice, a few caveats: First, this budget adjustment simply corrects for Albany’s originally overly optimistic revenue projections. In May 2009, the payroll tax was projected to bring in $1.54 billion for the MTA, and prior to this amended budget, the MTA was going to receive just $1.3 billion this year. Paterson may be patting himself on the back with
Basically, New York City businesses will see an increase of nearly 60 percent in the payroll tax to support the MTA while businesses outside of the city who clearly benefit from the presence of mass transit will have to pay less. Paterson claims this to be an “equitable” solution, but it seems to be a prime example of Paterson’s political pandering at a time when his poll numbers are down.
In response, the MTA had this to say:
“The MTA is grateful to Governor Paterson for his continued focus on funding the MTA and the critical service we provide to 8.5 million New Yorkers every day. The MTA’s revenues have taken two significant hits since December: a nearly $400 million deficit was closed in December with administrative reductions and service cuts; and just last week we learned of a new approximately $400 million shortfall due primarily to reduced State projections of the payroll mobility tax. Based on the estimates provided by the Governor’s office, the changes to the payroll mobility tax proposed today would provide $230 million to recover much of the latest $400 million in deterioration and could lessen the need for additional cuts on top of those passed in December. It would not eliminate the need for the service cuts and administrative reductions included in the MTA Budget passed in December.
“The proposal also changes the structure of the payroll mobility tax, which is a decision to be made by the Governor and the Legislature. Even if this restructuring is enacted, the MTA will remain focused on overhauling how it does business to reduce costs and operate within the funding provided.”
For now, at least, we can breath a sigh of relief as the agency should see some of its deficit reduced. Unfortunately, that increased state contribution will come at the expense of those who live and work in New York City.