Transpo Advocates Livid Over Deeper Cut To NY MTA Revenue Stream

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(New York, NY - WNYC) The new tax deal working its way through Albany would impose a larger cut than first thought to a tax that helps fund the NY Metropolitan Transportation Authority.

The authority--along with its ability to keep the region's subways, buses and trains moving--is now facing a $370 million cut, up from an initial estimate of $250 million. That's because public schools were added to the list of those newly exempt from the tax, along with private schools and thousands of small businesses.

The tax costs $340 per $100,000 of payroll.

The state has pledged to reimburse the NY MTA for the cuts, which appear set to last the length of the three-year tax deal.

According to a State Senate press release, the cut slashes the "MTA payroll tax for about 78 percent, or more than 704,000, of the business entities that currently pay it.  This includes eliminating the tax for 290,000 employers with payrollsof less than $1.25 million; 415,000 self-employed taxpayers; and all public and non-public schools."

Transit advocates, initially supportive of the arrangement because it appeared not to affect the MTA's bottom line, pointed out that the new reimbursement formula will deprive the authority in several ways: it will probably take longer for funds to reach it; millions in taxes the MTA could've taken in from an improved economy and expanded payrolls will now be lost; the state can still reduce the reimbursement at any time.

"This leaves the millions of New Yorkers who rely on public transit with little more than IOUs in the place of secure revenue," said a statement by the advocacy group Transportation Alternatives. "Public transit is this region’s lifeblood, creates construction and manufacturing jobs across the state, and  requires dedicated funding. Eliminating or reducing any source of revenue means that revenue must be replaced by another secure, dedicated source of funding."

When the plan was first released, the NY MTA praised it for ensuring that it would "continue to receive the level of funding needed to keep New York and its economy moving." No new comment was forthcoming from the authority a day later, as new details emerged. The so-called Payroll Mobility Tax contributes $1.4 billion a year to the NY MTA's operating budget.  When it was initially enacted, it was predicted that the tax would deliver $2.25 billion to the MTA -- legislators chose the tax (as well as a taxi surcharge and a tax on rental cars) in lieu of tolls on East River Bridges as part of a 2009 bailout package.  The package also included the most severe service cuts in generations and fare hikes essentially in perpetuity.

A declining economy led to sagging tax revenues.  The reimbursement plan envisioned by Governor Cuomo would only plug lost tax revenues from their lower-than-expected rates, not the higher rates that could come with a rebounding economy.

Governor Cuomo's office did not respond to a request for comment.