M.T.A. Rescue Passes, but Impact Is Questioned

by William Neuman and Nicholas Confessore

The State Legislature passed a series of new taxes and fees late Wednesday night meant to keep New York’s base subway fare from rising above $2.25 this year. But the hastily drafted bill, approved largely along party lines, raised many questions about how the plan would work and how effective it would be in stabilizing the struggling Metropolitan Transportation Authority.

In the short term, the plan would appear to raise significantly less money this year than in some earlier projections, although legislative staff members said it would be enough to get the authority through the year.

There were also questions about how a 50-cent surcharge on yellow cab rides in New York City would be collected from thousands of taxi drivers and owners.

And in the Senate, Republicans harshly criticized a promise in the bill to have the state reimburse school districts for the cost of a payroll tax, saying there was no guarantee the promise would be kept.

Questions also remained about the authority’s capital spending program, which is only partially financed in the rescue plan.

The vote came five months and two days — an agonizing period of political wrangling and brinksmanship — after a rescue plan for the transit system was proposed by Gov. David A. Paterson and Richard Ravitch, a former authority chairman, who had been appointed by the governor to head a commission on the authority’s finances.

In the end, the bill passed largely along partisan lines, with only Democrats voting for it in both the Assembly and the Senate. Republicans, many of whom objected to the additional taxes, were unanimously opposed. In the Assembly, some Democrats voted no, but in the Senate, all 32 Democrats voted for the bill.

Democrats hold a 32-to-30 majority in the Senate, and much of the delay in forging the rescue plan was due to objections from Democrats there.

It was not until this week that the last Senate holdouts were won over through a compromise on the school reimbursement. Aides to the governor and the Legislature worked overnight Tuesday and throughout the day on Wednesday, racing to finish writing the bill in time for a vote Wednesday night.

The bill included the payroll tax, of 34 cents for every $100 in wages, to be paid by employers in the 12 counties served by the transportation authority. It also included a series of fees on drivers and vehicles, the taxi surcharge, a $25 surcharge on vehicle registrations, a $2 fee on drivers licenses and an additional 5 percent tax on car rentals.

The bill did not set a new subway fare — only the authority can do that — but officials said it would give the authority enough money to prevent a planned fare and toll increase this year of 20 to 30 percent. It would also halt deep service cuts.

Legislative leaders and officials at the authority agreed that the base subway and bus fare would rise to $2.25, from $2. Other fares, commuter rail tickets and tolls would go up about 10 percent.

Together, the new taxes and fees would raise about $1.9 billion a year for the authority. This year, because less than a full year’s revenue would be captured, they would raise $1.1 billion.

But even that is less, by at least $165 million, than estimates that legislative staff members were working with as recently as Tuesday.

Among the reasons: Earlier versions of the plan called for the payroll tax to apply retroactively to wages paid since Jan. 1. But the bill changed that to March 1 for most employers. Schools, on the other hand, will not have to begin paying the tax until Sept. 1.

The bill also postponed the start of collections on the taxi surcharge until January 2010.

It was not clear how the tax would be collected from thousands of taxi owners.

In the debate on the bill on Wednesday, Senate Republicans like Andrew Lanza of Staten Island questioned the promise to reimburse school districts for the payroll tax, since it must be appropriated by the Legislature each year.

“That’s the guarantee?” Mr. Lanza said.

By James T. Madore

ALBANY – Negotiations to avert fare hikes and service cuts by the MTA will intensify Monday as lawmakers return to the Capitol after the holidays.

State Senate Democrats were expected to debate privately another bailout plan that includes a modified payroll tax on employers in the 12 counties served by mass transit and adding a host of new levies, knowledgeable sources said last night. Gov. David A. Paterson also was to step up efforts to woo Senate Republicans with a first meeting with Sen. Dean Skelos (R-Rockville Centre), the minority leader.

State officials are seeking to head off implementation of a “doomsday” budget by the operator of the Long Island Rail Road, New York City subway, Long Island Bus and other services. Several trains would be mothballed next month and fare hikes averaging 23 percent would go into effect around June 1.

Paterson has vowed to keep lawmakers in Albany until a deal is reached.

