As mentioned in today's 411, people paid a lot of attention to the ill-fated East River bridge tolls over the course of the MTA bailout debate, but very little to the payroll tax (a.k.a. 'mobility tax').
Maybe that was Richard Ravitch's intention all along: to create a maddening diversion with tolls (which would only have net $600 million a year in their most expensive form) while the payroll tax came in under the radar and did all the work ($1.5 billion and counting). It's a steadily increasing tax that should do wonders to shore up MTA's portfolio. That's because the taxes that currently subsidize fares tend to be transactional and therefore extremely volatile. The MTA's $1.8 billion operating deficit this year wasn't created just because real estate values dropped--because they did, though not very much. But what really plummeted were the number of real estate sales. And the MTA only makes money off of real estate when it is bought, sold or mortgaged. (The city of New York, by contrast, makes money based on property values.)
Just look below at the slow, steady growth in the region's total payroll over the past 20 years, as provided by the state Department of Labor. By comparison, according to the MTA, the Urban Tax (imposed on sales and mortgages of commercial property in the five boroughs), went on a five year slide in 1987, dropping a total of 85 percent before recovering. Last year, the Urban Tax began another decline, which the MTA expects (hopes?) will bottom out next year, down 46 percent from its 2007 peak.
By contrast, there were only two out of the last 20 years that saw negative growth in the region's payroll. Overall, the payroll increased 275 percent; inflation clocked in at 83 percent over the same period. The 2008 and 2009 figures will dampen this record, no doubt, but if you could invest in the region's payroll, as the MTA now is able to do, it's as sure a thing as T-bonds and with a better return.