There is still more to the recent court decision declaring the MTA Payroll Tax unconstitutional.
Past New York City mayors, New York State governors along with the State Legislature and New York City Council refused to adopt the appropriate levels of direct financial assistance under past and current MTA Five Year Capital Programs going back decades. They insisted that the MTA raise billions by borrowing. This has resulted in a greater reliance of bonding, which in turn eats up a greater percentage of the MTA’s budget on interest costs to support debt service payments.
The MTA payroll tax is just one of many. Besides relying on Mortgage Recording, Petroleum Business, Motor Fuel Excise and Corporate Franchise taxes, there is also drivers License Fee of $1 for each six month’s of validity including learner’s permit, Auto Registration Fee of $25 per year on registration, renewal of motor vehicles $27, taxicab tax of 50 cents per taxicab ride imposed on taxi owners, auto rental tax, 5 percent tax on automobile rentals and supplemental regional petroleum business tax enacted in May 2009 by the state Legislature. The average New Yorker isn’t really aware of paying many of these taxes during day-to-day financial transactions.
There is only so much revenue from MTA Bridge and Tunnel toll fees available for transit. The infusion of $1.5 billion in American Recovery and Reinvestment Act funding several years ago was a one-time-only windfall most of which has already been spent. An 8-percent to 10-percent unemployment rate depending upon the community you reside in continues impacting ridership and farebox revenues on many routes.
The economic recession continues to impact both employee-payroll and real-estate-mortgage transfer tax revenues. Past plans for creating new revenues by tolling free Manhattan East River bridges and implementing congestion pricing continue to face opposition by a majority of members in both the New York City Council and state Legislature.
Neither New York City Council Speaker Christine Quinn, New York City Public Advocate Bill deBlasio, New York City Comptroller John Liu, Mayor Michael Bloomberg, Gov. Andrew Cuomo, state Comptroller Tom DiNapoli, state Senate Majority Leader Dean Skelos, Senate Minority Leader John Sampson. state Assembly Speaker Sheldon Silver, Assembly Minority Leader Brian Kolb or any other public official on the town, county, city or state level identifies any sources for increasing funding by the billions of dollars needed or replacing lost revenue from ending the MTA Payroll Tax.
This cash is necessary to support keeping the current fare structure, maintaining basic state of good repair and system expansions along with funding high tech improvements.
For decades, under numerous past MTA Five Year Capital Plans, both the city and state collectively cut billions of their own respective financial contributions. They repeatedly had the MTA refinance or borrow funds to acquire scarce capital funding formerly made up by hard cash from both City Hall and Albany.
Fast forward to today. The city, state and federal governments all face current and future year multi-billion-dollar budget shortfalls accompanied by declining tax revenues.
To assist the MTA in balancing this new potential shortfall of over $1 billion per year, just which capital improvement projects would any elected official propose the MTA cancel to help balance the budget and avoid far greater previously scheduled future rounds of fare increases? Which route(s) would they support service reductions to save operating dollars? What public official would volunteer to reduce service, cancel or delay any capital projects benefiting constituents in their district? Increasing the amount of future fare hikes may not be a financially viable option.
Reductions in the frequency of cleaning subway, Long Island Rail Road and Metro North Rail Road stations, buses, subway, Long Island Rail Road and Metro North Rail Road cars, elimination of routes or adding to the waiting times for the next bus, subway, LIRR or Metro North train as a means to save funds to fill this new potential budget shortfall could be counter productive. Increasing crowding, reducing the number of available seats or trips on routes could make public transit less attractive.
The reaction could result in a significant number of riders returning to automobile use. Fewer riders mean less farebox revenue, thus impacting budgets.
Proposals for cost savings by consolidating various agency procurements or staff performing similar functions is a tired old cliche discussed for decades whose results have probably been maxed out. The potential financial savings of several hundred million doesn’t come anywhere near bridging even greater overall budget deficits in the billions.
There are little remaining non-union senior management in the pool to target versus others. Significant costs are locked in place such as salary, fringe, medical and pension costs for union employees. Negotiating with unions to allow management more flexibility in work rules and assignments might support greater productivity.
Offering to share some of the savings accrued from this with workers to foster improved partnering between management and employees might also help. Yearly interest payments on the MTA’s $34 billion long term debt which may grow to $41 billion by 2017 is taking a bigger bite out of future budgets leaving less money for capital projects and making balancing budgets more challenging.
Like it or not, previously scheduled fare hikes in 2013, 2015 and 2017 are probably justified if the MTA is to provide the services millions of New Yorkers on a daily basis count on. Fare hikes are inevitable due to inflation along with increasing costs of labor, power, fuel, supplies, materials, routine safety, state of good repair, replacement of worn out rolling stock, upgrades to stations, yards and shops along with system expansion projects necessary to run any transit system.
MTA services are still one of the best bargains in town. Since the 1950s, the average cost of riding either the bus, subway or commuter rail has gone up at a lower rate than either the consumer price index or inflation. The Metro Card affords a free transfer between bus and subway. Prior to this, riders had to pay two full fares. Purchasing either a weekly or monthly pass further reduces the cost per ride. Many employers offer transit checks, which pays even more of your costs.
In the end, quality and frequency of service is dependent upon secure revenue streams. We all will have to contribute – be it at the fare box or tax revenues generated by different levels of government redistributed back to the MTA.
Better to pay the piper now then later.
Larry Penner
Great Neck
