Payroll tax increase, savings would fund $68B in MTA projects under NYS budget deal
Gov. Kathy Hochul’s tentative deal to fund billions of dollars in MTA infrastructure projects by hiking payroll taxes on some employers in the region drew mixed reviews Tuesday, with supporters praising the plan as necessary to keep the transit system safe and reliable, and opponents criticizing it as another cash grab from taxpayers.
The agreement, hammered out Monday night as part a $254 billion state budget deal, promises to fully fund the Metropolitan Transportation Authority’s $68 billion 2025-29 capital budget, in large part through an increase in taxes paid by employers in the MTA region with more than $10 million in payroll. Smaller employers will see either no change in payroll taxes, or reductions, according to Hochul’s office. Municipalities will be exempt from the taxes.
Hochul spokesman Gordon Tepper said "final budget bills will be printed later this week that will provide additional details" on the MTA funding plan. MTA officials declined to comment Tuesday, but are expected to address the looming deal at the transit agency’s monthly board meeting Wednesday.
The increased payroll tax is expected to generate $1.4 billion annually, which will be used to finance $30 billion in spending in the capital plan. The MTA, under the agreement, must also come up with up with $150 million in recurring annual efficiencies that would be used to finance $3 billion in spending, according to Hochul’s office.
Asked if the internal belt tightening is achievable, MTA board member Marc Herbst said in an interview Tuesday, "It’s going to have to be."
"That’s the goal. That’s what’s needed to be done. And every effort is going to made to move in that direction," said Herbst, who represents Suffolk County, adding that the MTA has, in recent years, proven its ability to stick to a budget. "With that recent track record, the confidence is there, and it’s for the betterment of all commuters."
State, New York City and federal subsidies would cover most of the rest of the record-high $68 billion plan, which sets aside $6 billion for the Long Island Rail Road, including accessibility upgrades at stations, new trains to fully replace the LIRR’s 1980s-era M3 fleet, and groundwork for the future electrification of tracks to Yaphank.
The state is also kicking in $1.2 billion in funds that it initially earmarked for the redevelopment of Penn Station — an effort that the federal government recently announced it was taking over, according to Hochul’s office.
State Sen. Dean Murray (R-East Patchogue), a frequent critic of MTA spending, said he was eager to "see more details" of the deal, which must be approved by the State Legislature. But Murray noted it’s not the first time that the MTA and state have turned to employers on Long Island to help balance the transit agency’s books. In 2009, a payroll tax hike was the foundation of a bailout of the MTA, as it faced a $2 billion deficit. Democrats lost control of the State Senate the following year.
Murray noted that the newly proposed tax increase on some employers comes in the same year as the MTA enacted its congestion pricing tolls, and has plans to raise fares and tolls, including on the Long Island Rail Road.
"Once again, the fallback, or the go-to, is the taxpayers, the people. They’re going to reach back into the pockets of business owners," Murray said. "You’re literally taxing jobs. You’re punishing success."
Republican Assemb. Ed Ra, of Garden City South, also denounced the agreement, posting on X that it was "done behind closed doors and a month late. NY deserves better."
Long Island business leaders expressed conflicting sentiments over the plan. Matthew Cohen, president and CEO of the Long Island Association, a business group, called the MTA funding strategy "a delicate tightrope."
"We will closely monitor how the largest companies fare after being asked to carry a greater burden balanced against the good news of some tax relief for small businesses," Cohen said in a statement, adding that the tax breaks going to smaller employers "could cause a positive domino effect for the region."
Gov. Kathy Hochul’s tentative deal to fund billions of dollars in MTA infrastructure projects by hiking payroll taxes on some employers in the region drew mixed reviews Tuesday, with supporters praising the plan as necessary to keep the transit system safe and reliable, and opponents criticizing it as another cash grab from taxpayers.
The agreement, hammered out Monday night as part a $254 billion state budget deal, promises to fully fund the Metropolitan Transportation Authority’s $68 billion 2025-29 capital budget, in large part through an increase in taxes paid by employers in the MTA region with more than $10 million in payroll. Smaller employers will see either no change in payroll taxes, or reductions, according to Hochul’s office. Municipalities will be exempt from the taxes.
Hochul spokesman Gordon Tepper said "final budget bills will be printed later this week that will provide additional details" on the MTA funding plan. MTA officials declined to comment Tuesday, but are expected to address the looming deal at the transit agency’s monthly board meeting Wednesday.
The increased payroll tax is expected to generate $1.4 billion annually, which will be used to finance $30 billion in spending in the capital plan. The MTA, under the agreement, must also come up with up with $150 million in recurring annual efficiencies that would be used to finance $3 billion in spending, according to Hochul’s office.
WHAT NEWSDAY FOUND
The tentative state budget deal would fund billions of dollars in MTA infrastructure by hiking payroll taxes and finding savings in the agency's budget.
The increased payroll tax is expected to generate $1.4 billion annually, which will be used to finance $30 billion in spending in the capital plan. The MTA, under the agreement, must also come up with up with $150 million in recurring annual efficiencies.
Supporters praised the plan as necessary to keep the transit system safe and reliable, while opponents criticized it as another hit for taxpayers.
Asked if the internal belt tightening is achievable, MTA board member Marc Herbst said in an interview Tuesday, "It’s going to have to be."
"That’s the goal. That’s what’s needed to be done. And every effort is going to made to move in that direction," said Herbst, who represents Suffolk County, adding that the MTA has, in recent years, proven its ability to stick to a budget. "With that recent track record, the confidence is there, and it’s for the betterment of all commuters."
State, New York City and federal subsidies would cover most of the rest of the record-high $68 billion plan, which sets aside $6 billion for the Long Island Rail Road, including accessibility upgrades at stations, new trains to fully replace the LIRR’s 1980s-era M3 fleet, and groundwork for the future electrification of tracks to Yaphank.
The state is also kicking in $1.2 billion in funds that it initially earmarked for the redevelopment of Penn Station — an effort that the federal government recently announced it was taking over, according to Hochul’s office.
State Sen. Dean Murray (R-East Patchogue), a frequent critic of MTA spending, said he was eager to "see more details" of the deal, which must be approved by the State Legislature. But Murray noted it’s not the first time that the MTA and state have turned to employers on Long Island to help balance the transit agency’s books. In 2009, a payroll tax hike was the foundation of a bailout of the MTA, as it faced a $2 billion deficit. Democrats lost control of the State Senate the following year.
Murray noted that the newly proposed tax increase on some employers comes in the same year as the MTA enacted its congestion pricing tolls, and has plans to raise fares and tolls, including on the Long Island Rail Road.
"Once again, the fallback, or the go-to, is the taxpayers, the people. They’re going to reach back into the pockets of business owners," Murray said. "You’re literally taxing jobs. You’re punishing success."
Republican Assemb. Ed Ra, of Garden City South, also denounced the agreement, posting on X that it was "done behind closed doors and a month late. NY deserves better."
Long Island business leaders expressed conflicting sentiments over the plan. Matthew Cohen, president and CEO of the Long Island Association, a business group, called the MTA funding strategy "a delicate tightrope."
"We will closely monitor how the largest companies fare after being asked to carry a greater burden balanced against the good news of some tax relief for small businesses," Cohen said in a statement, adding that the tax breaks going to smaller employers "could cause a positive domino effect for the region."
Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.
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Newsday Live Author Series: Christie Brinkley Newsday Live and Long Island LitFest present a conversation with supermodel, actress and author Christie Brinkley. Newsday's Elisa DiStefano hosts a discussion about the American icon's life and new memoir, "Uptown Girl."
