Tax NY Businesses to Close MTA Budget Gap?

To Get MTA Back on Track, Albany Has ‘A Plethora of Options’

Funding for transit is one of many contentious issues up for debate in the state budget due April 1. | Hiram Alejandro Durán/THE CITY

By Jose Martinez, The City

This article was originally published on Mar 29 2:23pm EDT by THE CITY

NEW YORK - Days before the April 1 deadline for the state budget, a multitude of proposals are in place for how to help fill the MTA’s enormous financial hole.

Ranging from calls to tax New Yorkers’ use of streaming services to stripping Madison Square Garden of its decades-long tax exemption, Gov. Kathy Hochul and state legislators have floated several ideas on how to help fill a budget gap created by post-pandemic work-from-home shifts and the lagging return of ridership to the subways and buses.

The funding proposals aim to fill a gap that’s projected to be at least $600 million in 2023 — and expected to grow to nearly $3 billion when emergency federal aid runs out, expected to happen by 2025.

“There is a plethora of options, a cornucopia of options,” said Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the MTA. “But the question is what is politically palatable, what’s going to raise the money that riders and the system need and what’s going to keep us from having this conversation every year.”

New Balances

The MTA has traditionally relied on farebox and toll revenue to cover close to half of its more than $18 billion operating budget, with the rest coming from tax dollars and subsidies. 

Chairperson and CEO Janno Lieber has long been calling on lawmakers to come up with alternative — and preferably recurring — streams of revenue for a system that he has repeatedly likened to “air and water” for New Yorkers. 

Gov. Kathy Hochul, MTA CEO Janno Lieber and NYPD Chief of Transit Michael Kemper at the Fulton Center in Lower Manhattan. Jan. 27, 2022. | Hiram Alejandro Durán/THE CITY

“It is essential that they move quickly to a budget deal that will fully address the MTA deficits brought on by COVID and to head off service cuts, massive fare hikes and, God forbid, layoffs and other undesirable impacts,” Lieber said Wednesday during the MTA’s monthly board meeting.

Elected officials, budget watchdogs and transit advocates said Hochul’s proposal to increase the payroll tax on larger businesses within the city and the seven suburban counties served by the MTA offers the most realistic chance to stabilize the transit agency’s financial fortunes.

“This is the most sane and rational approach to funding the MTA,” Assemblymember Robert Carroll (D-Brooklyn) testified at the agency’s Wednesday board meeting.

A Slew of Ideas

But it’s far from the only idea on how to shore up the MTA’s sagging finances. 

Others include a legislative proposal to increase corporate taxes and one that would by 2026 start collecting about $450 million a year from three downstate casinos — along with one-time license fees of $500 million each.

Meanwhile, politicians who want to put a 4% tax on the cost of streaming services like Netflix and Disney+ estimate the levy could bring in $100 million a year. And they say a 50-cent surcharge on all Uber and Lyft rides could bring in up to $200 million annually.

Word on the street is Albany pols want to tax streaming services. | Hiram Alejandro Durán/THE CITY

“They’re not gimmicky, it all contributes,” Daglian said. “Every drop in the bucket helps to fill the bucket but in and of themselves, the [payroll tax proposal] brings us a lot closer to the finish line.”

There has also been a call from some state lawmakers to raise money for mass transit through residential parking permits, potentially bringing in up to $400 million a year, although that would require City Council approval.

The payroll tax hike, included in Hochul’s February budget proposal, would provide the MTA with $800 million annually by boosting the top payroll tax on certain employers and self-employed individuals from 0.34% to 0.50%, according to the governor’s math. 

Reliable Service

Lieber has said the payroll tax proposal would most reliably address MTA deficits on an ongoing basis.

“We need to know the money’s going to be there,” he said. “So I don’t want to be going back to Albany year after year to have to shake the cup again and have another drama about how much money is going to be given to the MTA.”

A Reinvent Albany analysis of the various funding proposals concluded that the various ideas could provide more than enough money to cover the MTA’s deficit and to boost service.

“It’s just a matter of coming together to find what the best new taxes are and making sure that there is enough money for improving service, not just keeping it at the current level,” Rachael Fauss, a senior policy adviser with the budget watchdog, told THE CITY.

Lieber said Wednesday that the MTA is looking at ways to increase service frequency on nights and weekends if there is enough money to make that a reality.

“We’re in the subway and bus operations business,” he said. “If we’re given money to operate more service, we will be thrilled.”

Danny Pearlstein, policy director for the advocacy group Riders Alliance, said lawmakers must focus on the most realistic funding proposals.

“The criteria should be: Can we count on the money coming in?” he told THE CITY. “It has to materialize — it cannot be funny money.”

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