Streetsblog New York City

In a 40-22 vote last night, the State Senate voted to phase out the payroll mobility tax, which generates about $1.5 billion per year for the MTA. The Senate proposal would eliminate the tax entirely in suburban areas while reducing it in New York City. Though the bill is expected to go exactly nowhere in the Democratic Assembly, it’s a sign of the intense opposition to the payroll tax among Republicans and in the suburbs, as well as the collective delusion about the state of the MTA’s finances.

Under the bill, sponsored by Long Island Senator Lee Zeldin and Majority Leader Dean Skelos among others, small businesses and schools would first be exempted from the payroll tax. By 2014, the seven suburban counties of the MTA region would be exempt while the New York City payroll tax would be cut by more than a third.

In addition to every member of the Republican majority, the bill garnered the votes of eight Democrats. Every Democratic state senator from outside New York City voted to repeal the payroll tax. Shockingly, so did Queens Senator Malcolm Smith, who while majority leader in 2009 was responsible for shepherding through the Senate the MTA funding package that had the payroll tax as its centerpiece. Every Senate Democrat voted for that bill at the time, meaning the six non-freshmen Democratic nays from last night flipped their votes (here’s the roll call), whether because of a different political climate or the knowledge that this was merely a symbolic vote.

The Senate Republicans estimate that reducing the payroll tax by this much would take roughly $840 million away from the MTA each year. Their bill does include a few offsets in the form of existing revenues redirected to the MTA, which they claim would leave $375 million in total cuts to transit.

Capitol Tonight reporter Liz Benjamin, however, spoke to one source who said those offset estimates were wildly off the mark. Benjamin reports:

According to an Albany insider who crunched the numbers of this, by the time the bill is fully implemented in 2014, it would generate a budget gap for the MTA of about $800 million a year. That would be offset slightly by a statewide sales tax intercept, but the annual estimated hit to the authority is still hovering at about $768 million, this source maintains.

Even more fantastically, the Republicans are claiming that their cuts need not result in any increased fares or reduced service.

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In case you've forgotten who's in charge these days, Governor Paterson's nomination of Jay Walder to succeed Lee Sander as MTA chief was quickly met with a joint statement from Malcolm Smith, John Sampson, and Fare Hike Four members Pedro Espada and Carl Kruger. In the interest of "transparency and accountability," the senators say they plan to put Walder in front of their committees before any decision is made. Kruger, for his part, tells The Daily Politics that he doesn't consider the backbone of the region's economy to be a particularly urgent agenda item.

"We'll look at it over the course of the next couple of months," said Kruger. ... "After that, we'll finish our vetting process, which hasn't even begun yet, and we'll have a better idea about the timetable (for a confirmation vote)."

When Liz Benjamin informed Kruger that Walder has already spoken of restoring public trust in the agency -- a task that will be much more difficult thanks to shameless hucksters like Kruger himself, the senator replied:

"I come from Missouri; don't show me, tell me. I mean, everybody says they're for oversight and accountability. What does that mean? What does it mean?"

I swear, this blog just writes itself sometimes.

Now that Governor Paterson has backtracked on his pledge to secure a long-term solution to New York's transit funding crisis, the push is on to spin the slapdash result as a responsible outcome, not a capitulation to Albany's lowest common denominator.

Courtesy of Liz Benjamin, here's Senate Majority Leader Malcolm Smith emerging from last night's closed-door session with the two Long Island legislators who will presumably give him the 32 votes needed to pass a bill:

I think it is a tribute to them, and a tribute to this Democratic conference. Reform is what everybody wanted. Everybody said that you should have a legislature where the rank-and-file members have a right to speak their mind, and have input -- and not only have input but get some results.

Never mind that all the negotiating for this deal took place behind closed doors. Or that the plan Smith's conference concocted does not reduce the MTA's dependence on debt financing. Or that the band of senators who derailed the viable plan drawn up by the Ravitch Commission are the same group who held the Democratic takeover of the Senate hostage last year, in return for more lucrative and powerful committee chairmanships.

Sure, rank-and-file legislators need a more open, transparent process in Albany, but letting the Fare Hike Four dictate the agenda hardly qualifies as reform, or sound policymaking.

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Video: Elizabeth Benjamin/The Daily Politics.

We were half-kidding last week when we said state legislators were open to taxing anything from pet food to shoelaces as long as they could say they had saved the MTA, and as long as drivers could continue to cross East and Harlem River bridges at no cost. Turns out it's no joke after all, according to Senate Majority Leader Malcolm Smith.

