Everyone wants to fix the MTA, but who’s paying?

MTA
MTA
Marc A. Hermann/MTA
Authorities released a long-term “Fast Forward Plan” to make the beleaguered subway and bus system more efficient and reliable earlier this year.

Everyone wants to fix the MTA, but who’s paying?

Fixing the MTA is estimated to cost $40 billion.
October 24, 2018

At Wednesday’s Metropolitan Transportation Authority board meeting, Chairman Joseph Lhota called for multiple new sources of revenue to address the MTA’s operating deficits and capital funding needs. “I say multiple sources of new additional revenue because congestion pricing, even if fully developed and completely implemented, will not be enough,” Lhota said.

The funding needs of the MTA expanded earlier this year when the New York City Transit Authority released a long-term “Fast Forward Plan” to make the beleaguered subway and bus system more efficient and reliable. The plan will remain a proposal unless the MTA obtains the necessary funding, which has been estimated by NYC Transit Authority President Andy Byford to cost $40 billion over 10 years.

“Obviously the elephant is, well, ‘How much does this all cost and how are we going to pay for it?,’” Byford said Oct. 11 at a Harlem town hall to get public feedback on the plan. “We are in the final process of calculating the exact cost of that plan that I just outlined to you, and it is big bucks, right? We are talking billions of dollars,” he said.

The MTA budget is divided into two kinds of funding: operating and capital. According to Byford, fares cover approximately 46 percent of daily operating expenses, such as bus and subway driver salaries. The remaining 54 percent is covered by miscellaneous revenue like advertising, rental income, and taxes.Everything else, including maintenance and major repairs, is covered by capital investment funds from the state, city and “in very defined circumstances,” he said, “from the feds in Washington.”

So, to make the Fast Forward Plan reality, the MTA needs additional funding. Politicians and advocacy groups have presented a few ideas for where the money could come from, but nothing has been passed in the state Legislature, which would have to approve any new revenue stream.

Here’s the breakdown of each major proposed funding source:

Congestion pricing

Revenue: $1.1 billion per year

The most high-profile and widely discussed idea, would charge drivers for entering zones where there is heavy traffic, such as Manhattan south of Harlem during business hours. Transit advocates love the idea because it would be a twofer, reducing the city’s choking traffic, which would move buses more quickly, give drivers an incentive to switch to transit, and improve air quality. New York would be the first city in the United States to adopt congestion pricing, but the approach has been adapted in other large cities such as London. Earlier this month at a breakfast for the Association for a Better New York, Gov. Andrew Cuomo said in reference to fixing the MTA, “there is only one way it happens; that is congestion pricing.”

New York City Mayor Bill de Blasio is not a fan of the idea and in the past he has voiced concerns about congestion pricing being unfair to New Yorkers with hardships such as a low income or disability. (Congestion pricing advocates note that people who drive into Manhattan are on average much wealthier than those who take transit.) Suburban and some outer-borough legislators in Albany are reluctant to back a fee that would affect many of their constituents. Fix NYC, Cuomo’s traffic advisory panel, reported in January that charging cars and trucks on weekdays and weekends could bring in a gross annual revenue of $1.1 billion.

Millionaire’s tax

Revenue: $800 million per year

De Blasio wants to make the wealthiest New York City residents pay for transit modernization. He calls it the “Fair Fix.” By taxing individuals with incomes over $500,000 and couples with incomes over $1 million, the tax proposal is “aimed at raising as much as $800 million annually,” the mayor’s office said last year. A tax on the wealthy would address de Blasio’s concerns with the affordability of congestion pricing for less affluent drivers and also provide funding for subsidized MetroCards for low-income New Yorkers. But, like congestion pricing, only even more so, the millionaire’s tax would not raise enough revenue on its own to fully fund Fast Forward. It also requires state approval and is opposed by Cuomo and the Republican state Senate majority, although that could change in November.

Commuter tax

Revenue: $922 million per year

From 1966 until 1999, New York City taxed nonresidents who worked in the city 0.45 percent to 0.65 percent of their income. The state Legislature killed the commuter tax and some people want it back. “Bringing back the commuter tax would correct a historical mistake,” wrote the New York Times editorial board last year. The Times conceded, however, that legislators in Albany would not want to alienate the crucial suburbs during election season.

New York City Councilman Brad Lander has also encouraged reinstating the tax by including it as a proposed funding option on Signal Fail, a website his office developed to advocate for a better subway signal system. If the commuter tax had been in effect for the year 2017, the city Independent Budget Office reported that it would have increased revenue by $922 million.

Carbon tax

Revenue: $7 billion per year

A carbon tax would increase the price of burning fossil fuels and any resulting goods and services. In Canada, British Columbia has been taxing carbon emissions since 2008. There, it is applied to the purchase or use of fuels like gasoline, diesel, natural gas, heating fuel, propane and coal. During her primary campaign, Cynthia Nixon advocated for the carbon tax – or “polluters fee,” as she called it – as part of her “fair way to to pay for a subway that works” and simultaneously combat climate change.

However, according to the Tax Policy Center, the downside of a carbon tax is that it would disproportionately affect low-income households. Even so, the tax that could raise $7 billion annually has garnered support from Democratic elected officials throughout New York state. One possible compromise: reduce some of that revenue by giving a tax rebate to low-income households.

Corporate taxes

Revenue: $9.6 billion per year

In an op-ed written for the Gotham Gazette, former state Assemblyman Jim Brennan argued that it is time for city businesses to contribute to the transit system, especially since their employees use the MTA to get to work. New York businesses have been getting tax cuts at the state level since 2015 and, most recently, the U.S. federal corporate income tax was reduced to 21 percent – a 14 percent cut. Brennan argues that the “$9.6 billion in new cash annually into the pockets of New York corporations” should be used to fix the MTA. What Brennan is proposing is independent of the Metropolitan Commuter Transportation Mobility Tax imposed on some employers who do business in the metropolitan commuter transportation district – New York City, Nassau, Suffolk, Orange, Putnam, Dutchess, Rockland and Westchester counties.

Christina Saint Louis
is an editorial intern at City & State.
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