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

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

December 08, 2011 at 4:38 pm

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.


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.