Late yesterday afternoon, David Paterson unveiled his plan to help cover the MTA’s deficit while assuaging suburban concerns over the payroll tax by shifting more of the tax burden to city-based businesses. Those doing business in the five boroughs would see the tax increase by 60 percent while those outside the city would see it decrease by 50 percent. These tax adjustments will supposedly restore the payroll tax revenue to the amount originally projected last May and deliver another $230 million to the MTA this year.
Last night, I called this move a political one designed to earn the beleaguered Paterson some points outside of the City, but many of my readers believe it to be a more equitable distribution of the tax burden based upon those who benefit from transit. The reality is that city businesses — the major economic drivers of the entire metropolitan area — are not going to look too kindly upon higher tax rates during a bad economy. Already, the Mayor and other business officials are slamming the plan.
The Mayor last night put out a scathing statement that highlighted the now-dead effort to bring congestion pricing revenue to the MTA. He said:
“First the Governor proposed a state budget that slashes support for New York City but not the suburbs, and now he proposes to wallop city businesses with more taxes while lightening the load for businesses in the suburbs. The idea that the State can spare the suburbs while sacking the City is terrible economics, grossly unfair, and contrary to every principle of good regional development. We in New York City saw the MTA’s problems coming and came up with a plan that would have created a steady stream of revenue for capital programs. Now the Governor proposes to shift an extra half billion dollar burden onto New York City taxpayers, who are the economic heart of our region. I will work night and day with our City’s delegation in Albany to stop this wrongheaded proposal from moving forward.”
Business leaders echoed the Mayor’s call but also took the opportunity to question the MTA’s business practices. “A far-reaching and dependable regional transit system is among New York State’s greatest assets,” Kathryn Wylde, head of the Partnership for New York City, said. “[We] remain open to discussing new ways to improve the MTA’s finances, so long as the approach is equitable and balanced. Additional funding, however, cannot be justified unless the MTA gets better control of spending and improves its contracting and procurement processes.”
Streetsblog saves its indictment for the Gang of Four who refused to support Richard Ravitch’s call for East River bridge tolls or congestion pricing. Wrote Ben Fried this morning:
So think of the New York City payroll tax hike, if it comes to pass, as a testament to the obstinacy of Carl Kruger, Pedro Espada, Ruben Diaz, Sr., and the disgraced Hiram Monserrate — as well as their GOP counterparts like Marty Golden and Andrew Lanza who sat idly by and did nothing to help the Ravitch plan last year.
Nine months after these NYC-based State Senators killed bridge tolls and nearly two years after members of the city’s Assembly delegation stopped congestion pricing in its tracks, we now face the distinct possibility that NYC businesses will end up shouldering more than three times the payroll tax rate as suburban businesses. Think back to all the city politicians you’ve heard float make-believe proposals about reinstating the commuter tax or making only non-NYC motorists pay bridge tolls. This new tax on New York City — on their constituents — is their handiwork too.
And so here we are, in another MTA political mess, this one inspired by our accidental governor. The state has a few options at its disposal: It could raise the payroll tax across the board to fund transit; it could push through congestion pricing or East River bridge tolls; or it could further push the pain onto the backs of New York City workers and residents who already pay more than their fair share to subsidize suburban commuter rails. Paterson has chosen to put forward the last and worst option. Can it get past the State Assembly and Senate? Will New Yorkers pay more or will the MTA continue to suffer?
11 comments
Wouldn’t congestion pricing be wonderful right now?… Yes.
It’s high time that the MTA died.
The solution to these problems is to split the MTA into a Regional Transportation Association, and a City Transit Authority.
The City transit authority should include all MTA assets in the 5 boroughs – Bridges & Tunnels, Subways, Buses, Staten Island Transit etc. The RTA should include LIRR & Metro North. Thus, money raised in the city would stay in the city for the maintenance of the city’s transit needs.
