State Senator John Bonacic wants to repeal part of the payroll mobility tax.
Over the past few months, as New York state legislators have made noises about repealing the payroll mobility tax, I’ve continued to point out the need for that money. Albany cannot strip away any of the $1.3 billion the MTA expects to see in payroll tax revenue without finding another source of money for the beleaguered transit agency. Most state representatives do not seem wise to this fact, but a few, in fact, are.
Enter John J. Bonacic. The Republican State Senator from the 42nd District has submitted S. 4774, a bill that would eliminate the payroll tax in Orange, Dutchess, Putnam, Rockland, Westchester, Suffolk and Nassau Counties and would instead allow New York City to institute East River bridge tolls. The proceeds from that move, which Bonacic believes would be more than enough to make up for the decreased payroll tax revenue, would help fund the MTA.
“Since the tax’s enactment, the MTA has not demonstrated it is any more effective in providing services to the people of the Hudson Valley and Long Island,” Bonacic said in a statement last week. “It remains, as I said when the tax was first proposed, ‘taxation without transportation’ on the people of our region.”
In describing the impetus behind the bill, Bonacic issued an impassioned assault on the payroll tax. His office’s release says:
According to a 2003 analysis, East River Bridge Tolls: Revenue, Traffic, Mobility and Equity Impacts; prepared by Schaller Consulting, tolls on the East River Bridges would bring in $522 million in annual revenue if the city adopted toll charges between $2.50 and $5. In comparison, an analysis done in June 2009, by State Comptroller Thomas P. DiNapoli projected that the MTA tax would bring in $394.3 million in revenue from Long Island and Hudson Valley. That means the bridge tolls would be more than enough to make up any lost revenue if the MTA payroll tax ended outside of New York City. However, the accuracy of the Comptroller’s initial projection has come into question given the current recession – meaning perhaps even less revenue would be necessary to make up the difference if the MTA payroll tax was eliminated.
“People commute to New York City from New Jersey and Connecticut. My proposal is not a pie in the sky repeal of the MTA tax, which leaves a gaping hole in the MTA’s budget. Rather, it puts the financial onus on the people who commute to New York City and drive around New York City, rather than the small businesses, non-profits, and local governments whose employees, by virtue of the fact that they are working here in the Hudson Valley and Long Island, are not using the MTA to go to or from work,” Senator Bonacic said.
Town of Chester Supervisor Steve Neuhaus, whose community is part of a lawsuit to declare the MTA tax unlawful, likes Bonacic’s alternative. “The MTA tax is also a property tax. Town’s like Chester spend thousands of dollars on the MTA tax. That cost is passed onto our property taxpayers. Simple fairness dictates that those who use the City’s bridges and subways and train system ought to pay for it. Orange County’s small business owners and local governments, whose employees do not use the MTA to get to and from work, should not be on the hook to pay the MTA tax. Senator Bonacic’s plan is fair, which is what we should expect from our government.”
There are, of course, a few concerns. Neuhaus’ comments do not seem to offer a full view of the taxation picture. While transit service to the nether reaches of certain upstate and Long Island counties may not be as frequent or as comprehensive as many would wish, that the trains go do these towns adds to the property value. Even if businesses do not need the rails to go to and from work, they benefit from the added access. Ideally, the payroll tax would help capture that value without going overboard. It’s hard to say if it does.
Meanwhile, the toll plan comes with a silver lining. While the payroll tax repeal would be immediate, Bonacic’s bill would be contingent upon City Council action. If our city representatives do not approve a bridge toll plan, the payroll tax would be diminished, but the MTA would not be able to recoup the lost dollars. That’s not an ideal outcome by any means.
It’s tough right now to see much action on this issue. At some point, the state will address the payroll tax and MTA funding, but more immediate issues — including the giant $10 billion hole in the capital plan — will take center stage this summer and fall. Slowly, though, momentum is building for some kind of action on the payroll tax. That money, though, must be replaced through other funding mechanisms.
25 comments
Basically, this plan wants NYC to solely pay the payroll tax that also subsidizes the suburban commuter rails while the suburbs get completely off the hook. In addition, they want to implement bridge tolls that not only affects the suburbanites, but also outer-borough residents who are also responsible for the payroll tax. Something about this funding mechanism seems very lopsided.
I’m all for bridge tolls/ congestion pricing reducing the payroll tax, but the suburbs will have to pay their fair share. As suburban regions, Long Island and the Hudson Valley owe their value to a healthy, transit-dependent central city. I don’t see this plan flying through the NYS Assembly.
