During rough economic times, politicians angling for reelection like nothing more than a tax to serve as a good whipping boy. Since the MTA has long held that unwanted position at the bottom of the New York political totem pole, the unpopular, but necessary, payroll tax is beginning to attract everyone’s ire. While neither Andrew Cuomo nor Rick Lazio have voiced any support for the payroll tax, GOP lawmakers are starting to make noise about a repeal.
In Newsday today, transit writer Alberto Castillo explores how state Republicans are calling for an end to the tax (link is subscription only). Well, perhaps saying they want an end to the tax is premature. Rather, they’re beating the MTA/forensic audit drum. Unless the authority agrees to a forensic audit — something to which it has been quite willing to submit — these representatives wish to deny the MTA its next payroll mobility tax check. “We want every paper clip, every pencil. We want to know every expense of the MTA and its subsidiaries,” Dean Murray, from Patchogue, said. “Before you turn to the taxpayers to bail you out, you should look where you could save money.”
Castillo has more priceless quotes from state representatives who do not view it as their duty to mind the MTA, a state authority. One representative from Glen Head claimed that, in the words of Castillo, “the MTA wouldn’t need that money if it kept its house in order.” Michael Montesano said, “It’s just easier for them to go to the taxpayer and to the State Legislature and just ask for more money. And if you don’t give it to them, there’s the threat of more service cuts.”
Of course, there’s the threat of more service cuts or fare hikes. If the state, the body that granted the MTA a corporate charter and mass transit oversight, doesn’t deign to fund transit, then the MTA can balance its books through only fare hikes or service cuts. This isn’t complicated policy; it’s simple economics.
For its part, the MTA says it “welcomes” an audit and, in fact, is the subject of numerous audits conducted at both the state and city level. “At the same time, this current administration has undertaken the most aggressive cost-cutting initiative in the history of the MTA, leading to more than $700 million in recurring annual cost savings,” MTA spokesman Kevin Ortiz said to Newsday.
A forensic audit is all well and good, but what will be the point? Thomas DiNapoli will discover that, shockingly enough, the MTA wastes money. He’ll discover that the authority has redundant staffing levels, that its corporate structure was built through combining six different entities into one with little to no consolidation. He’ll find wasteful policies and poor capital oversight on the part of the state, and a state-mandated bidding process that doesn’t leave the MTA with the best possible contractors.
Of course, lawmakers won’t be satisfied with a forensic audit. If given the chance, they’ll move to repeal the payroll tax entirely. That’s why Nassau County and the Town of Chester, among other municipalities, are joining a suit to halt the payroll tax. If successful — which they probably won’t be — what would happen?
As I’ve mentioned over the past few days, the MTA is relying on the payroll tax for up to $1.5 billion a year over the next four years. In 2011, the payroll tax is expected to be over 27 percent of total government subsidies for the MTA’s operating budget. Were the state to repeal it without an adequate replacement source of revenue, the consequences would be disastrous. The MTA would either have to raise fares by 30 percent, slash service to levels never seen before in New York or begin to contemplate defaulting on its payments.
So politicians can beat their anti-tax drums. Republicans can speak out against it; Andrew Cuomo doesn’t have to embrace it. But without this necessary evil, the MTA won’t be a fiscally viable agency. Give me congestion pricing. Give me East River Bridge Tolls. Just don’t take away the payroll tax.
12 comments
I can support the argument against the payroll tax for one main reason: the money that was raised for the MTA by that tax was offset by a near-equal reallocation of Albany’s other MTA funding to its “General fund”. This is based on memory, so I’d appreciate someone doing some fact-checking on my claim, but I believe that the payroll tax’s net effect was funding state obligations other than transit.
We want every paper clip, every pencil. <– What an imbecile! This is so 80's it is nauseating (and I love the 80's!)
Hypothetically, if all the governing bodies that are currently auditing the MTA instead provided the same amount they are spending on the audits to the MTA's operations budget, how many bus and subway services would still be running today that instead were terminated late June? How many seniors would still have their local buses? How many of the off shift workers would still have better transit options?
Boo to Mr. Paper Clip and his ridiculously silly colleagues and also to the governing bodies currently auditing the MTA. Fund the buses instead. Poor form indeed!
It’s not that audits are bad or that the MTA doesn’t spend several times more than it needs to for the service it provides — but this audit won’t come to anything. It’s not the cost of paper clips that have put the MTA where it is. It’s the fact that the MTA pays more than twice as much as needed for what’s basically unskilled labor. (How do you know you’re paying “too much”? If a job notice attracts more than two qualified applicants, you’re paying too much. Most MTA job openings attract several hundred qualified applicants.) The other problem, which the audit will uncover if it’s in any way honest, is that the MTA has about twice as many workers as needed to do its work.
