Home MTA Economics With $320 million gone, cheering the wrong thing

With $320 million gone, cheering the wrong thing

by Benjamin Kabak

With nary a public hearing, a commissioned study or much advanced warning, Gov. Andrew Cuomo signed the MTA Payroll Tax repeal into law yesterday afternoon. With the stroke of the pen, the Governor has followed in the footsteps of his predecessors who refused to guard the MTA’s dedicated revenue funds, and he stripped $320 million in annual funding from the MTA’s budget. It was a dark, dark day for the city’s five million daily straphangers who rely on constant service and affordable fares to power the city’s and the state’s economy.

As the dust settles from last week’s surprise announcement concerning this revenue stream, transit advocates remain dismayed. Cuomo, as Transportation Nation’s Jim O’Grady and Colby Hamilton noted, claims the lost money will be replaced “dollar for dollar.” That’s a lofty claim for a governor who has silenced congestion pricing supporters and seems disinclined to invest in transit. Will that money be replaced on a one-time basis for 2012? Will Cuomo identify a new semi-permanent revenue stream that will help shore up the MTA’s budget? Right now, no one knows.

Even before the ink dried on the bill, though, State officials, nearly all from the Republican Party, were toasting the end of this so-called “job-killing” tax. It’s a tiring and wrong point, one I’ve debated numerous times over the past few years, but that didn’t stop the usual gang of New Yorkers from patting themselves on the back. “I want to thank Governor Cuomo and my legislative colleagues for their partnership to help begin repealing the job-killing MTA Payroll Tax,” Sen. Lee Zeldin, one of the most egregious payroll tax opponents said. “The MTA Payroll Tax has been damaging our economy and restricting the growth of quality jobs in New York. Repealing this tax for all small businesses and schools, and reducing the rate for others, spurs real economic development and helps put New York State on the path towards prosperity.”

“The MTA payroll tax has been an enormous burden on businesses and today we are lifting that burden. More than 290,000 small businesses will now have a greater opportunity to invest in their businesses and invest in creating new jobs,” Senate Majority Leader Dean Skelos said.

The one Democrat who offered a comment seemed to fail to understand the role transit funding plays in the region. “The reduction and, in some cases, elimination of the payroll tax is a step in the right direction,” Assemblyman Kevin Cahill said “I have been fighting against this unfair tax since its inception, and this brings us closer to doing away with it entirely. While the MTA is important to our state and plays a significant role in our economy, the payroll tax placed an undue burden on underserved Hudson Valley communities, making them responsible for a system from which they receive no benefits.”

No benefits! Hudson Valley, a part of New York State, which is largely supported by New York City, which relies on the MTA for economic success, supposedly receives no benefits from the MTA. It’s a laughable thing to claim in public, and I have to wonder what Assemblyman Cahill thinks of his constituents’ collective intelligence.

Even without such absurd statements from Hudson Valley, Zeldin’s claims hit closer to home. Somehow, funding the MTA is “damaging our economy and restricting the growth of quality jobs in New York.” Zeldin should talk to Brooklyn merchants who see their business decline by 80 percent when the MTA doesn’t provide adequate transit service to their areas. Perhaps Zeldin should read Charles Komanoff’s assessment of the impact of the tax cut. He argues how the $320 million in lost revenue will make travel slower and our roads more congested as transit cutbacks drive subway riders to more frequent use of cars and cabs. That — and not some job-starved desolate landscape — is the future of the city without an adequately funded MTA.

Now that suburban interests have succeeded in rolling back over a fifth of the MTA’s projected payroll tax revenue, the answer should be simple: Make the suburban counties pay for it. As long as the city and its business owners continue to pay the payroll tax, the money should prop up New York City Transit’s buses and subways first and the commuter rails later, if there’s enough left to spread around. Then, perhaps, these suburban representatives will start to learn how much the MTA means to them and their constituents. That — or some congestion pricing plan with dedicated transit revenues — seems to me to be the only far way to ensure that key services are maintained in light of an even higher and more crushing debt.

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Adirondacker12800 December 12, 2011 - 11:24 pm

Hudson County, a part of New York State,

While people may joking call Jersey City the far West Village and Hoboken, West Chelsea,,,, Hudson County is in New Jersey…

Mike December 12, 2011 - 11:28 pm

I think he meant the Hudson Valley. But yeah, it’s confusing.

Benjamin Kabak December 12, 2011 - 11:48 pm

It’s fixed now.

David December 13, 2011 - 8:24 am

Billionaires don’t ride subways.

Mike December 13, 2011 - 9:01 am

No it isn’t. Still says Hudson County.

Kevin Cahill December 14, 2011 - 6:35 am

The businesses and residents in the 101st Assembly District, comprised of most of Ulster County and the Town and Village of Rhinebeck in Northern Dutchess County, have been unfairly impacted by this measure since its inception in 2009. As their representative in the Assembly, I have contacted the leadership of the MTA on multiple occasions to seek an opportunity to discuss my concerns and make suggestions to help remedy the situation. Each time my requests have gone unanswered.

