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.
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