The Fiscal Hostage Taking

The Fiscal Hostage Taking:

When the MTA’s Greed Meets Albany’s Unrestraint

As people from Long Island, Upstate New York and Connecticut travel into work in New York City each day, they’ve all noticed one thing: it costs more. Bridge and tunnel tolls went up midway through July. Subway and bus fares went up by about 12.5 percent, 25 cents, at the end of June. In November, those who travel by way of taxi in New York City will find themselves paying even more than the already excessively expensive cab rides, when a 50 cent surcharge is tacked on.

Why is this all happening? Well there’s a very simple reason. The MTA needs more money. Earlier this year the Metropolitan Transit Authority (MTA), following the example of our banks, went to Albany pleading poverty and demanding money from the New York State legislature in order to remain solvent; the MTA threatened fare hikes of over 25 percent for buses, subways and trains as well as extensive service cuts if an alternative source of income was not found. The MTA controls Metro North Railroad, Long Island Railroad, The New York City bus and subway systems as well as many New York City bridges and tunnels, including the Verrazano Bride, Robert F. Kennedy Memorial Bridge and the Queens Midtown Tunnel. After months of debate the NYS Assembly and Senate passed a bill to create and maintain additional funding for the MTA in a matter of two days. The bill is estimated to raise about one billion dollars for the MTA in 2009 and around 1.9 billion dollars in 2010. You may find yourself wondering: Where is all this money coming from? The answer is YOU.

The MTA Bailout bill has caused outraged protest throughout the 12 county region it affects, named the “Metropolitan Commuter Transportation District,” a region solely connected by the presence of the MTA within it. The bill has created a series of new taxes and fees to be imposed. Taxpayers, businesses, non-profit organizations, local governments, public schools, and hospitals are just some of those being hurt by the bill. The bill includes new license and registration fees, a new tax on rental cars and a surcharge on taxi rides. The elephant in the bill is a retroactive .34 percent payroll tax put on everyone, including New York State itself. “It’s offensive.” says Marc Molinaro, a New York State Assemblyman representing parts of Dutchess County. “It’s the first time, as best we can tell, in New York State history where New York State imposed a tax on tax-exempt institutions.”

While there is a section of the bill that allocates to reimburse public schools for their payment of the payroll tax, it leaves one to wonder, why didn’t they just exempt public schools from the tax? Assemblyman Joel Miller of the 102^nd Assembly District says, “People have to realize that even though there was some reference to ‘we’re going to give the money back to the public schools,’ that’s a lie. It’s not in the bill. It’s simply a reference to an INTENT to do something, and this government never follows through on intents, they don’t even follow through on the law. So that’s not happening.” And Assemblyman Miller is absolutely right. The language used in the bill is as follows: “It is the intent of the Governor to submit and the legislature to enact for each fiscal year after the ’09 – ’10 fiscal year in an annual budget bill an appropriation in the amount to be paid to school districts pursuant to this section.” Assemblyman Molinaro feels the same way, saying, “Living by a commitment made by the State of New York for future years is like hoping to visit Neverland.”

“We’re not paying it!” jokes Richard Barrett, town supervisor of Milan, a town of about 2,500 people in Northern Dutchess County. “The MTA tax is retroactive to March of ’09. And we never budgeted it because we were just informed that it was due.” While Milan only has to pay about 850 dollars, larger towns in the region have to pay far more. On the website for the town of East Fishkill one is welcomed with “ARE YOU FED UP WITH THE NEW MTA PAYROLL TAXES? PLEASE CALL THE NYS GOVERNOR AND ASSEMBLY SPEAKER AND LET THEM KNOW!” emblazoned in bold lettering. Supervisor John Hickman says that East Fishkill had to allocate upwards of 15,000 dollars to pay the retroactive tax for 2009 and that the town will owe 29,000 dollars in 2010. In fact, New York State itself has to pay about 15 million dollars into the payroll tax each year.

Think you’ve heard the best yet? Oh, it gets better. Despite all of the money being poured into the MTA, there has yet to be a forensic audit of the MTA. That’s right. Albany closed their eyes and handed over the keys to the bank. Not only has there not been an audit since the bailout bill was written, but the MTA actually hires the company that does their audit, which the MTA itself then submits to the state, after review. “I’m not even sure there’s enough ethics and morality in enough people to accomplish anything.” says Joel Miller, one of the assemblymen who have been pushing for an independent forensic audit of the MTA. “Here’s an organization that kept two sets of books and lied about their reserve funds; that increased fares when there was no need to increase fares.”

While the bill contains a clause allowing the State Legislature to commission an independent audit of the MTA, Assembly Speaker, Sheldon Silver, declined to bring the commission of an audit to vote before the Assembly. In fact, in a press release, Mr. Silver, who represents parts of New York City, predominantly in Manhattan, was quoted as saying, “The bill provides a stable, long term funding stream for our buses, subways, Long Island Rail Road and Metro-North and spreads the burden equally among everyone who has a stake in the region's future.” Assemblyman Molinaro cares to disagree stating, “Quite frankly, other than the boroughs of New York City, Long Island and the four counties of the Mid-Hudson Valley get treated as second class citizens in the discussions.” He goes on to say that, “You have the four counties of the Mid-Hudson Valley shouldering disproportionately the burden without receiving the same service and with little address of the waste and fraud and abuse that exists within the agency. And that is offensive at best to us. It’s like a fiscal hostage taking. We’re forced to pay, we get limited services and there’s nothing we can do about it.”

In part H of section 1 of the bailout bill, Albany sought to create transparency and accountability within the MTA. But in reality, which Albany seems to exist outside of, part H created a sovereign leader of the MTA by combining the positions of Chairman and CEO. Now, the chairman of the MTA has fiscal and administrative power over all of the MTA and its subsidiaries. You may find yourself wondering, how does that create accountability and transparency? It doesn’t. Who is the MTA Chair accountable to? It would seem that many people are left asking the same question. He’s not accountable to the riders. He’s not accountable to those of us stuck paying the bill for the MTA. So who, then, is he accountable to?

So what has the MTA Bailout done for us? Fares and tolls still went up. New taxes and fees were imposed upon us. A position of unaccountable power was given to the leader of the MTA. What has been done for us, the people? The MTA has been given a nearly 2 billion dollar bailout, with no sunset on the taxes and fees imposed. They’ve raised fares and tolls for which the MTA expects 50 million dollars for each one percent increase. And as if that weren’t enough money already, the MTA recently held a public hearing on the topic of obtaining federal stimulus funds. As we all sit here scratching our heads over this bailout, my final question is: Is there any end to the greed of the MTA?

All interviews and writing by: Kyle T. Collins