Northern Dutchess County receives no MTA services whatsoever. However, the businesses and employees in the region, including the Ulster residents who work in Dutchess, have been responsible for a payroll tax that subsidizes a service to which they have no direct access. The action taken last week was not a cut to the MTA. It merely shifted a small portion of the burden from those underserved communities to the state’s general fund.

Countless residents, small business owners, not-for-profits and hospital officials in the region have repeatedly contacted my office to seek relief from the substantial impact this tax has had on their already strained budgets. The payroll tax is only the latest charge added over and above several other fees and taxes these individuals and businesses uniquely pay for a service they do not receive.

According to data available at the time of its enactment, of the estimated 8.5 million people who use MTA services on average weekdays, only 6,000 are commuters from Dutchess County, roughly 2% of the county population. Yet, businesses and not-for-profits in the region have been held accountable for the same percentage as those located in New York City and the adjacent counties that receive significantly higher levels of services and have substantially more residents utilizing the system.

Considering Northern Dutchess County has been paying in full and receiving little in return, it seems only fair that the MTA expand the services available in those communities. I have repeatedly requested that, at a minimum, the MTA start with a regular, reliable shuttle from Rhinebeck to the Poughkeepsie train station. Additionally, I have sought an expansion of the Board to increase representation for underserved areas to ensure their needs are adequately considered in future funding and decision making.

I certainly understand the value a well maintained and functional mass transit system. I also appreciate the challenges residents of the East Side encounter when it comes to accessing the subway. They do, however, have access to other MTA supported transportation options. For the Rhinebeck residents, there is no train, no bus to take them to Metro North and often no parking if they drive 20 miles to the nearest station.

The communities that I represent are paying a tax for services they are not being provided. From their perspective, any step to reduce that burden is a step in the right direction.

J B December 12, 2011 - 11:44 pm

You mean silenced congestion pricing supporters, not opponents, right?

Benjamin Kabak December 12, 2011 - 11:48 pm

Indeed I did.

Alex C December 13, 2011 - 12:17 am

You know that “Our National Debt” counter they have? They should have one for all the money Albany has stolen and cut from the MTA since the day Pataki came into power. I can’t believe in New York we can’t find a competent person to run for Governor or Mayor who isn’t a complete crook. Damn Anthony Wiener’s Twitter urges.

Bolwerk December 13, 2011 - 9:38 pm

Anthony Weiner was a complete twit who wanted to coddle suburbanites and impose a suburban vision on NYC as much as anyone. We should consider ourselves lucky for not having the risk of him becoming mayor – at least in the near future.

Aaron December 13, 2011 - 2:09 am

[T]he payroll tax placed an undue burden on underserved Hudson Valley communities, making them responsible for a system from which they receive no benefits.

Like you alluded to, I hope that the first cuts are to MNRR and LIRR services. Hell, they could, if they’re legally obliged to provide service, run one train roundtrip daily. That should make the point nicely, although I suspect that many of those suburban knuckleheads wouldn’t get the message no matter what you did.

Anyhow, Ben, was the payroll tax repealed or “merely” eviscerated? The article you link to implies that it was gutted but not outright repealed in a fashion that would exempt all but the largest of businesses from paying it. At any rate, I’ll eat my desk if Albany actually restores all $320m dollar-for-dollar in perpetuity. It’s far easier to repeal a tax than enact one, and something tells me that my desk has little to fear… I’d lay odds (not Romney’s $10,000, though) that this year’s cuts will be restored at about 25%-75% through a one-time allocation, probably through some budget trickery that involves moving money from other MTA allocations to create a new “payroll tax fund;” future years will likely be 100% unfunded due to “unforeseen budgetary constraints.” Sadly, I doubt that the MTA has the autonomy or the political cojones to actually take a chainsaw to suburban services, and I’m sure that it’s only a matter of time before we’re playing the “what subway line goes next?” game.

Anyone missing David Paterson yet?

Eric F. December 13, 2011 - 8:36 am

“It’s far easier to repeal a tax than enact one”

Did you just move here from Idaho?

Streetsblog New York City » Today’s Headlines December 13, 2011 - 9:00 am

[…] Kabak: Make Suburbs Pay for Lost MTA Revenue […]

The Coboalt Devil December 13, 2011 - 9:37 am

California, here I come!

Al D December 13, 2011 - 9:46 am

An empassioned article…love it! For decades now, the State (& Feds for that matter) rob the City blind. They take and take and take, and return little:

NYPD had jurisdiction over NYC. When do you ever see NYS Police patrolling? But the same cannot be said elsewhere.

Our students are 90% of the suburban school kids when it comes to funding. Why are our kids only 9/10 of a suburban kid?