No other solution addresses the perennial raiding of the funds that should be earmarked to NYC transit (as per the 1968(?) agreement which established the MTA by swallowing up TBTA & NYCT) by the suburban commuters.
Unless you have a more in-depth explanation to this proposal, I don’t really see how splitting an integrated regional transit network into its constituent parts really addresses the institutional political lack of funding. Strikes me as a way to sever the MTA from any sort of state responsibility at all. The city probably can’t afford and shouldn’t be expected to go at it alone.
First, the current system isn’t really integrated. You don’t see attempts to make good subway/commuter rail connections, or integrate fares, or time transfers, or do any of the other hundred things that make commuter rail and rapid transit cohere in the rest of the world.
Second, the state funds city services all the time, for example CUNY. CUNY works just fine severed from SUNY.
I agree with what Alon said. If there were an RTA which consisted of the LIRR & MNRR, then i suspect there would be greater emphasis on integration of the maintenance, equipment and management of the two commuter railroads. The way it is configured right now, it allows the MTA to delude itself that it can maintain these as disparate entities, not parts of a system.
As far as the NYC-TA, the City agencies would have their own source of revenue – the Bridges and Tunnels, if the State didn’t fund the NYC-TA thoroughly enough, presumably tolls would go up, as well as fares. This would guarantee adequate funding because pressure to fund the MTA would come from both transit users and people who use the Bridges and Tunnels.
I thought we wanted more efficiencies, not more inefficiencies. Even as a single agency, the MTA still seems to sometimes have multiple departments doing the same task. That would only be legitimized by your proposal.
I see the attractiveness of this idea in that it offers the potential for more accountability. However, I believe that before such a move is made, which eventually may prove to be inevitable, steps need to be taken to increase accountability.
Here’s what I’d like to see happen:
1) It should be extremely difficult to remove MTA Board appointees.
2) The length of service on the Board should be very long, perhaps 14 years like the Federal Reserve. This way the board members have to live with their decisions, and they will serve through at least one full business cycle.
I believe that doing those two things will also give the MTA more leverage in negotiations with the City and State. They will be able to raise fares and tolls with relative impunity. If legislators don’t want fares and tolls to go up, they can always increase subsidies to the MTA.
I am struggling with the premise that “New York City workers and residents who already pay more than their fair share to subsidize suburban commuter rails.”
Yes, we do pay more…but is it unfair? If you can find the numbers showing that we city-dwellers are subsidizing suburban rails, I would like to see them. I suspect it is more likely that they are subsidizing us.
Naturally, no one ever wants to pay a dime more than they pay today. The Straphangers, for instance, can be reliably counted upon to oppose every fare increase. Hardly anyone volunteers to pay higher taxes. But is it unfair? I am not so sure.
I do agree that congestion pricing and/or bridge tolls were the best solutions available. They failed because some folks thought those ideas were unfair, too.
I do agree that congestion pricing and/or bridge tolls were the best solutions available. They failed because some folks thought those ideas were unfair, too.
They failed because a few state representatives don’t understand the breakdown between those who commute via car and those who rely on public transit. I’d be willing to say it’s as simple as that. Being inherently unfair as you say the taxation levels are and being willfully ignorant as I claim those representatives to be are two different things.
Anyway, I’ll try to find the tax breakdowns, but I think you’ll find that NYC residents, because of the myriad taxes and fees only we pay, heavily subsidize all of the transit options in the region.
The only way to find out would be to remove politics from the equation altogether, i.e. privatize all forms of movement, then wait and see where the prices settle. This will of course never happen, so calculating the ‘real’ cost of moving around will always remain nearly impossible.
“…terrible economics, grossly unfair, and contrary to every principle of good regional development.”
– Kind of like the Mayor’s hand-picked MTA Board members agreeing to let Bruce Ratner walk away from his promised $100 Million payment for development of the LIRR Atlantic/Carlton Yards. Or to simply ignore the customary Payment In Lieu Of Taxes that would normally be required by Related, for development of the West Side Yards.