Payroll mobility tax a key part of transit funding
In the aftermath of her State of the State address, I challenged Gov. Kathy Hochul to step up and fix the MTA’S multi-billion-dollar deficit. In her executive budget address, she did. The governor’s proposal takes a thoughtful, balanced approach to restoring the MTA’S financial health through a mix of significant internal cost-savings, moderate fare and toll increases, realigned cost-sharing with the state and city of New York, and new revenue from future casinos.
Another key component is a slight increase to the payroll mobility tax (PMT) — from 0.34 percent to 0.5 percent — to generate $800 million in new revenue for the agency each year. This is the right move, and not just because I helped create the tax as lieutenant governor in 2009.
The PMT is a good source for transit funding. It’s not regressive like the sales taxes that typically fund operating budgets at transit agencies around the United States. Its burden falls on certain employers based in the city and the suburbs, largely in line with the relative system costs of the MTA. And for the narrow range of companies affected — only the largest five percent of all businesses in the authority’s service region — it’s deductible from federal corporate income taxes.
There’s been criticism since the PMT’S inception that it would hurt job growth; that’s simply not true. In fact, job growth in the MTA region has outperformed New York state and the U.S. as a whole since the tax was implemented. Even the agency’s suburban counties have gained more jobs than the counties immediately outside them.
And as I said, the proposed rate increase applies only to a small cross section of businesses with annual payrolls above $1.75 million. Many of these employers have workforces that can (and have been) working remotely. They nevertheless want robust transit service – and strong law enforcement — throughout all five days of the workweek. I don’t think it’s unreasonable to ask them to shoulder some of the costs.
Gov. Hochul smartly agrees. She recognizes the vital importance of transit not only to the daily lives of millions of New Yorkers, but also to the regional economy. We all remember the bad old days of the 1970s and ‘80s, when erratic service, dilapidated cars and stations, and a notable lack of public safety were the prevailing images of the MTA. That’s not where the MTA is at today, even with its financial issues. Service has never been better, and the agency is well on its way to delivering on a historic $55 billion capital program.
The governor is wise to learn from the mistakes of the past and preserve this progress. It’s time for everybody else to get on board.