And of course transit…I hope the Prince (Cuomo), antes up $.

ajedrez December 13, 2011 - 10:39 am

Probably something to do with economies of scale. They figure that they can accomplish the same amount with 90% of the funding that they give upstate (we don’t need to bus kids 10 miles into school like they do upstate)

Hank December 13, 2011 - 9:47 am

Republicans in Albany live in bizzaroland. They want tax money from the City to support their upstate constituents and roads, yet continue to slash any attempt to support the City and steal from the MTA. Sort of like feeding arsenic to the goose who lays your golden eggs.

I don’t want to believe that they are ALL this stupid, but it is a tempting conclusion.

Christopher December 13, 2011 - 10:02 am

Republicans in Albany live in bizzaroland.

It’s not just Albany. That’s their homeland no matter where they are.

Larry Littlefield December 13, 2011 - 9:55 am

They carefully applied the same payroll tax cuts to NYC as to the suburban counties to avoid this very conclusion.

You want to do something about it? Take my suggestion, and eliminate the MTA payroll tax and MTA bus service. NYC could keep the tax, and use it subsidize buses it would operate. The suburbs could come up with their own plans.

Meanwhile, get the proportion of subway operating costs covered by the fare up, perhaps offset by a higher minimum wage in Manhatttan S. of 110th Street. And make the commuter railroads match that higher share, or shut down.

Frank B. December 13, 2011 - 11:14 am

This is absolutely terrible. How many times can the MTA be cut before the system goes under?

Honestly, this is egregiously ridiculous.

SEAN December 13, 2011 - 11:49 am

This is absolutely terrible. How many times can the MTA be cut before the system goes under?

Isn’t that the goal?

Justin Samuels December 13, 2011 - 12:45 pm

Maybe the MTA in its current form going under would be good. Put New York City Transit back under NYC control, and let the mayor be responsible.

pete December 13, 2011 - 12:08 pm

The MTA offers nothing to the Hudson Valley. A train that runs once every 2 hours is useless. Greyhounds and the like are faster. Of all MTA Counties, the Hudson Valley and Dutchess get nothing. No heavy rail metro, no buses. If a county wants its own buses, it has to pay for them http://midcitytransit.com/midd.....tMap08.pdf

http://news.google.com/newspap.....%2C4240747 MTA wont provide it.

Rob December 13, 2011 - 6:19 pm

It costs between 5 and 10K annually for a car. Metro North and the buses are a bargain. Now if we just had more and better buses, and our towns stopped allowing development to sprawl….

Roy December 13, 2011 - 12:21 pm

Compared to what I was paying for a similar commute in the UK, Metro-North is a steal, about half the monthly cost. I think we suburban commuters could pay more…

normative December 13, 2011 - 12:38 pm

The UK rail can be quite expensive, especially compared to other Euro-rail systems, but it much more extensive and there are certainly more trains per hour. There are tons of rail stations within zone 1 and 2, and rail lines going every which way.

The sad thing is all the suburban areas need a rail system into the city, or they will forced to drive, and thus increase the amount of cars on the road.

Alon Levy December 13, 2011 - 7:19 pm

Compared to what you’d be paying in Paris, Metro-North is robbing you blind, and providing inferior service.

Phil December 13, 2011 - 4:52 pm

As the finance guy at a small business I can say that the impact from this tax break will only save us anywhere from 3-6 thousand depending on how the implement it and based on year to date payroll #’s.

That money saved won’t really do anything in terms of creating “jobs” but to be honest 7k per year does make a difference for a small business much like 700 goes a long way for the average house hold.

Today’s Headlines | Body Local NYC December 13, 2011 - 5:00 pm

[…] Kabak: Make Suburbs Pay for Lost MTA Revenue […]

jj December 13, 2011 - 5:41 pm

Cuomo’s running for President in 4 years , so his record will reflect whatever he needs that makes him look electable

Alex C December 13, 2011 - 8:49 pm

I’m hoping Hillary primaries him and beats him. It’s a matter of who the Dem nominee is, as the Republican Party will have finished killing itself by then.

Bolwerk December 13, 2011 - 9:51 pm

Hmm, the way I’m seeing this (correct me if I’m wrong), this is costing about 6¢/transit ride – and that’s assuming the cost is recovered entirely on the backs of subway and NYC bus riders riders (which may not be a stretch, given how Albany works).

Matthias December 14, 2011 - 12:20 pm

Don’t you mean to say:

“He argues how the $320 million in lost revenue will make travel slower and our roads more congested as transit cutbacks drive subway riders to more frequent use of cars and cabs. That — and not some full-employment utopia — is the future of the city without an adequately funded MTA.”

‘If you give a mouse a cookie…’ :: Second Ave. Sagas December 19, 2011 - 12:35 am

[…] proclaimed the usual band of anti-payroll tax voices. As we know, they are cheering on the wrong thing, but they’ll learn the hard way once the MTA must cut services to make up the budget […]


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