Assembly Rep. James Brennan has put forth legislation aimed at addressing the MTA’s capital funding gap.
As the MTA enters a fourth month of uncertainty regarding the agency’s proposed five-year plan, we’ve heard a big fat nothing from Gov. Andrew Cuomo’s office, and within the city, Mayor de Blasio is content to let Albany fiddle while asking the feds for more national support for transit. But while the Move New York fair tolling plan garners a groundswell of support, Assembly representative James Brennan is set to introduce a new piece of legislation aimed at shoring up capital funding for transit.
Brennan’s plan, announced via a Dana Rubinstein piece and subsequent Facebook post, could generate additional revenue against which the MTA could bond out its capital plan through a combination of gas and income taxes and would force New York City to pony up more money. That latter piece is important, and I’ll return to it soon. Brennan’s proposal is far from the platonic ideal, but it’s the first sign of real life we’ve seen from Albany on the MTA’s capital funding woes.
“To say that the MTA’s $14 billion shortfall is extremely alarming would be an understatement,” the Brooklyn representative said. “Now more than ever we need to think creatively about how to address our transportation funding needs as well as how to generate reliable consistent funding for our state’s infrastructure. For too long the state’s infrastructure and mass transit systems have operated with unreliable funding.”
His plan revolves around a new New York State Transportation Infrastructure Finance Authority that would issue the bonds to finance $20 billion in various MTA and other state infrastructure projects. My issuing the money under a new authority, Brennan’s proposal would not necessarily add more debt to the MTA’s already-sagging books, and it would instead rely on a new state agency to carry the fiscal load. To generate the revenue needed to issue these bonds, Brennan has called for a ten-cent increase in the state gas tax and an increase in the income tax rate for those earning between $500,000-$2 million a year of ½ of 1 per cent.
Brennan estimates these tax increases would generate around $1.25 billion per year. Yes, it’s true there are tax increases,” he said to Capital New York. “The idea of this is we are not running away from our problems.”
The third piece of this puzzle is more intriguing. Brennan’s legislation would demand that New York City pony up a mandatory contribution, starting with $60 million in year one and increasing each year of the five-year plan by $60 million annually. The contribution under this bill would thus be capped at $300 million. How the city generates this money is up to Mayor de Blasio and the City Council.
And therein lies the rub. Brennan’s plan isn’t Move New York. As Stephen Miller at Streetsblog wrote, “It lacks most of the traffic-busting, safety-enhancing benefits of toll reform.” But by essentially forcing the city’s hand, Brennan’s plan could spur City Council to pass a a home rule resolution requesting Albany approve a Move New York plan to help generate the revenue required by Brennan. It’s a roundabout solution to a tricky problem, but, as I said, someone is thinking about it.
So far, de Blasio’s and Gov. Cuomo’s offices have issued platitudes. Cuomo’s office said that efforts to solve the funding gap “will continue with all stakeholders” while de Blasio said he is “committed to investing in our infrastructure, which will only come with strong partnership between all levels of government.” The MTA, which won’t go to bat for any particular solution, expressed a desire to “engage in a robust dialogue” on closing the $14 billion gap.
For now, Brennan’s plan is the dialogue, but as the state has passed its budget, watchers expect Cuomo to begrudgingly turn some attention to the MTA’s funding gap. The ideas today start with gas and income taxes. Where it goes after is up for debate.
29 comments
While I disagree with his funding methods (the Move NY plan raises much of the money needed with much better results for traffic), it is nice to finally see someone in Albany at least start the debate.
We really need a few people up there to champion the Move NY plan.
MoveNY raises ~one third of the money needed. They want to paper over that by dedicating ~twenty years of revenue to five years of spending. You need Brennan’s tax hike, Move NY, and something else. Either cutting costs or more revenue. Otherwise you’ll be back in this same spot before long.
I can hear the upstate polls & the voters screaming right now… TAX INCREASES! THE EVIL MTA! blah, bla, blahh!
Brennan’s plan is a good one… and it’ll get some upstate support.
Especially the income tax increase. I have to say, you can probably count on the fingers of both hands the number of upstate voters in the income bracket which would see that tax increase. Those are suburban-NYC income numbers, not upstate income numbers.
He calls an additional tax on people making 500k a “millionaire’s tax”. Why not start the tax on $1 of income and make everyone in NY a millionaire? Also, it’s very odd that the tax, at least as reported is only on the band of income between 500k and 2 million. Nothing over 2 million? Maybe there’s a sense that in the band lies people who are relatively high income but not able to move around as easily as those who make more?
I’m not sure I’d agree with anyone who says that this will “start the debate” or some such. NY pols have endless tax raising ideas, and this one seems if anything less fully baked than most.
I think this is why: http://www.forbes.com/sites/ja.....s-that-is/
http://www.tax.ny.gov/pdf/curr.....hedule.pdf
For married filing jointly the tax rate from ~300k to ~2.1 million is 6.85%. 8.82% above that. He’s talking about adding a new bracket for income in the 500k-2.1 million income range at 7.35%. Still much less than the top bracket.
If you make 500k you don’t pay a dime in the new tax. If you make another hundred dollars on top of that you owe fifty cents.
They are going to fund the capital plan with fifty cents? In the truthy world of talking points, taxes don’t cost very much yet somehow generate enormous sluices of indispensable revenue. So at 400k, you’re exempt! Huzzah! So you just pay your 40% federal income tax, your 4% Obamacare surtax, your 3% city income tax, your 7% state income tax, and the standard 15% federal payroll tax, generously split with your employer. Piece of cake. I won’t even mention the sales and property taxes you’ll pay from what’s left. Plenty of capacity there to cough up another few points for a good cause. And all the causes are good, after all.