The logical demand, of course, would be that the MTA slash wages and benefits while reducing its work staff by about half over the next four or five years (which would let you do a lot of it via retirement and give remaining workers time to ramp up to normal-world productivity standards gradually, so the strain would not kill them). Trouble is, that would not only violate current contracts, it would also destroy the career of any politician who seriously suggested it, even an upstate Republican.
Legislators in both parties serve, if not at the pleasure of public sector unions, then only as long as they don’t outrage them. And any effort that would actually make the MTA cost efficient and eliminate the need for the tax would enrage public sectors unions — and is thus impossible. The people who want to eliminate the tax are right that the MTA does not need the tax to offer all that it does — and far, far more — if it operates efficiently. But they are foolish to think either that it is possible for the MTA to operate efficiently or that any New York politician can advance his career by taking on public transit unions.
“The logical demand, of course, would be that the MTA slash wages and benefits while reducing its work staff by about half over the next four or five years (which would let you do a lot of it via retirement and give remaining workers time to ramp up to normal-world productivity standards gradually”
Cutting salaries will never fly but what can fly is reworking work rules so that you consolidate 50 plus job title into a more manageable number plus pay based on a combined salary plus benefits number. There are 5-10 cleaner and basic maintainer at NYCT . One guy sweeps trains but not stations. Another can not paint and yet another paints over graphiti.
Dumping the conductors and all remaining station agents and combining it into one fare inspector code enforcer title that can monitor stations, trains and select bus. this alone redirect nearly $1 billion in salary and benefits into needed areas and reduce costs because they save vs the mandatory staffing right now
NY taxes cigarettes to discourage smoking. NY is considering a special tax on soda to discourage soda consumption. And this tax on wages paid leads to . . .
As a Suffolk County small business owner, I feel the need to tell the MTA what every business already knows: If you can’t run with the big dogs, stay on the porch. Can’t pay your bills? Stop spending so much. Can’t spend what you don’t have. Why am I being forced to support the MTA? No one imposes a payroll tax so that I can pay my bills. Layoffs and cutbacks. It happens all the time and the MTA should be no different.
Except your business is not a publicly funded service that’s essential to economic functioning of the whole metropolitan area.
You can debate whether a payroll tax is the fairest way to raise transit revenue. You can also point out inefficiencies in the MTA that could be removed to save money. But ultimately the MTA needs public funding to survive and NYC and the whole region, including Suffolk County, need the MTA to survive. While no one likes paying taxes, they are necessary for the public good.
Very well said!
Of course, the MTA can reduce spending. And while some office expenses need to be cut, there’s no real way for them to seriously cut expenses without cutting service. If the revenues aren’t high enough to support the current level of service, then some service simply has to be cut.
Manhattan had too many buses, and this was unnecessary service. One bus went North on 6th Avenue and South on Broadway, (both streets have 4 track subways underneath). This was redundant service which should have been eliminated YEARS ago. So I think the current cutbacks are good as the MTA can reallocate its resources.
Jessica, to be fare to the MTA, a lot of small business and for that matter large businesses have workforces who use the public transportation to come to work. Metro NYC would not be what it is today if it weren’t for the public transportation and if you want to do business here, then you have to pay some sort of tax to support it. If that’s unacceptable, I hear taxes are real low in rural Mississippi (which barely has highways).
I’m changing my username from John to ajedrez (John wasn’t my real name anyway)
I just don’t see what the audit will accomplish. The only thing that they can realistically uncover is wages that are too high, and that is in the union contracts. Of course, all of those politicians want to appease the average person, who still thinks that the MTA still has 2 sets of books (even at the public hearings, there were people shouting “Open the books!”, when the MTA posts all of the budget information on its website.
Now, of course, they could give the MTA the money instead of spending it auditing them, to avoid a fare hike or restore some of the services that were cut on June 27th, but the public would simply complain that it is going to be stolen by the top officials.
By the way, Justin Samuels, that route that you are referring to (the M6) has been replaced by the M5 in the neighborhoods south of Houston Street. It still mostly parallels the 6th Avenue and Broadway subway lines, but at least the section of the route between Central Park South and Houston Street has one service instead of 2. I do agree with you that some of the service reductions actually benefitted the people. The S60/S66 combination gave residents of Grymes Hill direct access to the St George Ferry Terminal for the first time in history, as well as direct access to Port Richmond (though the transfer was simple). These service reductions are a way for the MTA to see which services are unneeded, though I don’t think they should’ve all been done at the same time, as some reductions have a worse impact than others.
The M1 was also eliminated south of Houston.
[…] tax revolt has slowly developed in the suburban counties that ring New York City. Nassau County has filed a suit to overturn the tax, and the future of the levy has become a campaign issue in some of the […]