The New York Senate was expected to finish a bill last night to close a funding gap for the Metropolitan Transportation Authority that would create revenue streams to support up to $6 billion of bonds for the transit system, a spokesman for the Senate majority said.

The Senate could vote as soon as today on a plan that would dedicate for capital spending 25% of an estimated $1.76 billion to be raised annually through a menu of fees and taxes, said Austin Shafran, spokesman for Senate Majority Leader Malcolm Smith, D-Queens.

"Our plan allows a continued commitment to the core capital program to the extent possible," Shafran said. The proposal would support $182 million of new debt service in the current year, he said, adding that the funding is a "down payment" on the 2010 through 2014 capital program, which the agency's board will consider later this year.

"Other more expensive long term capital projects like Second Avenue subway have to be reevaluated based on the state of the economy," Shafran said.

The revenue would support more bonding than the $4.5 billion that had been expected from a congestion-pricing proposal which the Legislature allowed to die last year, but much less than the $20 billion to $30 billion that a plan proposed last year by a commission headed by former MTA chairman Richard Ravitch.

The lion's share of revenue from both Ravitch's and the Senate's proposal are roughly $1.5 billion generated by a payroll tax in the 12 counties served by the MTA. The Senate plan would impose a 0.34% payroll tax in New York City as well as the counties of Nassau, Suffolk, Westchester and Rockland, and a 0.25% payroll tax in Dutchess, Orange and Putnam counties.

The new bill will include amendments proposed by Gov. David Paterson that would divide $60 million among school districts in the counties hit by the payroll tax.

The Senate backed off of a demand that MTA funding be linked to funding for bridges and roads in upstate New York and Long Island. The original Senate bill called for a $1 per ride taxi surcharge that would have been split evenly between the MTA and the Highway and Bridge Trust Fund. Under the new bill, which is based on bill S. 4487, that surcharge would be just 50 cents and would raise and estimated $95 million annually only for the MTA.

Other means of raising revenue include several motor vehicle fees. According to the original bill, the fees would be deposited into a segregated account called the MTA assistance fund.

The new revenue measures would allow the authority to increase tolls and fares by an 8% yield, rather than the 23% yield the MTA board approved last month, as well as service cuts to close a $1.2 billion gap. Last week the agency announced its current-year deficit had grown by an additional $621 million. The fare and toll increases as well as service cuts are scheduled to be phased in starting on May 31.

Moody's Investors Service last month put the MTA's transportation revenue bonds on watch for downgrade, stating that without legislative action, the agency's ability to meet its needs through fare increases and service cuts would not support an A2 rating.

Moody's analyst Nichole Johnson said she couldn't comment on how the latest Senate proposal would affect the MTA's credit rating, noting that several proposals had already come and gone without being adopted.

"We really haven't seen the full story yet," she said. "They haven't adopted anything."

Moody's tries to resolve ratings watchlist actions within 90 days, meaning that the rating agency will likely make a decision on the MTA's rating before July.

"We haven't seen any numbers of how it all fits together, how it supports not only its ongoing operations but capital needs going forward, including debt service," Johnson said of the Senate proposal. "It remains to be seen what, if any, plan will actually be adopted that first of all addresses the looming budget gaps and then secondly addresses their long-term operational needs and capital needs."

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