5:12 pm Aug. 23, 2012
M.T.A. chairman Joe Lhota today warned of "devastating service cuts" if a court's ruling that struck down an M.T.A tax is upheld.
"Without the payroll mobility tax, the M.T.A. would be forced to balance its budget with a combination of devastating service cuts and ever-increasing fare hikes," said Lhota, speaking before a phalanx of news cameras in Grand Central Terminal's Vanderbilt Hall on Thursday afternoon.
Yesterday, a Long Island court ruled that the so-called payroll mobility tax, which levies 34 cents on every $100 of payroll in the 12 counties served by the M.T.A.'s buses, subways and commuter rail, was unconstitutional.
Similar challenges have been dismissed by other courts since the tax passed in 2009, and this particular judgment is not considered likely to be upheld.
But Lhota was not taking any chances. Nor was he wasting an opportunity to underscore the importance of the financially ailing authority to the metropolitan region.
Since taking charge of the M.T.A. last year, Lhota has made it his express mission to improve its reputation amongst riders, with the belief that only if people like the M.T.A., will they be willing to better fund it.
The tax contributes some $1.26 billion of revenue to the authority's $13 billion operating budget every year. It was passed in conjunction with four other M.T.A.-related taxes (a vehicle registration fee, taxi surcharge, car rental tax and car license fee) that, combined with the payroll mobility tax, contribute $1.8 billion annually to the authority.
Lhota believes the court's ruling jeopardizes the entire package.
Since the passage of the payroll mobility tax, suburban legislators have been clamoring for its elimination, and late last year they found some success with Governor Andrew Cuomo, when he agreed to exempt some freelancers, smaller businesses and schools, and reduce the rates for some others. The governor promised to make the M.T.A. whole using general funds, which he did, but there's no guarantee what will happen in future years, and with future governors.
With or without the payroll mobility tax, the M.T.A.'s financial situation is considered fragile.
Assuming the payroll mobility tax remains unpopular in the suburbs and legislators continue trying to chip away at it, and assuming the M.T.A.'s finances remain on shaky ground, is Lhota exploring any new funding mechanisms?
"I will work with the state legislature, I will work with the governor to see if there is a way in which we can construct something that is not as controversial as the [payroll mobility tax,]" Lhota said on Thursday. "But until that time, the PMT needs to continue. And we need to be able to continue to receive the revenue from the PMT to provide the level of service that we have been providing."
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