Temporary MTA Funding Plan Jeopardizes New York’s Fiscal Future

FOR IMMEDIATE RELEASE: June 7, 2024
Media Contact: press@fiscalpolicy.org

“Long-term investment needs, such as the MTA’s capital budget, must be funded through stable, recurring revenue measures”

 

“Abandoning a stable revenue source in favor of temporary measures is a decision to weaken New York’s fiscal stability”

NEW YORK | The Fiscal Policy Institute Director Nathan Gusdorf today released the following statement:

“Governor Hochul’s directive to the MTA to ‘indefinitely pause’ planned congestion pricing for New York City, and her proposed alternative revenue sources, are ill-advised tax and economic policy.

“The Governor is now proposing to temporarily rely on informal reserves in New York’s general fund — an inappropriate use of reserves, which should be used to manage fluctuations in the state economy, not replace permanent sources of revenue. Long-term investment needs, such as the MTA’s capital budget, must be funded through stable, recurring revenue measures.

“Congestion pricing offers a rare opportunity to create a new, reliable source of revenue for infrastructure investment while improving the quality of life in the city. Abandoning a stable revenue source in favor of temporary measures is a decision to weaken New York’s fiscal stability.

“The Governor’s original proposal to raise the MTA payroll tax rate on businesses and workers in New York City — which would disproportionately burden low income workers of color — particularly comes as a surprise given her recent opposition to tax increases on the wealthiest New Yorkers. The Governor’s new willingness to raise payroll taxes is striking. Hochul opened this year’s budget negotiation by announcing her refusal to raise income tax rates on the wealthiest New Yorkers, while insisting on the necessity of a $1.2 billion cut to Medicaid spending and a nearly $500 million reduction in planned spending on School Aid.

“The choice to abandon congestion pricing is also surprising given the bipartisan character of support for the policy, ranging from environmental activists to big business. New Yorkers understand that a reliable MTA is the beating heart of the largest metropolitan economy in the world, and that the $15 billion of capital funding expected from congestion pricing is desperately needed for infrastructure upgrades.”

Background:

Informal Reserves

  • The current proposal to spend $1 billion out of the State’s general fund is in effect a decision to use reserves. The State has $21.6 billion in assets formally designated as reserves, and an additional $8.8 billion in assets that are not committed to any spending program (and therefore are essentially also reserves). Thus, the State has a total of $30.4 billion available in the general fund to manage its spending obligations.

Payroll Tax

  • New York State already raised the payroll tax on NYC business and residents to increase MTA funding last year.
  • Last year’s increase indefensibly excluded counties in Long Island and the Hudson Valley, thereby significantly increasing the tax increase imposed on New York City businesses.
  • Experts generally agree that some share of a payroll tax is borne by a business’s employees. Exempting the suburbs from last year’s payroll tax increase was, therefore, a decision to shift a higher tax burden onto workers of color, who are disproportionately located in New York City.
  • 25 percent of MTA operating costs are from the LIRR and Metro-North, and over 50 percent of all employment in the suburbs is attributable to commuters who work in New York City and the local jobs they create.

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The Fiscal Policy Institute is a nonpartisan, nonprofit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all.

###

Published On: June 7th, 2024|Categories: Featured on Home, Press Releases, State Budget, Tax & Budget, Tax Policy|

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Temporary MTA Funding Plan Jeopardizes New York’s Fiscal Future

FOR IMMEDIATE RELEASE: June 7, 2024
Media Contact: press@fiscalpolicy.org

“Long-term investment needs, such as the MTA’s capital budget, must be funded through stable, recurring revenue measures”

 

“Abandoning a stable revenue source in favor of temporary measures is a decision to weaken New York’s fiscal stability”

NEW YORK | The Fiscal Policy Institute Director Nathan Gusdorf today released the following statement:

“Governor Hochul’s directive to the MTA to ‘indefinitely pause’ planned congestion pricing for New York City, and her proposed alternative revenue sources, are ill-advised tax and economic policy.

“The Governor is now proposing to temporarily rely on informal reserves in New York’s general fund — an inappropriate use of reserves, which should be used to manage fluctuations in the state economy, not replace permanent sources of revenue. Long-term investment needs, such as the MTA’s capital budget, must be funded through stable, recurring revenue measures.

“Congestion pricing offers a rare opportunity to create a new, reliable source of revenue for infrastructure investment while improving the quality of life in the city. Abandoning a stable revenue source in favor of temporary measures is a decision to weaken New York’s fiscal stability.

“The Governor’s original proposal to raise the MTA payroll tax rate on businesses and workers in New York City — which would disproportionately burden low income workers of color — particularly comes as a surprise given her recent opposition to tax increases on the wealthiest New Yorkers. The Governor’s new willingness to raise payroll taxes is striking. Hochul opened this year’s budget negotiation by announcing her refusal to raise income tax rates on the wealthiest New Yorkers, while insisting on the necessity of a $1.2 billion cut to Medicaid spending and a nearly $500 million reduction in planned spending on School Aid.

“The choice to abandon congestion pricing is also surprising given the bipartisan character of support for the policy, ranging from environmental activists to big business. New Yorkers understand that a reliable MTA is the beating heart of the largest metropolitan economy in the world, and that the $15 billion of capital funding expected from congestion pricing is desperately needed for infrastructure upgrades.”

Background:

Informal Reserves

  • The current proposal to spend $1 billion out of the State’s general fund is in effect a decision to use reserves. The State has $21.6 billion in assets formally designated as reserves, and an additional $8.8 billion in assets that are not committed to any spending program (and therefore are essentially also reserves). Thus, the State has a total of $30.4 billion available in the general fund to manage its spending obligations.

Payroll Tax

  • New York State already raised the payroll tax on NYC business and residents to increase MTA funding last year.
  • Last year’s increase indefensibly excluded counties in Long Island and the Hudson Valley, thereby significantly increasing the tax increase imposed on New York City businesses.
  • Experts generally agree that some share of a payroll tax is borne by a business’s employees. Exempting the suburbs from last year’s payroll tax increase was, therefore, a decision to shift a higher tax burden onto workers of color, who are disproportionately located in New York City.
  • 25 percent of MTA operating costs are from the LIRR and Metro-North, and over 50 percent of all employment in the suburbs is attributable to commuters who work in New York City and the local jobs they create.

###

The Fiscal Policy Institute is a nonpartisan, nonprofit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all.

###

Published On: June 7th, 2024|Categories: Featured on Home, Press Releases, State Budget, Tax & Budget, Tax Policy|

Share on Social Media!