“This is obviously something that we’re going to be heavily engaged in this week,” said Austin Shafran, spokesman for Senate Majority Leader Malcolm Smith (D-St. Albans).

Factions of Senate Democrats have derailed a $1.2-billion rescue plan for the Metropolitan Transportation Authority – backed by Paterson and the Assembly’s Democratic majority – over the payroll tax and tolls on now-free East River and Harlem River bridges. Shafran said Sunday the Senate would not consider bridge tolls, including last week’s amended proposal from a state commission.

Paterson aide Erin Duggan said: “There are a lot of good options and solutions on the table. The governor just needs the legislature to work with him.”

Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver (D-Manhattan), said he continues to work with Paterson and Smith to “keep huge fare hikes and major service cuts from going into effect.”

The Senate GOP, shut out of talks so far, is demanding money for bridges and roads on Long Island and upstate. With Democrats split, Republican votes are required to adopt a rescue plan.

Richard Ravitch, the former MTA chief who led the state commission, said, “If they haven’t done anything by the end of [this] week, the MTA is going to start taking drastic action.”

An MTA spokesman wasn’t immediately available to comment.

Unexpected Opposition to Payroll Tax Throws M.T.A. Rescue Talks Into Turmoil

by William Neuman and Nicholas Confessore

Negotiations on a financial rescue plan for the Metropolitan Transportation Authority were thrown into turmoil on Tuesday afternoon in Albany when a small group of Democratic senators from suburban districts moved to oppose a regional tax on payrolls, according to two people close to the talks.

It was the second time that a revolt within the narrow Democratic Senate majority had derailed efforts to forge a bailout that would scale back a large increase in fares and halt deep service cuts by the authority.

The obstacle arose just as negotiators believed they were close to replacing the revenue from an earlier proposal, tolls on the East and Harlem River bridges, that had been rejected by another group of senators.

The payroll tax, a key component of the rescue plan, would be paid by employers in the 12 counties served by the authority, and was expected to raise as much as $1.5 billion a year.

The objections to the payroll tax came on a day full of activity, as hopes of a compromise on the rescue were raised in the morning and then abruptly dashed in the afternoon.

“It’s not dead but it’s definitely not in good shape,” said one of the people close to the talks, who spoke on condition of anonymity because the talks were continuing. “I think we’re nowhere.”

Assembly Speaker Sheldon Silver, who has pushed for a rescue, said he expected negotiations to resume.

“There’s still a will” to find a solution, he said Tuesday night. “The difficulty is in putting our hands around how we change it.” He added, “Maybe a little time out would be helpful.”

The Senate majority leader, Malcolm A. Smith, was upbeat Tuesday morning after emerging from a meeting with Gov. David A. Paterson and Mr. Silver.

“I’m optimistic we may have something done between now and tomorrow,” Mr. Smith said.

At the same time, Mr. Paterson and Mr. Silver conceded they were unable to overcome resistance in the Senate to the new bridge tolls and said that another source of revenue would have to be found to replace the toll money.

The new tolls were opposed by a group of half a dozen Democratic senators from Brooklyn, Queens and the Bronx, and Mr. Smith has made it clear for weeks that the Senate would not pass a plan that included the new tolls.

The rescue plan is intended to spread the burden of helping the authority among several groups. Transit riders would pay through a more modest fare increase than one that is set to go into effect later this spring; drivers would pay through tolls; and employers would contribute through the payroll tax.

To replace the toll revenue, officials said Tuesday that they were looking at a series of other charges on motor vehicles, including a surcharge on taxi rides in New York City, an increase in the vehicle registration fee and an increase in the tax on car rentals.

After the morning meeting, legislative staffers and aides to the governor and the authority began to evaluate what combination of vehicle-related charges would generate sufficient money to help the authority, which has a $1.2 billion deficit this year and larger deficits looming.

But 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.”

While acknowledging his opposition to the payroll tax, Mr. Foley declined to discuss his talks with other officials.

The sudden turnaround further exposes the precarious situation in the Senate, in which Democrats have a 32-to-30 edge over Republicans, which means that a single Democrat has the power to block virtually any initiative.

