Op-Ed: The Fine Print in Cuomo’s Tax Deal

December 8, 2011 4:38 PM video

New York State Gov. Andrew Cuomo’s new progressive tax reforms will cut more than taxes, it will also cut revenues from the MTA payroll tax that subsidizes your daily commute. I’m wary of any plan that weakens the MTA’s dedicated revenues.

A packed subway train during morning rush hour on the L line in Bedford, Brooklyn. Flickr/Jp Gary

Under the new plan, and buried in the last paragraph of the governor’s press release, there are two important facts you should note:

  • That funding will be maintained by “other sources”

When the original plans for a payroll tax overhaul were leaked earlier this week, the reimbursements were backwards. The state was going to reimburse tax payers for the monies they had to pay out under the payroll tax, and the MTA would see no loss in revenue from the state. Now, the state will use “other sources” to ensure that the MTA gets its $320 million while the taxpayers won’t need to pony up the dough any longer. Of course, we know how that story ends.

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Without a steady stream of money from the payroll tax, the state will suddenly be unable to find the $320 million it owes to the MTA, and legislators will blame the MTA when the Authority comes forward with a budget deficit.

A healthy MTA can spur the economy just as much as a reorganized tax code.

It’s unclear right now if that $320 million payment would cover just 2012 or would be implemented on an ongoing basis. As it stands now, the MTA’s budget projects long-term deficits with over $1.5 billion in payroll tax revenue. Reducing that figure by $320 million a year (or whatever the final figure is) would increase the MTA’s deficits as well as the pressure on the public to carry that debt through fare increases, service cuts or both.

This highlights the need for the transit lockbox legislation. Not only would it make it more difficult for the state to rearrange MTA finances, but it would require the state to explain what $320 million in loss subsidies would mean for the MTA. Instead that legislation has languished on Cuomo’s desk. I can’t help but feel pangs of fear that the $320 million will disappear, and the MTA will slip further into the red as time goes by. A healthy MTA can spur the economy just as much as a reorganized tax code.

Benjamin Kabak is the editor of Second Ave. Sagas, where a version of this post previously appeared. Kabak has been covering all things related to New York City’s vibrant public transit network since 2006. He is also one of the founders of River Ave. Blues, a fan blog about the New York Yankees. He is a recent graduate of the NYU School of Law and works as a technology lawyer.

  • Stan Chaz

    The devil is in the details: My understanding is that part of Cuomo’s plan is to reduce MTA taxes on businesses. The MTA helps these businesses to grow and prosper. If these sacred “job-creators” pay less for the MTA, I’ll give you one guess who will be forced to pay more:
    The working stiff will get shafted again. Enough subsidies and corporate welfare for the 1%! Enough “corporations are people too”! Enough corporations that send our jobs overseas, and wish that we’d go away too…. as they buy every politician in sight. We demand a government that works FOR ALL OF US, not just for a favored few….NOT just for the rich.
    This land IS our land…and that we WANT IT BACK!

  • RealNYrsShouldntPayTheMTAtax

    The working stiffs were going to get stiffed again and again by the MTA. Not until total change and a clean gutting of the MTA’s board is made will there be any real changes to this pathetic for profit company.
    Besides any real monetary subsidies should come from the Federal Transit Act.

  • Joe

    The MTA Payroll Tax needed to be reduced because it was hurting businesses and the taxpayers in the Mid-Hudson Valley, where we barely even use the service. Why should we be paying for a service that not only does our area barely use, but do not even have equal say in its voting (0.25% for each of the four counties above the city and Westchester: Rockland, Orange, Dutchess, Putnam Counties), along with paying as much as everyone else in the city? It makes absolutely NO sense whatsoever.

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