The Payroll Mobility Tax is a tax on employers within the Metropolitan Transportation Authority’s service region that provides dedicated funding for the agency’s operating and capital budgets. This page covers CBC’s work on tax rate increases, the allocation of revenue between operating and capital needs, the economic impact on businesses, regional funding equity, and long-term transit fiscal stability.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
Lawmakers should avoid concentrating the burden of closing the MTA financing gap on large businesses through the payroll mobility tax and instead spread it out more fairly.
The MTA and stakeholders should ensure that PMT revenues receive close attention to ensure collections meet forecasts going forward.
Key Data
In January 2026, the CBC reported that the State increased the Payroll Mobility Tax twice in the past three years to provide $2.5 billion more to the MTA, causing total PMT collections to more than double from $1.8 billion in 2022 to $4.7 billion in 2026.
According to a December 2025 report, the PMT rate increase for the highest payroll businesses is projected to yield $1.4 billion in 2026, with State law requiring 28.5% of PMT revenues to be set aside in the Capital Lockbox and the remaining 71.5% flowing to the operating budget.
In June 2024, the CBC opposed a proposal to raise the PMT by $1 billion annually to replace congestion pricing, noting it would hit the same businesses whose taxes were raised by $1.1 billion in the prior year to fund the MTA operating budget.
As of November 2023, the PMT rate was increased from 0.34% to 0.60% on businesses with NYC-based payroll costs at or above $437,500 in any calendar quarter, which was expected to add $1.1 billion annually to the MTA's projected revenue.
A July 2020 analysis showed that PMT receipts were shifted off-budget starting in fiscal year 2019, with off-budget PMT taxes totaling $1,356 million in fiscal year 2019 and $1,837 million in fiscal year 2020.
New York City businesses currently face the highest combined corporate tax rate in the nation at 17.44 percent, a burden that would rise to 22.48 percent if state rates were increased to match New Jersey. This high tax environment, compounded by recent increases in the Payroll Mobility Tax, threatens the state's economic competitiveness and risks driving businesses to relocate or reduce investment.
Key Data
$1.8 billion
— Total Payroll Mobility Tax collections in 2022.
$4.7 billion
— Total Payroll Mobility Tax collections in 2026.
$2.5 billion
— Additional funding provided to the Metropolitan Transportation Authority through Payroll Mobility Tax increases over the past three years.
Payroll Mobility Tax (PMT) revenues are performing better than expected, leading to a $215 million upward revision in 2025 collections. Additionally, the recent rate increase for the highest payroll businesses is expected to generate $1.4 billion in 2026 to support the 2025-2029 Capital Plan.
Key Data
$215 million
— The amount of the upward revision in 2025 for Payroll Mobility Tax (PMT) revenues flowing to the operating budget.
$1.4 billion
— The projected yield in 2026 from the Payroll Mobility Tax (PMT) rate increase for the highest payroll businesses.
28.5 percent
— The portion of Payroll Mobility Tax (PMT) revenues set aside in the Capital Lockbox to support the 2025-2029 Capital Plan.
71.5 percent
— The portion of Payroll Mobility Tax (PMT) revenues that flows to the operating budget.
The state budget relies on raising the payroll mobility tax to address the MTA's financing gap, a move that disproportionately impacts large businesses and threatens New York's economic competitiveness. To ensure the MTA's financial stability, the state must secure labor agreements for operational efficiencies that reduce costs and preserve services.
Recommendations related to Payroll Mobility Tax (PMT)
Lawmakers should avoid concentrating the burden of closing the MTA financing gap on large businesses through the payroll mobility tax and instead spread it out more fairly.
Key Data
$3 billion
— Amount the MTA is expected to contribute to support the plan, though no specifics have been provided.
The recent state budget agreement relies too heavily on the payroll mobility tax to fund MTA capital investments, which negatively impacts economic competitiveness. A more equitable approach would involve distributing these costs across a broader base of riders, drivers, and taxpayers.
Recommendations related to Payroll Mobility Tax (PMT)
It would have been fairer and better for economic competitiveness to spread the cost more broadly among riders, drivers, and taxpayers.
To address the $33.4 billion funding gap in the MTA's 2025-2029 Capital Plan, the state should prioritize rebuilding projects, increase pay-as-you-go contributions, and modestly raise user fees. If tax increases are necessary to cover the remaining shortfall, lawmakers should consider options like regionalizing city-only taxes or implementing small increases in the payroll mobility tax.
Recommendations related to Payroll Mobility Tax (PMT)
Lawmakers should consider options to raise revenue, such as small increases in the payroll mobility tax (PMT), if they decide to raise taxes to fill the MTA capital funding shortfall.
The MTA faces a massive capital funding gap, requiring a strategic approach to prioritize essential repairs over expansion projects while securing sustainable revenue. Options for financing include leveraging existing resources, increasing operational efficiency, and evaluating tax mechanisms like the payroll mobility tax to ensure the system's long-term viability.
Recommendations related to Payroll Mobility Tax (PMT)
The MTA should evaluate the payroll mobility tax (PMT), which broadly allocates support but was recently raised and may have economic implications.
Financing for the 2025-2029 Program should be allocated among drivers, riders, and taxpayers, who all benefit from transit.
The MTA should use recurring revenue to support capital investment on a pay-as-you-go basis, as much as it is appropriate.
Key Data
$700 million
— Annual amount of fare evasion that the MTA needs to reduce to provide needed operating budget savings.
$2 billion
— Potential annual savings the MTA could achieve by increasing efficiency with collaboration from labor.
45%
— Portion of State tax revenues paid by City taxpayers, which should be considered when evaluating direct appropriations.