Tuesday’s payroll tax revolt could not be seen as totally unexpected, since several Democrats had voiced discomfort with the tax in the past. Yet Mr. Smith seemed to have been taken by surprise by the senators’ opposition.

“There has been no consensus reached on a plan to address the M.T.A.’s budget shortfall,” said Austin Shafran, a spokesman for Mr. Smith, when asked about objections to the tax. He added that everything was still on the table “except tolls.”

M.T.A. Increases Fares and Cuts Services

by William Neuman and Jennifer Lee

The board of the Metropolitan Transportation Authority voted on Wednesday morning to enact a series of fare hikes and service cutbacks needed to keep the transit system from going broke.

The vote was broken largely into three parts: fare hikes, toll increases and service cutbacks. After hearing from the public and the board members, the board approved each by a vote of 12 to 1.

M.T.A. Is Set to Approve Higher Fares and Service Cuts

by William Neuman

The base subway and bus fare in New York City would rise to $2.50, up from $2. A 30-day MetroCard would cost $103, up from $81. A monthly ticket on the Long Island Rail Road for a commuter who travels between Ronkonkoma and Pennsylvania Station would increase to $352, up from $278.

Senator wants to jumpstart Moynihan with stimulus

by Erik Engquist

Sen. Charles Schumer says $100 million in federal money, plus some of the billions marked for train projects, could get the stalled station project rolling.

Sen. Charles Schumer said Monday that the Moynihan Station project should be jumpstarted with money from the federal stimulus package, including funds that other New York officials want for a high-speed rail project.

At a Crain’s Business Breakfast Forum in midtown, New York’s senior senator outlined a proposal for the $1 billion development of the station in the Farley Post Office to move forward in the face of inactivity by the project’s private developers.

He said $100 million should be tapped from the pot of funding for shovel-ready projects in the federal stimulus package, and that additional funds should be secured from the $8 billion in stimulus money set aside for high-speed rail and $1.2 billion for Amtrak.

Mr. Schumer also called for Amtrak—rather than New Jersey Transit—to be the primary tenant at Farley, and that rent from the retail component of the project be used to help Amtrak pay its projected $15 million in annual operating costs.

The senator’s proposal faces numerous hurdles. Other politicians across New York want the state to use its high-speed rail money to start building a line from New York City to Albany to Buffalo. Mr. Schumer said New Jersey Gov. Jon Corzine has yet to agree to change New Jersey Transit’s projected role at Moynihan. And Amtrak itself would need to sign off, and might have other priorities for its stimulus money—such as adding trains to busy routes or upgrading additional lines.

Mr. Schumer said the government cannot wait for the private sector, which less than two years ago had grandiose plans for office towers as part of the project, on Eighth Avenue and West 33rd Street. But in his prepared remarks at the breakfast, he said the two selected developers, Vornado Realty Trust and Related Companies, should have a role: “We must leverage the expertise of the Vornado/Related joint venture to help oversee the construction of the project.”

The senator said the developers should be pushed to “move as quickly as possible on the private development portion of the project” but did not say how that could be done. Construction loans for big projects have been virtually impossible to come by in recent months.

Sheldon Silver Proposes $2 Toll Plan for East River Bridges

By Glenn Blain and Pete Donohue

State Assembly Speaker Sheldon Silver Wednesday night proposed putting tolls on the East River bridges equal to the price of a subway ride, currently $2.

Silver pitched the proposal to his Assembly colleagues gathered to discuss the Metropolitan Transportation Authority’s fiscal crisis.

A bailout plan drafted by former MTA Chairman Richard Ravitch recommends East River tolls matching those at MTA crossings like the Robert F. Kennedy Bridge. Drivers with E-ZPass pay $4.15 to cross that span.

Assemblyman Richard Brodsky billed Silver’s proposal as progress in the bid to avoid huge fare hikes and severe service cuts the MTA says will be necessary later this year without a massive bailout.

“It was attractive to people who had problems with the other proposal, but there were a great variety of opinions,” Brodsky (D-Westchester) said of the lower-priced tolling concept. “We are in the process of building consensus. That doesn’t happen in one meeting.”