OASDI/FICA cuts off at 118,000. I should have such problems.
Yup, cuts off at 118k and replaces, maybe, 25k in retirement income if your lucky enough that it’s still paying out when you retire. What a deal.
If the Federal Government isn’t making Social Security payments you will have much bigger problems than that your benefit isn’t being deposited into your bank.
Brennan’s plan would be a nice complement to Move-NY.
Aren’t we deep enough it debt? What do we do five years from now. More to the point, what happens in the next recession when the state starts deducting the interest on the next $20 billion of “non-MTA debt” from the MTA’s “dedicated” revenue stream? The way it has been raiding the MTA and the Transportation Trust Fund for the past 20 years?
In any event, for those interested, I’ve posted spreadsheets with NYC taxes and other revenues, spending and debt, per $1,000 of NYC residents’ personal income, compared with the U.S. average, other parts of (and every county in) NY State and NJ, and other counties and states around the country. From the 2012, 2002 and 1992 Census of Governments.
This puts transportation expenditures and funding in the complete context. It also shows we are already deep in debt with high taxes. And collapsing services in some cases. Thanks to being ruled for 20-30 years by Brennan and his contemporaries in Generation Greed.
I’ll be writing up my take on this information over the next few months, but I’ve put up the tables first hoping that there are some open minded people willing to look at them and make up their own minds.
https://larrylittlefield.wordpress.com/2015/04/12/background-and-databases-2012-census-of-governments-state-and-local-finance-data/
Would you be more supportive if Brennan’s proposed funding and the MoveNY proceeds were funneled directly to MTA’s capital budget and not towards additional bonding?
Massive expenditures such as pubkic transportation, airports, and highways will always be bonded out. The debt is paid back by the taxes levied. You cannot apply household economics to government agencies. They will never save billions in the Bank before they start out these projects.
We could. But we go and elect Republicans who cut taxes to get more revenue which puts us back in debt.
… back in 2000 the discussion was about what paying off the national debt was going to do to the economy. We were projected to pay it off in 2012. We could have used the surpluses of 2013 and following years to fund an infrastructure bank. States and municipalities could have borrowed money at low or no interest. But then bankers wouldn’t have bonds to sell and rich people wouldn’t have had bonds to buy.
The pension and other retirement funds are mainly invested in bonds (especially government). Debt benefits anyone who collects a pension or has a 401k (bonds are safer than stocks). Insurance companies invest their money in bond markets too (so anyone who has an insurance policy is a beneficiary of debt). Debt is merely a way of making money flow around. Large institutions and wealthy people buy government debts and therefore put money into circulation.
You can never apply household economics to the government nor to infrastructure. Government debt does not hurt the general public. Only people in the public who don’t understand finance think debt is bad because they think of some poor person who can’t pay their bills.
The federal government can simply “print” more money if it can’t meet its obligations.
State finances are still constrained by their ability to tax economic activity. So the state and MTA are subject to an economic environment more resembling household economics.
The state nor the MTA do not have incentives to save up money like a household.
Their budgets are based on either the revenue that they will have coming in over a period of time and how much debt they can raise.
A household would consider saving money up over a time period before big expenditures. The state never would. The state and the MTA have powers to grant themselves more revenues (raise taxes or raise fares) that households do not.
They may not have much incentive to save, but the implications of overextending themselves are pretty similar.
Why should the government be interfering with the fabulous free market by issuing bonds?
To keep rentiers happy, presumably.
(Nobody really believes in “free markets”. They’re just used as an excuse when rent-collecting fatcats want to loot money.)
Yes. I want ongoing expenditures paid for on an ongoing basis. And normal replacement is an ongoing expense. It it keeps being paid for with debt, and the existing debt keeps getting refinanced, eventually 100 percent of MTA revenues will go to pay off debts.
“For too long the state’s infrastructure and mass transit systems have operated without unreliable funding.”
That’s supposed to be “without reliable funding” or “with unreliable funding”, right?
Yes, this opinion might be unpopular, but MTA really needs to get a grip on their construction management. Why is basically every project budgeted at over a billion dollars per mile? EVEN WORSE, even that’s not enough to cover the final costs.
Yes, not all of the capital budget is capital construction. I get that. But given that the IG has found lots of waste and fraud in MTA’s maintenance department, I’m pretty sure upkeep costs can be dramatically cut as well.
The links I put up yesterday didn’t have the desired effect. Lots of people looked at the post, but only a handful downloaded some of the spreadsheets to look at the tables.
Anyway, for those who like things spoon fed, I’ve put up my first post using the Census of Governments data, on taxes.
https://larrylittlefield.wordpress.com/2015/04/14/taxes-2012-census-of-governments-finance-data/
The fact that we need more taxes, given how much higher our tax burden is than anywhere else, just shows up how badly Jim Brennan’s generation has screwed those coming after.
It is all about who gets taxed.
For decades now, the poor and middle class have been taxed out the wazoo, while the filthy rich have barely been taxed at all.
I don’t know if poor people need to get taxed less or not, but for openers, we could stop loading them up with user fees, radically increased fares and tolls and other regressive offloads of formerly government paid services and whatnot. That stuff is basically what happens when the Republicans gut the budgets and the governments can’t continue providing the same levels of services.
Previously, those same services would have been paid for with money raised by more or less progressive taxation; now, they are paid for more directly by users. Due to a general reluctance to do this, some services and potential improvements are lost in the process.
In the big picture, people have let their fears of being taken advantage of outweigh their compassion for the less fortunate.
Crime’s rising
Taxes rising
same old same old
.