Relates to phasing out the metropolitan commuter transportation mobility tax

Summary of provisions

Section 1. Amends section 801 of the tax law to provide for a tiered relief schedule that will repeal the remaining mobility taxes for the Hudson Valley and Long Island by 2016, and New York City by 2018.

Section 2. Amends paragraph (b-1) of subdivision 2 of section 503 of the vehicle and traffic law to add a new subparagraph (iii) that will provide for an annual decrease in supplemental learner permit/license fees resulting in the elimination of such fees for Hudson Valley and Long Island by 2014, and New York City by 2015.

Section 3. Amends section 499-c of the vehicle and traffic law to provide for an annual decrease in supplemental registration fees resulting in the elimination of such fees for Hudson Valley and Long Island by 2014, and New York City by 2015.

Section 4. Amends the unconsolidated law to provide for a new paragraph (a) and (b). Paragraph (a) clarifies the components of total operating expense as it relates to the proposal. Moreover, it provides for an offset of costs for any reductions in transit aid. Paragraph (b) directs the revenues from containing growth of the operating expenses of the MTA to the MTA finance fund, and any excess savings to a separate subaccount within the finance fund for purposes of reducing the 2013 fare increase.

Section 5. Amends subdivisions 2 and 3 of section 1270-h of the public authorities law to require the MTA to deposit in the MTA finance fund all revenues resulting from limiting the growth of the MTA's total operating to the MTA finance fund, and any excess savings to a separate subaccount within the finance fund for purposes of reducing the 2013 fare increase. Clarifies that the monies deposited within the two thousand thirteen fare increase reduction subaccount are exempted from alternative use.

Section 6. Effective date.

Justification

In 2009, the State enacted the controversial Metropolitan Transportation Authority (MTA) bailout plan. As part of this plan, new revenue streams were established: a mobility tax, also known as the MTA payroll tax was imposed on employers in the MTA region and supplemental motor vehicle license and registration fees were increased on owners in the MTA region. In addition, a fare increase was scheduled to begin in 2013.

Recently, the State repealed the MTA payroll tax on 80% of all businesses, and eliminated the payroll tax imposed on schools and libraries. In order to achieve the repeal of the payroll tax impacting these entities, however, the State subsidized the loss of revenue generated from these funding streams.

Over the last several decades, the MTA budgets have far exceeded the rate of inflation and their unsustainable levels of spending have consistently placed a burden on tax payers by requiring increased state subsidies.

In 2012, the MTA operating budget, excluding increases in debt service, will exceed $13.8 billion. This figure surpasses the operating budgets of the Power Authority; the Port Authority of New York and New Jersey; the Dormitory Authority; the Urban Development Corporation; the Long Island Power Authority; and the New York State Thruway Authority - combined

In fact, the MTA operating budget exceeds the combined operating budgets of all cities (except NYC); all towns and all villages in the entire state of New York.

Recognizing that the perpetually cash-hungry MTA has had a long history of being fiscally mismanaged, this bill eliminates the newly imposed taxes and fees and reduces projected fare increases. By curbing the out of control spending trends that have plagued the MTA since its inception in 1965, the MTA spending will be limited to 2% or 120% of the CPI, whichever is less. This action will achieve billions in revenue generated through savings over the next several years. In fact, if the spending limitation called for in this plan had been put in place beginning in 2006, the MTA would have already saved New Yorkers over $6.6 billion.

Spending limits have been similarly placed on local governments and school districts with the enactment of the Real Property Tax Cap in 2011 which imposes a 2% cap on the local tax levy. In the same vein, the State has adhered to a self-imposed spending cap of 2% in the adoption of the last two State budgets, while addressing multi-billion deficits.

This plan calls for the MTA to operate more efficiently and within the spending limits structured for municipalities across the state. As a result, the revenues achieved through savings will allow the phase

out of the mobility/payroll tax, and the elimination of the supplemental car registration and license fees. By creating a mechanism which forces the MTA to be fiscally responsible, tax relief and fare reductions are easily achieved by utilizing the revenue generated from the significant savings produced, without compromising the MTA capital budget.

Eliminate the Remaining Mobility Tax

o 2013- cut by 50% for the Quarter Pounder (Dutchess, Putnam, Orange, and Rockland) Counties

o 2014 - cut by 50% for all Hudson Valley & LI Counties

o 2015 - cut by 80% for all Hudson Valley & LI Counties

o 2015 - cut by 26% for NYC

o 2016 - repealed for all Hudson Valley and LI Counties

o 2016 - cut by 44% for NYC

o 2017 - cut by 71% for NYC

o 2018 - repealed for NYC

Eliminate the Supplemental License Fee and Supplemental Registration Fee

o 2013 - cut by 75% for all Hudson Valley and LI Counties

o 2013 - cut by 30% for NYC

o 2014 - repealed for all Hudson Valley and LI Counties

o 2014 - cut by 65% for NYC

o 2015 - repealed for NYC

Reduce the 2013 Fare Increase

o Reduces the planned 2013 7.5% fare increase for the MTA Region to 5.5%

Legislative history

New bill.

Fiscal implications

The proposal caps the growth in the MTA's operating budget over prior year levels to the lesser of 120% of inflation or 2% growth. Further, it utilizes the surplus revenue available from the limitation on spending growth to offset the reduction in transit aid from reduced taxes and fees, and to reduce the 2013 planned fare increase from

7.5% to 5.5%. As such, there are corresponding cost savings to both consumers and the State.

Effective date

This act shall take effect immediately.