Home MTA Economics From Cuomo, another raid or just accounting moves?

From Cuomo, another raid or just accounting moves?

by Benjamin Kabak

After Gov. Andrew Cuomo vetoed the lockbox bill, New York’s transit advocates worried that it would open the door to another raid. Now that the governor’s budget is out, there are concerns that Cuomo has again reappropriated transit dollars in a way that leaves the MTA without money it expects, but the details are a bit hazy. The missing money, in fact, may not be from a misappropriation but from a decision made over a year ago to roll back some of the payroll mobility tax.

The Tri-State Transportation Campaign brought this issue to light yesterday. In Cuomo’s budget presentation, the Governor notes that “the Budget will use $40 million in surplus mass transportation operating assistance funds to pay for a portion of the debt service associated with previously issued MTA service contract bonds.”

The $40 million is barely a drop in the bucket for the MTA, and it’s not enough to avoid, say, any future potential fare hikes. But politicians are casting a wary glance. As the Daily News notes, one Brooklyn assembly rep has objected to the budget. “It’s a grab and he shouldn’t do it,” James Brennan said. “There are many possible uses of these funds that would benefit the riding public, from improved maintenance to restoration of service to mitigating fare hikes.”

The governor too defended the move. Suddenly, the same people who are always concerned with the MTA’s debt obligations are objecting to an effort to slowly pay it down. Cuomo has upped state contributions to the MTA’s operating budget and called the debt payments a “legitimate transit purpose.” I can’t get too worked up over this one.

But there’s another item TSTC highlighted that bears further examination:

While the Governor’s budget includes $310 million from the State’s General Fund to the MTA to compensate for lost revenue resulting from the rollback of the payroll mobility tax (PMT) in December 2011, this flat amount (which has been included every year since 2012) could be actually shortchanging potential revenue. The New York State Department of Labor estimates that 218,300 jobs were created in the downstate MTA region from November 2011 to November 2013, which means that additional PMT revenue likely would have been generated from these additional jobs, in excess of the $310 million. This additional revenue may have been enough to offset the proposed four percent MTA fare increase in 2015.

It’s not clear what, if any, effect the PMT would have on job-creation numbers, but it wouldn’t have led all downstate companies to freeze employment expansion. It seems clear the MTA is getting shortchanged here, and that was always a concern when Cuomo rolled back the PMTA. That, and not the debt payment issue, should be the real concern.

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SEAN January 23, 2014 - 5:19 pm

It’s not clear what, if any, effect the PMT would have on job-creation numbers, but it wouldn’t have led all downstate companies to freeze employment expansion.

True, but the PMT could be used as an easy out to let employees go or not even higher them. Think what happens every time the topic of raising the minnemum wage comes to light.

Duke January 23, 2014 - 9:29 pm

Paying down existing debt is good. Taking on debt in the first place is bad unless you need cash NOW and have no other means of raising the money – it only makes things cost more in the long run, the interest payments are effectively wasted money.

jhi January 23, 2014 - 9:53 pm

What were the MTA service contract bonds issued to fund? Were they issued by the state or the MTA?

LarrylLittlefield January 24, 2014 - 6:38 am

You miss the point Ben. Cuomo’s move shows that a fraud is really a fraud.

After running up massive debts in the previous three MTA Capital plans, rational people began to say the MTA had to stop or it was doomed. But stopping without stopping, in effect, maintenance would mean using actual tax revenues to pay for the plan. The legislature didn’t want to do that.

So what it did instead was have the STATE borrow the money INSTEAD of the MTA, which is an organ of the state. See the difference? That debt wouldn’t cost straphangers anything, because the state would pay it back. Not the MTA. That’s what people were told.

So now Cuomo plans to use dedicated MTA tax money to pay the state debt.

What’s the relevance here? What is freaking Jim Brennan’s big idea to fund the next MTA capital plan with less MTA debt? Have the state borrow the money instead, so paying it back won’t cost the MTA anything.

Cuomo’s raid. Brennan’s lie. The MTA’s doom. The next capital plan starts next year. Or doesn’t.

Abba January 24, 2014 - 4:04 pm

I would pay the MTA $100 to have BUsTime in Brooklyn next week.Thats how much I want it

Benjamin Kabak March 5, 2014 - 9:11 am

I have to close comments on this post. It’s getting flooded by spam.

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