MTA Politics

With the state legislature’s term rapidly expiring, Republicans in Albany cannot scrounge up enough bicameral support to overturn the controversial MTA payroll mobility tax, Judy Rife reported today. Despite the fact that State Republicans will vote for repeal today as a symbolic gesture to curry favor with their constituents, the Assembly will not be following suit. “We have several bills pending in the Senate, but we don’t yet have a partner for any of them in the Assembly,” a spokesman for Dean Skelos said to the Albany-based reporter. 

Assembly Democrats, well aware of the GOP’s repeal efforts, are not inclined to address MTA funding over the next few days. “We have no plans to change the MTA payroll tax,” a Sheldon Silver spokesman said.

Over the past few weeks suburban representatives who campaigned on anti-payroll tax platforms have ramped up the call for a repeal, but to me, their arguments seem spurious at best. Lee Zeldin, for instance, claims that the MTA can generate over $1 billion in cost savings through internal efficiency improvements, but the numbers just aren’t there to support this charge. Without another source of funding then – be it congestion pricing or bridge tolls – the MTA can ill afford to lose the payroll mobility tax revenue. As flawed as it is whet tax must remain.

Interestingly, Rife notes too that while politicians have called for a forensic audit of the MTA, they have also refused to pass a bill that would fund such an audit. Good ol’ grandstanding, ain’t it grand?

After countless raids and misappropriations of supposedly dedicated MTA funds, a coalition of MTA workers, business leaders, transit activists and state politicians have started to push for a transit funding lockbox. Spearheaded by State Senator Martin Golden and Assembly Member James Brennan and with the support of Transportation Alternatives, the Straphangers Campaign and the TWU, among others, the bipartisan effort could provide another piece in the MTA funding puzzle, and it is a solution long necessary to protect transit funding in New York.

“Albany must keep its promises. Taxes created to fund the MTA should be spent on the MTA. Albany has to stop raiding funds legally dedicated to transit, the environment, roads and bridges,” John Kaehny of Reinvent Albany, whose group has long called for a transit lockbox, said. “Creating a tax for a special purpose and then spending it on something else, is bad policy and bad government. It undermines public faith in government, and fuels cynicism.”

The measure, announced last week by Golden and Brennan, has garnered little press lately, but Allan Rosen brought it to my attention in his latest COMMUTE column on Sheepshead Bites. The bill currently has been referred to committee in Albany, but with some loud and powerful voices behind it, it could move quickly.

“This legislation is for those who ride the buses and trains in New York City and have been asked to pay more for less service,” Golden said in a statement. “The management of our transit system cannot be built around a misguided policy of increases and reductions. It doesn’t make sense that while the quality of the commute of thousands has deteriorated; it’s costing more for them to travel.”

Brennan, the Democrat, echoed his Republican colleague’s sentiments: “The transit system needs every dollar of dedicated tax revenue to pay for mass transit, not diverted to provide budget relief for the State’s deficits. Further sweeps by the State for the MTA’s dedicated funds will be a disaster for mass transit, and this legislation will provide needed protection.”

The bill, which is available in full here, is a simple one. “Diversion of funds dedicated to the Metropolitan Transportation Authority and any of its subsidiaries to the general fund of the state is prohibited,” it says. The bill continues:

The director shall be prohibited from diverting revenues derived from taxes and fees paid by the public into a fund created by law for the expressed purposed of funding the MTA or any of its subsidiaries into the general fund of the state or into any other fund maintained for the support of another governmental purpose. No diversion of funds can occur contrary to this section by an administrative act of the director or any other person in the Executive Branch but can occur only upon a statute enacted into law authorizing a diversion that would otherwise be prohibited by this section.

In other words, the legislature can still divert funds, but if it does so, it must adhere to a series of stringent reporting requirements. Any diversion must include the following:

• The amount of the diversion from dedicated mass transit funds.
• The amount diverted from each fund.
• The amount diverted expressed as both monthly transit passes and EZ-Pass toll crossings.
• The cumulative amount of diversion from dedicated mass transit funds during the proceeding five years.
• The date or dates when the diversion is to occur.
• A detailed estimate of the impact of diversion from dedicated mass transit funds will have on the level of mass transit service, maintenance and security.

Essentially, if anyone in Albany is going to divert MTA funds away from transit, they have to be willing to lay out exactly what it means to the millions who rely on the subways, buses and MTA crossings every single day.

Golden, not a supporter of either the Ravitch plan or congestion pricing, has taken on an important role in New York City transit policy. He sits on the Capital Program Review Board, and despite his tenuous relationship with last decades’ funding measures, he has been vocal in calling for an end to these transit raids. With the right allies — including transit workers — this measure could gain momentum.

“The diversion last year of funding for public transportation resulted in the largest service reductions in New York City history,” John Samuelsen, head of the TWU, said. “Pinched funds this year will lead to additional service cutbacks, more dangerous stations and platforms, increased breakdowns of the rolling stock, and a needless decrease in quality-of-life throughout the transit system. The Lockbox legislation is a rational and necessary approach to protect this vitally essential public service, and to speed the economic recovery not only for the City but for the entire region.”

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.