Bonacic’s plan might basically work, but did you notice that there’s no tolling on the Harlem River bridges? It makes me wonder if the scheme was designed by someone from Westchester, which would make out like a bandit.
There are no perfect proposals, but this is a pretty good one. The fact is, except for possibly Nassau County, most of the outlying counties receive far less value for the tax than the amount they pay. They have every right to be unhappy. Perhaps the ideal proposal would leave those counties still paying something, but complete repeal outside of NYC, offset by tolling the East River bridges, would get my vote.
Obviously, as the post points out, repealing the tax while merely giving NYC the option (but not the obligation) to toll the bridges could be disastrous.
Are you sure about it? The richest suburbanites work in the city and pay city payroll taxes, so the per capita payroll tax in the suburbs isn’t as high. And although transit ridership in the suburbs is much lower than in the city, the per rider subsidy is much higher.
Additionally, the payroll tax rate is scalable, i.e. it is LESS in Suffolk and more in the 5 boroughs, reflective of the ‘true’ transit impact in a particular community.
The legal fees associated with these lawsuits probably end up costing as much as the payroll tax itself.
And lastly, need I invoke the following: Suffolk and Orange Counties would be just like any other county were it not for their access and proximity to NYC. So everyone wants to kill the goose that lays the golden eggs it seems.
Actually, the tax is not scalable, which is one of its flaws. It’s a flat 0.34% of payroll for covered employers in the covered counties, regardless of how much MTA service they get.
Oh, OK. Perhaps I was recalling one of the proposals put forward where there was a scaling. Either way, the miniscule percentage makes this more of a political fight than a financial one. School and/or real estate taxes are much greater than this.
Remember, it’s paid by businesses, so it’s not a property tax. Multiply 0.34% by a decent-sized payroll, and pretty soon you are talkinga about real money.
I have no inherent objection, but I do think this whole thing needs to be looked at holistically. Bridge tolls should surely benefit NYC (streets preferably, transit if necessary), not the commuter railroads. NYC, OTOH, needs to be put in a position where it is advantageous for the city to take some responsibility for transit funding and MTA oversight.
Any “patch” changes are rather thoughtless, I think. We need better financing, funding that is sourced closer to the people getting the service, and recognition that local governments are going to have to play a part in oversight/administration, decisionmaking, and the rewards. NYC is far from perfect in regards to how it finances transit, but the city is at least trying to invest in transit. Nassau politicians may bitch about the payroll tax, but they aren’t exactly eager to fund their buses.
This has the potential to be a great change if to moves more of the MTA’s funding under the control of local rather than state officials. That said, I think tolling roads to provide revenue for transit is probably not a stable political outcome, nor is there any logical consistency to the idea of transit subsidies scaling with the number of people driving over a bridge. Bridge tolling to me functions best if it’s simply a lever for the MTA to raise its prices.
Bridge tolling to me functions best if it’s simply a lever for the MTA to raise its prices.
This is exactly what will happen as the bridge traffic pluunges because of tolls. The last time fuel prices spiked, bridge and tunnel traffic dropped. They would angle the tolls to function as the congestion core charge and once that is done, the fares across all of the MTA network would then go up.
The problem with this is that I do not trust the city to invest that money into bridge repair/replacement and the transit system. I expect them to milk the rapid transit infrastructure until it breaks.
Bridge traffic wouldn’t “plunge.” Just look at the traffic on the bridges and tunnels that are already tolled. The vast majority of people driving into the city have very good reasons for coming, and have no other acceptable means of getting here. Either they do not live near transit, or the transit options near them are poor. Very few of them are going to stay away, just because the trip now costs $5 more.
And if they do, good riddance. At least congestion will drop a bit.
Actually, though, there’s a possibility this could increase average traffic – at least if the tolls get equalized. Tolls aren’t the only cost of driving borne by the driver. Time is another, and a wasted 30 minutes in traffic is worth a lot more to many people than even a $10 toll. People probably make dumb trips to avoid the Queens-Midtown Tunnel because it’s tolled and the Queensboro bridge isn’t.
Um, no. Some people will be induced to drive by lower congestion, but if there are too many of them, then congestion will increase too much. There is no way a toll can increase traffic, because at equal traffic level there’s still the same congestion cost, plus now the toll.
Um, yes. It’s unlikely and paradoxical, but it is possible. Average traffic/crossing only needs to go up – it doesn’t mean the tolls increase traffic on the newly tolled bridges (though that could happen eventually, as people adjust to newly available capacity). As motorists shift away from inefficient trips on currently untolled crossings to take the tolled ones they should have been taking anyway, there’s no reason it’s impossible for average usage and average efficiency to increase.