Following another futile secret meeting late yesterday with his Assembly counterpart Sheldon Silver and Governor David Paterson, Smith acknowledged that at this point any revenue source will do. The Politicker reports:

"It's not about merits," Smith said. "It's just about what gets us there with the votes that we need to get it passed. Because there are things in this plan that, somebody's not going to like something. At some point, you just have to sort of toughen up a little bit and make the tough decisions."

"It's not about merits" goes a long way toward explaining Smith's proposal to substitute bridge tolls with a taxi surcharge, a scheme that by one columnist's count has the support of Smith, Carl Kruger, and no one else. It could also serve to sum up Smith's idea of "reform" in Albany, at least as it applies to the MTA funding crisis. Consider his comments when The Fare Hike Four unveiled their cockamamie plan.

Liz Benjamin asked Smith whether the fact that the new plan clearly represents the thinking of the old Gang of Three was a sign of his own weakness. He said it was just part of the "paradigm shift."

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Here's another wake-up call for state legislators dithering over a transit funding package: The sinking economy continues to choke off revenues for New York City's subways and buses. The MTA finance committee announced this afternoon that the agency's budget gap is $621 million bigger than previously forecast. That's on top of the $1.2 billion hole that brought about the imminent doomsday fare hike and service cuts. The culprit? Plummeting revenue from dedicated taxes, fares, and tolls.

If there was any doubt before, now it should be clear: The latest transit rescue package proposed by Malcolm Smith is too skimpy to get the job done. By refusing to ask car commuters to shoulder any of the burden, the plan Smith put forward would merely postpone the day of reckoning for straphangers.

Tomorrow the State Senate is expected to vote on that plan, or some variation on it. For months obstructionist senators have excused their own inaction by pointing fingers at the MTA for what they deem a lack of transparency. But now the Senate might pass a transit funding package without holding any public hearings whatsoever. How opaque is that? The utter lack of transparency or discussion about this latest plan should be enough to preclude any votes from senators looking to burnish their good government cred.

The new budget numbers also set the stage for tomorrow's big rally in Union Square, where the Working Families Party and transportation advocates will gather to protest the doomsday fare hike and service cuts. The Senate's proposal is a band-aid that won't deliver what this coalition demands: a long-term, sustainable revenue stream that will protect straphangers from paying more for a deteriorating transit system. A real remedy, like the Ravitch plan, needs a united front behind it in order to regain momentum. This rally must be a galvanizing moment, and the person best positioned to deliver is Dan Cantor, head of the labor-backed Working Families Party.

Here's a chance for the Working Families Party to make a strong push for a robust transit plan. A plan that will put the city's subway and bus systems on sound footing. A plan that will spare working New Yorkers from worse fare hikes and deteriorating service.

Car commuters are one constituency asked to sacrifice next to nothing in the Senate's latest proposal, even though the average income of the city's car owners more than doubles that of the transit-riding, car-free majority. The official position of the Working Families Party is that the MTA funding plan should be "based on the Ravitch principles." Coming out with a more forceful position at tomorrow's rally -- like a full-fledged endorsement of the Ravitch plan itself, including bridge tolls -- could change the terms of the debate.

While Majority Leader Malcolm Smith insists he can round up enough votes to pass the latest Senate MTA rescue plan, The Daily Politics reports that Bronx Assemblyman Peter Rivera participated in a rally today outside City Hall in protest of the proposal's $1 taxi surcharge, a facet of the bill that has also drawn fire from Mayor Bloomberg.

Instead, Rivera thinks the answer to the MTA funding crisis is a tax on jet fuel, which ranks with the purchase of Canadian prescription drugs as the most far-fetched, nonsensical "solution" we've heard yet from Albany.

Of course, there's still time for more, so let's hear 'em: What's the wackiest thing you can think of to slap a tax on to fund the MTA? Pet food? Cell phone minutes? Shoe strings? Nothing, apparently, is off limits.

Except driving.

Senate Majority Leader Malcolm Smith has come out with another MTA funding proposal, which again gives commuters who drive across East and Harlem River bridges a free pass. The $1.76 billion it would generate annually for the MTA falls more than $300 million short of the projected revenue from the original Ravitch plan ($2.1 billion). Liz Benjamin at the Daily Politics has the details:

Under the Democrats' proposal, which does not yet exist in bill form, the payroll tax would be 34 cents per $100 in the 12-county MTA service area, but it would be graduated so the outlying counties would pay less (exactly how much less was not immediately clear).

The payroll tax would generate the lion's share of revenue: $1.49 billion.