Assemblyman Michael Gianaris (D-Queens) didn’t reject the Silver proposal but wasn’t completely sold, either.

“Honestly, I’m still evaluating it,” Gianaris said. “This idea is certainly better than the Ravitch plan, but I remain very apprehensive about any tolls on the East River crossings.”

Tolls disproportionately affect the people of Queens, Brooklyn and the Bronx, Gianaris said.

Proponents dispute that argument, saying any successful bailout would include higher contributions from many others, like bus and subway riders in the form of modest fare hikes.

Faced with a $1.2 billion operating budget deficit and no money for its next capital construction program, the MTA in December adopted a “draconian” budget.

It includes hikes raising fare and toll revenues by 23% – potentially resulting in a $103 price tag for a monthly MetroCard now costing $81.

The doomsday budget also would eliminate 21 local bus routes, shut down the W and Z subway lines and close a handful of lower Manhattan subway stations during the overnight shift.

Senate Democrats also met to discuss the Ravitch plan and the plight facing more than 8million daily subway, bus and commuter train riders.

No matter what the cost, some said they wouldn’t support East River bridge tolls, making it difficult for approval. Democrats hold a 32-to-30 majority in the Senate. No Republicans have expressed support for tolls.

GET YOUR SHOVELS READY, NEW YORK

By ED OTT & KATHRYN WYLDE

December 17, 2008 —

IMMEDIATELY upon taking office, President Barack Obama will launch a massive effort to revive the economy – centered on $500 billion in new funding for modernization and construction of roads, bridges, airports, schools and infrastructure. By the end of January, states and localities need to identify “shovel ready” projects in order to compete for the funds.

When President Franklin Roosevelt undertook a similar program in 1933, New York won the lion’s share of money. That was because Robert Moses, the legendary “construction czar,” made sure the state was first in line with ready-to-go projects. He established a partnership with the construction industry, organized labor and financial institutions to get big projects going on a handshake. Many of our best public facilities are products of that era’s public-private partnerships.

Now we must duplicate that achievement with the Obama stimulus program.

We proved we could do it after 9/11: Emergency powers were invoked to clean up the World Trade Center site and get Lower Manhattan back in business in record time. Industry, labor and government all contributed to an accelerated recovery.

And today we face worse damage, in economic terms, than the terrorists inflicted on 9/11. Our state and city are broke – the state deficit is projected to reach $51 billion in four years. Finding places to cut costs is crucial – but that alone won’t be enough: We have to stimulate the economy and create jobs.

Obama’s program presents a great opportunity – we must win as much federal investment as possible and put the money to work quickly. Can New York rise to the occasion?

Gov. Paterson is certainly trying. With the same foresight he demonstrated in tackling the budget crisis before others woke up to the problem, the governor established a commission in October to determine how New York can tap the expertise and resources of business and labor to help government finance, engineer, manage and build public-works projects on an accelerated, cost-effective basis. The Commission on State Asset Maximization will issue its first report this week and, based on hearings it held across the state, the outlook is promising.

The commission has been asking hard questions about how the state’s cumbersome procedures for procurement, contracting and financing can be reformed to reduce costs and shift risk from government to private-sector experts. The long delays and cost overruns plaguing the Second Avenue Subway are just one example of how poorly positioned we are to make use of a quick start stimulus program.

The commission also found that New York is not in a strong competitive position for pending federal dollars. For example, we recently lost $350 million in federal grants (the funds were reallocated to Chicago and Los Angeles) because we couldn’t resolve our local differences over a traffic congestion-pricing plan.

A strong follow-up on the commission’s work could ensure that New York gets a healthy share of the Obama stimulus dollars. By including strong labor standards and protections, it removes the stigma that public-private partnerships are simply vehicles for privatization that result in lower wages and benefits.

A perfect storm of events is making the prospect of public-private partnerships look like a smart component of New York’s economic-growth strategy. Fortunately, storms of this magnitude don’t come around too often. But then again, neither do these types of opportunities. Like Robert Moses, we need to be ready, and we need to be bold.