It just takes a little stupidity to bottleneck the whole system – always the problem with highway dependency.
If the tolls are causing bridge traffic to plunge your toll is probably too high, probably above the revenue maximizing level. The actual toll should be well below that level; probably no higher than the traffic-flow optimizing level or natural congestion charge.
I don’t know about that. I could easily see the revenue-maximizing level being quite a bit more than the traffic equilibrium for reasonable throughput (whatever you want to call that – traffic moving the speed limit?). These are two fairly unrelated goals.
When will anyone start to question the claims made about this and other taxes? “The MTA tax is also a property tax. Town’s like Chester spend thousands of dollars on the MTA tax. That cost is passed onto our property taxpayers.” Thousands of dollars among an entire town amounts to a negligible increase in taxes. The system is far from ideal, but get real.
Well, here’s how you’d balance the funding. Eliminate the payroll tax and eliminate that counties equivalent share of public transit. That would give Orange, say 3 trains/day. Let’s see how much their commuting constituents have to say about that then.
I have to just chime in for a second. I take the train to Port Jervis frequently to visit family….They do not live in Orange County…They actually live in Pike County, PA right across the Delaware. I realize you’re probably speaking in hyperbole but the train schedule to and from Port (especially on a Sunday) is already sparse.
Why are Westchester, Nassau, and Suffolk exempt from the payroll tax? Last time I checked, don’t they have MTA service out there? Are they willing to give up that train service? Otherwise, they should be forced to pay the tax.
Nassau definitely doesn’t have an argument to be exempted. Between the LIRR and the MTA operated LI Bus, Nassau has a lot of service for a suburban setting. Mangano can try and privatize the bus all he wants, but it doesn’t change the fact that over a million people are able to live in Nassau County because of the large commuter rail network that reaches most parts of the county.
Very few of them are going to stay away, just because the trip now costs $5 more.
The cash toll is $6.50 each way and to avoid bridge & tunnel shopping, ALL the bridges will likely implement this toll. To go from zero to $6.50 one way is a big deal. To make the statement that this is not a big deal is to misunderstand the people using those bridges. Most of the vehicles are not Bimmers, Benzes, and Bentleys. I am sure that many of the trips are necessary, but that does not mean they won’t go away if the economic justification for them is no longer there.
We have seen time and time again that the city justifies revenue generation by talking about the environment or congestion. We have also seen that once the revenue is generated, it becomes addictive to the point where parking agents are writing LEGALLY PARKED cars tickets. People continue to forget that the purpose of congestion pricing is for the revenue generated on the bridges to replace virtually all NYC subsidy to the MTA. That includes the $422M to MTA Bus, plus the standard subsidy to the MTA. This is not new revenue. It is a revenue shift. For each dollar in surplus on the bridge, this is one less dollar from the city.
People probably make dumb trips to avoid the Queens-Midtown Tunnel because it’s tolled and the Queensboro bridge isn’t.
That’s right. A sizeable number of those people will stop making the trip if they had to spring for $6.50 one way. People will actually drive less when they can’t afford to keep driving as much as they do, but if the transit system can’t absorb them at rush hour, there will be problems.
If the tolls are causing bridge traffic to plunge your toll is probably too high, probably above the revenue maximizing level.
Let’s put this in perspective. The free ferry from Brooklyn Army Terminal to Manhattan carried 1,500 people per day for almost two years after 9/11. New York Water Taxi took it over and charged $4. 60% of the traffic vanished right away. It is not a simple task to predict how far above free people are willing to pay. Granted, the bridges have a much higher transportation value than this ferry route, but the fact remains that going from free to $6.50 is a massive step that will generate lots of revenue initially, but it will be far below estimates and will not add one dollar to the transit system.
Why are Westchester, Nassau, and Suffolk exempt from the payroll tax?
They will get a reduction, not an exemption. They understand that if the payroll tax is fully axed, the MTA would boost fares into orbit and minimize capital spending. The New Haven Line riders understand how this ends as they suffer through said conditions in Connecticut daily.
Many of the trips on the bridges are probably necessary, but presumably some of them are transit-substitutable.
I think you’re kind of overblowing the effect of a $6.50 toll, however. The saved time and maybe even gasoline (for larger vehicles) probably more than makes up for the cost in many cases. In a few where it doesn’t, oh well, the trips disappear. If a trip isn’t worth a $6.50 toll, why even take it?
[…] has led to much weeping and wailing and gnashing of teeth. If only the city could toll those bridges, it could turn Manhattan into a […]