Another key feature: a $1 taxi drop-off fee (50 cents more than what was originally on the table).

Half of the $190 million this fee is expected to generate would be used to pay the $95 million debt service on a $1.2 billion capital plan for roads and bridges upstate and on Long Island -- a move designed to woo GOP lawmakers and suburban Democrats who have so far dug in their heels in opposition to the payroll tax.

Other highlights:

- A $25 motor vehicle registration fee - on top of the existing fee, which was increased in this year's budget. ($130 million).

- Boosting the auto rental surcharge from 6 to 11 percent. ($35 million).

- A 25 percent increase in the motor vehicle license fee. ($10.5 million).

The proposal also includes several measures related to MTA governance and financial disclosure. Smith has not yet lined up the 32 votes needed to pass a plan in the State Senate, but spokesman Austin Shafran expressed confidence that a majority can be wrangled, reports Politicker's Jimmy Vielkind.

In a statement, Assembly Speaker Sheldon Silver left the door open -- fairly wide, I'd say -- to supporting the proposal:

I am willing to support any plan that provides a stable, long term funding stream for mass transit and apportions the burden equitably among everyone who has a stake in the MTA's future.

I have not had an opportunity to fully review the Senate's plan, but if it can accomplish both of those objectives and command the support of the majority of Senators then it is an alternative we're prepared to take very seriously.

Let's just focus on the revenue here. Smith's plan appears to fall short of Shelly's own by around $150 - $200 million per year, so something's got to give. Assuming the fare hike is held down to the range of eight percent, that means the Senate Dems are still prepared to sock New Yorkers with some combination of service cuts and slapdash investment in maintenance and expansion. Will that qualify as "a stable, long term funding stream" that "apportions the burden equitably"? With the MTA's financial picture growing bleaker by the day and the need for a robust plan all the more apparent, the only answer that makes sense is "No."

It seems like only yesterday that the three men emerged from their room with vague talk of an emerging scheme to spare transit riders -- temporarily, at least -- the pain of fare hikes and service cuts required, minus help from Albany, to keep the MTA afloat. But as the Times reports, a new development would catch the triumvirate flat-footed.

At a meeting later in the afternoon with Mr. Paterson, a group of senators from suburban districts told him they would not support the payroll tax.

The senators were Craig M. Johnson of Nassau County, Brian X. Foley of Suffolk County, and Andrea Stewart-Cousins and Suzi Oppenheimer, both of Westchester County.

"I’m very uncomfortable with the proposed payroll tax," Mr. Foley said later in an interview. "Suffolk County is in the outer ring of the service area. Our businesses would be paying into a system that they don’t get much out of."

Both the Times and Daily News point out that opposition to the payroll tax is not unexpected. Now that it's out in the open, however, lawmakers are reportedly scrambling, with Sheldon Silver suggesting that a "little time out would be helpful." Before the breakdown, everything from higher vehicle registration fees to a 50-cent cab surcharge was said to be under consideration.

Amid the chaos, one thing appears certain. Said a spokesman for Malcolm Smith to the Times: "Everything [is] still on the table 'except tolls.'"

Breaking news from The Politicker's Jimmy Vielkind:

David Paterson, legislative leaders and top staffers just emerged from a 90-minute meeting on an M.T.A. bailout package and declared that it will not include bridge tolls.

"The framework I see is that the Senate has really eliminated what my choice would be, which would be to have the tolls. If that's the case, then we're going to have to try to find alternative ways to come up with several hundred million dollars that would replace what would have been the revenues generated by the tolls," said David Paterson, who made a rare appearance at a press scrum outside his second-floor office.

The possible alternatives Paterson spoke of include a gasoline tax, increased automobile registration fees and parking fees -- though Paterson said he considered a gas tax hike "out of the question." 

For his part, Assembly Speaker Sheldon Silver characterized the still-secret plan as a righteous rebuke of last week's MTA board vote to raise fares and cut service -- which state lawmakers failed to prevent despite years of warnings. Said Silver:

"I think what's most important is we're dealing with the one thing the three of us agree [on]—the actions of the M.T.A. board cannot be allowed to stand. We have to get together and provide the revenue and ensure these 31-percent fare hikes do not stand."

Now that Shelly's own $2 toll plan has succumbed without ever coming up for a vote: New York State Legislature, what are you smoking?

Transit gallows humor from Daily News cartoonist Bill Bramhall. The whole toon is a fitting accompaniment to the paper's editorial stance on the MTA rescue saga. You can find it on the fourth slide in this gallery.