New York Mayor Bill de Blasio hopes the sense of urgency surrounding transit in his city will help carry his millionaire’s tax proposal through the state legislature in Albany.
“In moments of crisis, the political landscape starts to change,” de Blasio said Monday. “I also think at the same time, this has been brewing for years.”
Speaking at Brooklyn Borough Hall, de Blasio proposed increasing the city’s tax rate for the highest incomes to 4.4% from 3.9% percent on earnings above $500,000 for individuals and $1 million for couples.
According to the mayor, the tax hike could raise $700 million to $820 million annually over five years specifically for the city operations within the Metropolitan Transportation Authority, the state-run agency that oversees the subways and buses.
About $500 million could help modernize the system, he said, with the remainder to subsidize half-price fares for lower-income persons.
“If the MTA chooses to, that money could be used in the bonding process and that could support $8 billion in capital projects,” said de Blasio.
The MTA is one of the largest municipal issuers with about $38 billion in debt.
A millionaire's tax and subsidized fares for the poor also reflect the social-justice theme of de Blasio's first term. He is up for re-election in the fall.
De Blasio and the bill’s Albany sponsors, Sen. Michael Gianaris, D-Queens, and Rep. Daniel O’Donnell, D-Manhattan, insist the bill would include a lockbox provision. New York State in recent years has dipped into money earmarked for the MTA to balance its general fund.
“We’re going to be very clear, in the legislation this money cannot be diverted, cannot be sent over to the state budget for some other purpose, cannot be used by the MTA for some other kind of need,” said de Blasio.
“It is explicitly going to be for two things and two things only, capital improvements to fix the basic operations of the MTA and the ‘fair fare’ for those 800,000 New Yorkers. Two things, two things only. No three-card monte. No bait and switch. No moving money away and never giving it back.”
The proposal is likely to be a tough sell in Albany, where the city has often struggled with headwinds in the legislature that include resistance from upstate lawmakers. De Blasio on Monday called the general give-and-take with Albany a “semi-colonial dynamic" and acknowledged "a big fault line" in the state Senate.
De Blasio, shortly after taking office in January 2014, proposed a millionaire’s tax to fund his nascent pre-kindergarten program. He failed, although the state did contribute $300 million for the program.
A running feud between de Blasio and Gov. Andrew Cuomo adds another layer of complexity.
Gianaris wants the legislature to hold an emergency session.
“There’s no reason we can’t go back tomorrow, the day after, next week, whatever because the crisis is that important to solve," he said.
The crisis has spawned a raft of proposals including congestion pricing, which dates to de Blasio predecessor Michael Bloomberg's administration. Its champion today is engineer “Gridlock Sam” Schwartz, the city’s former transportation commissioner.
It calls essentially for tolling now-free East River bridges and imposing surcharge on vehicles entering Manhattan south of 60th Street, while reducing tolls at other crossings. De Blasio has been standoffish about the idea, essentially calling it a non-starter.
Anthony Figliola, vice president of Empire Government Strategies in Uniondale, N.Y., said a citywide and statewide tax amnesty program could provide some additional capital.
“Many other states have done it and netted billions,” he said. “The state alone has over $2.5 billion in uncollected taxes and other fees.
“Also, the city should look into tapping into its surplus to help pay for its share. $500,000 is a gross income number before taxes – for example, 45% to 50% of gross income goes to federal, state and city coffers --and that money after taxes does not go as far as one might think in one of the most expensive places to live in America.”
One reporter Monday even accused de Blasio of "trashing" Wall Street workers who do commute by transit.
Carol Kellermann, president of the watchdog Citizens Budget Commission, said the millionaire’s tax was “not an appropriate way to raise revenue for the MTA.” She added that taxpayers, notably those in the city, already provide about 40% of the mass transit budget through the payroll mobility tax and other levies.
New funding streams to support long-term capital needs, said Kellermann, should come from motorists — “who are not contributing their fair share to the MTA” — through congestion pricing or other motor vehicle-related charges.
“To the extent that the mayor is now supportive of city-funded half-price MetroCards for low-income riders, that support is welcome, but such a program does not require a new tax; it can be funded with existing city resources.”
Just who should backstop the lower-income discounts has been the source of frequent bickering the past few months among de Blasio, Cuomo and MTA officials and some City Council members who criticized the mayor for not including the measure in his fiscal 2018 budget. De Blasio at the time said the state should take the initiative.
MTA chairman Joseph Lhota has called for $856 million for immediate fixes to the creaking subway system. The Cuomo appointee also urged the city to contribute half of his estimated $4 billion for longer-term fixes. So does the leadership of the MTA’s primary labor group, Transport Workers Union Local 100.
"The challenges the subways are facing today need immediate resources and solutions right now, not years from now," Lhota said Monday.
Both Lhota and the union cited the $4 billion the city has in reserves.
“All we heard from the mayor today was crisis, crisis, crisis,” said Earl Phillips, secretary-treasurer of Local 100. “You have $4 billion, Mr. Mayor. Fix the damn crisis and stop playing games.”