Ed Ott is executive director of the New York City Central Labor Council, which represents more than 1.3 million workers throughout the city. Kathryn Wylde is president and CEO of the Partnership for New York City, the city’s leading business group.

BROAD COALITION OF LABOR, BUSINESS, CIVIC AND ENVIRONMENTAL LEADERS CALLS FOR $12 BILLION STIMULUS PACKAGE TO CREATE OR SAVE 435,000 JOBS ACROSS NEW YORK

Immediate Investment in Improving Infrastructure Would Put Thousands Back to Work While Making Crucial Improvements to Roads, Bridges, Public Transportation, Parks and Water Systems Across State

December 10, 2008 (New York, NY) – A broad coalition of labor, business, civic and environmental leaders from across New York today called on Governor David Paterson and the state legislature to pass a comprehensive $12 billion New York State stimulus package that would create or save 435,000 jobs across New York. The coalition also called on the state’s congressional delegation to devote federal stimulus money towards specific projects they laid out in their proposal. The announcement was made just weeks after State Comptroller Thomas DiNapoli made the grim prediction that New York stands to lose 225,000 jobs over the next two years.

THOMPSON, ELECTED OFFICIALS FROM ACROSS CITY, OPPOSE EAST RIVER TOLLS

Photo credit: Jeff Simmons New York City Comptroller William C. Thompson, Jr. holds a news conference on December 7, 2008 to announce his opposition to establishing tolls along the East and Harlem River bridges. Thompson was joined by a number of elected officials (from left to right): Senator Eric Adams, Assembly Member Jose R. Peralta, Council Member David I. Weprin, Brooklyn Borough President Marty Markowitz, Senator-elect Daniel L. Squadron, Council Member John C. Liu, and Senator Toby Ann Stavisky. View Thompson’s registration fee proposal View Video on of Speech on YouTube View Video on of Q&A on YouTube Joined by City and State legislators, New York City Comptroller William C. Thompson, Jr. expressed his opposition to tolls on the East and Harlem River bridges and promoted his proposal for a weight-based automobile fee as a more equitable revenue stream. Thompson renewed his call in the wake of Thursday’s report by the Commission on Metropolitan Transportation Authority Financing calling for measures to address shrinking revenue at the MTA. Plans calls for new tolls, a payroll tax, cuts in subway, bus and commuter rail service, and a potential fare hike. “While I support and applaud the Commission’s efforts, I am very concerned about the impact of its recommendation for new tolls on the East River and Harlem River bridges on the people of Brooklyn, Queens and the Bronx,” Thompson said. “The bridge toll proposal includes massive start-up and administrative costs and would drain an estimated $400 million from the $1 billion collected to construct and administer the toll collection system. My plan is the more cost-effective approach.” Expected to join Thompson today were: Brooklyn Borough President Marty Markowitz, State Assembly Members Joan L. Millman and Jose R. Peralta, Senators Eric Adams, Kevin S. Parker and Toby Ann Stavisky, Senator-elect Daniel L. Squadron, and Council Members John C. Liu and David I. Weprin. “Tolling the East River bridges amounts to a back-door approach to ‘congestion pricing’ and would unfairly burden Brooklynites and all outer-borough commuters, including those on Staten Island, who are already overburdened by tolls and underserved by public transit,” Markowitz said. “Contrary to the assumption that only rich people have cars, many outer-borough residents in areas underserved by mass transit are often less affluent, and rely on vehicles for their livelihoods. These tolls are basically an attempt to balance the transit system’s books on the backs of working people and small businesses.” “Putting tolls on the East and Harlem Rivers will be too much of a burden for working-class New Yorkers,” Peralta said. “We will look into finding alternate ways to produce revenue at the State level.” “The East River and Harlem River bridges are under the jurisdiction of the City Department of Transportation, and are, in reality, an extension of city streets,” said Stavisky, a Senate Transportation Committee member. “The next thing we know, the City will want to put a toll on 59th Street and charge you to walk from Second to First Avenue. This is congestion pricing Act II; it was wrong then and it’s wrong now. To balance its budget, the MTA should look at its real estate assets to see which of its buildings can be sold. The MTA also should attempt to streamline its headquarters operation.” Liu, who chairs the Council’s Transportation Committee, stated: “The proposal to toll the East and Harlem River bridges is highly divisive and will only tear the City apart, setting borough against