"First the governor proposed a state budget that slashes support for New York City but not the suburbs, and now he proposes to wallop city businesses with more taxes while lightening the load for businesses in the suburbs," Bloomberg says in his statement. The idea that the state can spare the suburbs while sacking the city is terrible economics, grossly unfair and contrary to every principle of good regional development."
The influential Partnership for New York City last year endorsed the concept of such a tax, which now puts a 0.34% levy, or 34 cents for every $100, on payroll for all businesses in the MTA's service area. But president Kathryn Wylde issued a statement Tuesday implying that the group would support an overhaul of the current structure only if reforming the MTA's finances came along with it.
"The Partnership for New York City remains open to discussing new ways to improve the MTA's finances, so long as the approach is equitable and balanced," Wylde says in her statement. "Additional funding, however, cannot be justified unless the MTA gets better control of spending and improves its contracting and procurement processes."
Paterson's proposal would increase the tax for New York businesses to 0.54% on payroll, while dropping the rate for suburban counties to 0.17%. The goal is to restore 2010 revenues to the originally projected $1.54 billion, which the state last week estimated would be about $350 million lower for the current fiscal year. The rationale for raising the city's share of the tax revenue from 70% to 88%, according to the governor, is that "New York City is the destination for over 90% of weekday ridership."
The governor's move comes after Moody's Investors Service lowered its rating of MTA revenue bonds last week. In a report, the ratings agency cited the MTA's "revenue deterioration over the past several months, leading to increased financial strain and liquidity pressure after the MTA had already addressed declining revenues by reducing spending and proposing service cuts to take effect later this year."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
