MTA deal reached in Albany

May 4, 2009 9:48:28 PM PDT
The New York State Senate has reached a deal to avoid the MTA's doomsday budget.The Senate's Democratic majority reached a tentative agreement with the 32 members needed to approve a bailout of New York City's transit system.

The bailout would avert double-digit fare increases and service cuts scheduled for next month.

Senate Majority Leader Malcolm Smith met privately with key suburban senators in opposition into the evening Monday.

The key concession -- special funding to school districts to exempt them from the payroll tax that would help fund the bailout.

Democratic Gov. David Paterson proposed the so-called bullet aid for schools as a way to get enough votes for the bailout.

After hours of negotiation, Senators Brian Foley and Craig Johnson agreed to the funding bill, giving Democrats enough support to get the bill passed.

Another big change in the funding bill is a lower taxi surcharge fee, which goes back to 50-cents. The fee is expected to raise $95 million a year, all of which would go to the MTA.

Other parts of the bill include:

  • A payroll tax of 34 cents per $100 of payroll for all counties served by MTA except Putnam, Orange and Dutchess. Those counties would pay 25 cents. The payroll tax is expected to raise $1.49 billion a year.

  • Car registration fees would go up $25 which will raise $130 million a year.

  • A five percent sales tax hike on car rentals, raising $35 million a year.

    VOTE: What do you think of the MTA bailout deal?

    Governor Paterson basically gave up on a quick way to pay for big capital projects like the 2nd Avenue Subway.

    He said the immediate goal was closing the MTA's budget gap to avoid major fare increases and service cuts, now just weeks away.

    Earlier in the day, Mayor Michael Bloomberg argued against a short-term solution.

    "There is no painless option, but the issues will be no simpler a few months from now than they are today, which is why Albany must find a permanent stream of funding for capital projects ? not next fall, but right now," he said.

    NYPIRG Straphangers Campaign welcomed the plan to avert massive fare hikes and service cuts, but agreed with the mayor about the funding of capital projects.

    "Both transit operating and capital needs are closely related," the Straphangers wrote in a statement. "The fare is how much you pay, service is what you get and capital improvements determine the quality of the ride, such as whether you are riding on a delay-plagued 42-year-old car or are at the mercy of a creaky 80 year-old signals."

    A vote on the plan could come as early as Tuesday.

    Assembly Speaker Sheldon Silver's office sounded optimistic about the plan's chances.

    "We're encouraged by the agreement in the Senate and are prepared to act immediately to save the fair and prevent massive service cuts. We remain hopeful that the final bill will include at least some funding for the next MTA Capital Plan," Dan Weiller, Silver's press secretary, said.


    Payroll Tax (schools held harmless through reimbursement)

  • $.34 per $100 for businesses within NYC/Nassau/Suffolk/Westchester/Rockland
  • $.25 per $100 for businesses within Orange/Putnam/Dutchess Counties
  • Generates $1.49 billion full year impact
  • Drivers License Fee

  • Supplemental Fee increase of 25-30% of current state fee for licenses and learner's permits
  • Generates $10.5 million
  • Motor vehicle registration

  • Supplemental fee of $25 on registration/re-registration of motor vehicles
  • Generate $130 million
  • Auto Rental Fee

  • Additional sales tax of 5% on car rentals
  • Generates $35 million
  • Taxi surcharge

  • 50 cents on the use of taxi services
  • Applies only to yellow cabs, excludes livery (black cars)
  • Generates $95 million
  • Total revenue raised $1.76 billion


  • 25% of funds raised go to paying debt service for capital plan ($26 billion)
  • The MTA can adopt its five year capital plan and begin to issue bonds based upon the dedicated revenue streams (25%) built into our plan
  • Built in revenue streams expected to allow MTA to bond up to $6 billion for capital expenditures.

    Preventing Abuse:

  • Require independent audit of MTA Finance and Operations
  • Require to post on its web site perks to members and staff and hiring outside advisors and consultants
  • Encourage whistle bowers to come forward when they see fraud
  • Transparency / Accountability

  • Expand fiscal oversight by the State Comptroller
  • MTA must post budget, financials and capital plans in plain English with supporting documents on its web site
  • Governance of MTA

  • Addition of 2 non-voting board members appointed by Majority Leader and Speaker
  • Create an office of Legislative and Community input within the MTA
  • MTA Contracting

  • Direct the authority to give priority to suppliers of goods and services from New York