borough. Furthermore, tolls are extremely inefficient since $1 billion in tolls would need to be collected to achieve net revenue of $600 million. A better way to generate funds for mass transit would be to increase the proposed payroll tax to 0.46% – instead of 0.33% – to achieve the same target revenue.” “Instead of charging tolls, why not bring back the Commuter Tax?” asked Weprin, who chairs the Council’s Finance Committee. “Revenue from the tax could be dedicated to specific uses that are likely to benefit commuters, such as transportation infrastructure, police, fire, and sanitation. Placing tolls at these crossings is effectively another tax burden on the already economically strapped citizens of New York City; we must find solutions that don’t continue to hurt the outer-borough residents, the taxpayers and the small businessperson.” Despite his concerns about new tolls, Comptroller Thompson embraced another component of the Commission’s plan: a Mobility Tax of one-third of a percent on payrolls in the Metropolitan Commuter Transportation District (the 12 New York counties covered by the MTA). That alone would generate $1.5 billion. “This affords us an opportunity to provide some relief to small business owners in paying those payroll taxes,” Thompson said. “I am recommending that we look for ways to exempt the smallest businesses from the proposed Mobility Tax, possibly through a threshold that applies either to annual revenue generated or a firm’s number of employees. Especially in this time of economic distress, we must continue to ensure that we do everything we can to help small businesses to grow and expand.” At today’s news conference, Thompson renewed his pitch to impose a weight-based registration fee on private and commercial vehicles. The plan – available at www.comptroller.nyc.gov – would annually generate more than $1 billion in regional revenue for the MTA while promoting energy independence and easing parking shortages in New York City neighborhoods. Thompson also has called for the reinstatement of the Commuter Tax, which would add approximately $762 million in annual revenue. Together, the weight-based fee and the Commuter Tax would generate more than $1.8 billion in annual transit funding. Currently, New Yorkers register their cars for a flat vehicle use tax of $30 every two years in addition to weight-based State registration fees, which annually generates $28 million. Raising the average fee by $200 would generate an additional $365 million in annual revenue from City residents and more than $1 billion from the 12 New York counties covered by the MTA. Thompson proposed a new, additional, weight-based transit-dedicated assessment of $100 for vehicles weighing 2,300 pounds or less, plus $.09 for every pound of curb weight over 2,300. Under such a fee structure, a Toyota Yaris, a light and fuel-efficient vehicle with a curb weight of 2,293 pounds, would cost an additional $100 to register, while a Lincoln Navigator, one of the heaviest and least fuel-efficient vehicles with a curb weight of 5,963 pounds, would cost an additional $430 to register. Thompson said the fee could be phased-in over time, allowing residents to take the fee into account when making auto purchasing decisions. He noted that New Yorkers who own cars generally have higher incomes; therefore, the fee structure would impact New Yorkers with lower incomes to a lesser degree than seeking to raise revenues by raising transit fares. In addition to creating additional revenue for public transportation, Thompson said the fee would bring other positive effects. Such a fee would encourage fuel efficiency by providing residents an added incentive to purchase lighter, more fuel-efficient vehicles. The fee essentially would raise the cost of owning a car in New York City, thereby reducing auto ownership to some degree, resulting in additional parking due to a smaller amount of cars being parked, as well as the smaller size of the more fuel-efficient cars. The fee could further be coupled with Department of Transportation-restricted parking zones in residential neighborhoods, within which only New York City-registered vehicles could park overnight. This measure would act as a disincentive for residents to register vehicles in other jurisdictions in order to evade weight-based fees. “My proposal makes sense for many reasons,” Thompson said. “First, compared to the other revenue-generating ideas proposed by the Ravitch Commission, it is less sensitive to swings in our local economy. It is also incredibly simple to administer, and there are no extra or hidden costs. There is no infrastructure to build; no special billing system to create, no need to chase down drivers…I hope the State Legislature gives my alternative proposal the serious consideration it deserves as it takes up the recommendations of the Ravitch Commission.”