December 4, 2008 / 6:12 PM / 11 years ago

UPDATE 1-NY MTA fiscal crisis means more taxes, tolls, fares

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By Joan Gralla

NEW YORK, Dec 4 (Reuters) - Solving the fiscal crisis gripping New York’s Metropolitan Transportation Authority will require every regional employer to pay a new payroll tax and new tolls on motorists on the East River and Harlem crossings, a new commission’s report said on Thursday.

Subway and bus riders will also have to pay higher fares, according to Richard Ravitch, a former chairman of the agency, who led the commission that produced the report.

“This is an effort to spread the burden among the largest group we possibly can,” Ravitch said at a news conference.

This would spare straphangers and motorists draconian fare and toll increases and service cuts, from less cleaning to fewer trains, which the agency said was its only alternative.

The nation’s biggest mass transit agency last month proposed a “doomsday” budget that would boost revenues by 23 percent, adding 50 cents to the current $2.00 one-way subway fare. Ravitch’s plan would use the money raised in the first year by the new payroll tax to minimize these increases, letting the agency revert to the 8 percent hike first planned.

But the legislature and Gov David Paterson, a Democrat who appointed Ravitch, must approve the overhaul, which was billed as a way to free straphangers from paying for anything other than the operating expenses, including depreciation.

“My overall thought is we’re going to have to make the tough choices; it’s either going to one source of pain or another,” Paterson said.

The new bridge tolls echo Bloomberg’s plan to combat traffic jams by charging motorists $8 to drive into midtown Manhattan on weekdays, which was shot down by the legislature.

Bloomberg pledged to work with the legislature. The mayor also made it clear that New York City will not hand its bridges over for nothing and Ravitch estimated the city would save hundreds of millions a year in maintenance if the state and federal government agree to the take over.

“One thing we’ve got to make sure is that we don’t take an asset and sell them and use the money for operating expenses,” Bloomberg said. “That’s not good fiscal policy.”

Capital projects, from upgrading to expanding the system that serves more than 8 million people a day, would be paid for with the new tax on employers, called a “mobility” tax.

Set at 33 cents per $100, this tax would raise $1.5 billion a year. The cash would be locked up in a new borrowing arm to ensure it can be used only for capital spending.

“It would be a totally new credit,” Ravitch said. That might please investors because many now have limits on how much of any one agency’s debt they can buy, and municipal debt is especially popular in New York because it is home to lots of wealthy individuals who prize tax-free income.

The new tolls on the East River and Harlem River bridges would be used to improve bus service, and “enormous” cost savings could be achieved if the counties that surround New York City join into a new regional bus arm, Ravitch said. (Reporting by Joan Gralla, Editing by Chizu Nomiyama)

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