Raising the Payroll Mobility Tax by $1 billion annually to replace congestion pricing would negatively impact New York's competitiveness and burden businesses that already faced a $1.1 billion tax increase last year. Instead of relying on this tax, the state should proceed with implementing congestion pricing to fund MTA capital investments.
Recommendations related to Payroll Mobility Tax (PMT)
The State should not now raise the Payroll Mobility Tax $1 billion annually to replace congestion pricing.
Key Data
$1 billion
— The amount the State should not raise the Payroll Mobility Tax by annually to replace congestion pricing.
$1.1 billion
— The amount by which business taxes were raised last year to fund the MTA operating budget.
The Metropolitan Transportation Authority's financial plan relies on increased revenue from the payroll mobility tax, which has underperformed expectations by $62 million through September 2023. Close monitoring of these tax collections is necessary to ensure the transit agency's projected revenue targets are met.
Recommendations related to Payroll Mobility Tax (PMT)
The MTA and stakeholders should ensure that PMT revenues receive close attention to ensure collections meet forecasts going forward.
Key Data
$1.1 billion
— The amount the payroll mobility tax is expected to add annually to the MTA’s projected revenue.
$62 million
— The amount by which payroll mobility tax collections through September 2023 were lower than forecasted.
The Metropolitan Transportation Authority's operating budget is temporarily stabilized by new revenue sources, including a $1.1 billion annual increase from the Payroll Mobility Tax, but faces a recurring structural deficit of $900 million after the current financial plan. To ensure long-term fiscal health, the agency must implement operational reforms, such as one-person train operations and work rule changes, to align spending with evolving ridership needs.
Recommendations related to Payroll Mobility Tax (PMT)
The MTA should implement one-person train operation (OPTO) on subways and proof of payment on commuter rail to increase efficiency.
The MTA should reduce maintenance and operating costs by targeting peer benchmark levels to ensure operations are efficient and cost-effective.
The MTA should negotiate work rule changes with labor unions to allow the MTA to adjust schedules and services to meet shifting rider needs.
Key Data
$1.1 billion
— Annual revenue generated from the increase of the Payroll Mobility Tax (PMT) on New York City employers.
$900 million
— Estimated annual budget gap the MTA will face beyond the five-year financial plan window.
$442 million
— Potential annual savings from expanding one-person train operation (OPTO) systemwide.
$300 million
— Potential annual savings from reducing commuter rail costs through fare payment verification.
$1.6 billion
— Potential annual savings from meeting benchmark maintenance and operations levels.
$330 million
— Annual cost of the Transport Workers Union (TWU) Local 100 collective bargaining agreement that exceeds budgeted raises.
The Metropolitan Transportation Authority's financial stabilization plan includes a $1.1 billion increase to the Payroll Mobility Tax on New York City businesses to help address future budget gaps. This funding measure is part of a broader effort to stabilize the transit system alongside congestion pricing and increased city support for paratransit.
Key Data
$1.1 billion
— The amount by which the Payroll Mobility Tax on New York City businesses was raised as part of the Metropolitan Transportation Authority's financial stabilization plan.
The Governor's plan to stabilize the Metropolitan Transportation Authority's budget relies heavily on increasing the Payroll Mobility Tax, which would generate $800 million annually, with a significant portion coming from New York City businesses. This approach is criticized for placing an unfair burden on the city, and it is suggested that the financial plan be reallocated more equitably across the region.
Recommendations related to Payroll Mobility Tax (PMT)
The balance of the plan should be appropriately allocated among those in the MTA region to avoid placing an undue burden on New York City.
Policymakers should reallocate the portion of the plan funded by the Payroll Mobility Tax to better consider the regional impacts of the Metropolitan Transportation Authority's costs and benefits.
Key Data
0.34 percent to 0.50 percent
— The proposed increase to the Payroll Mobility Tax's top rate.
$800 million
— The amount of additional annual revenue the Payroll Mobility Tax increase is expected to generate.
$640 million
— The estimated portion of the $800 million Payroll Mobility Tax increase likely to be paid by New York City businesses.
New York City taxpayers provide the majority of the Metropolitan Transportation Authority's non-fare and non-federal revenue, contributing 71 percent of these funds in 2018. This significant financial support, which includes revenue from the Payroll Mobility Tax, is expected to grow as new state-created taxes and fees are implemented.
Key Data
75%
— Portion of the **Payroll Mobility Tax (PMT)** generated in New York City.
$119 million
— Amount of the State’s portion of the Subway Action Plan funded by **City taxpayers** due to their contribution to the Payroll Mobility Tax and statewide revenues.
71%
— Share of the **MTA’s non-fare and toll, nonfederal revenue** provided by New York City taxpayers.
$3.4 billion
— Amount paid by New York City residents and businesses, representing **76.5 percent of the total $4.5 billion MTA regional taxes**.
$439 million
— Amount of **statewide revenues dedicated to the MTA** contributed by New York City taxpayers, representing 45 percent of the total.
The Metropolitan Transportation Authority faces a precarious fiscal outlook with a projected $637 million cumulative cash shortfall by 2023, contingent on optimistic assumptions regarding labor productivity and revenue growth. Among the risks to this financial plan is a $144 million decrease in Payroll Mobility Tax collections, highlighting the vulnerability of the agency's revenue streams to economic shifts.
Key Data
$144 Million
— The amount by which Payroll Mobility Tax collections decreased, indicating a risk to the MTA's financial plan.
New York State's reported budget growth of 1.9 percent for fiscal year 2020 is misleading due to accounting maneuvers that shift $4.1 billion in spending off-budget, including the Metropolitan Commuter Transportation Mobility Tax. These reclassifications obscure the true spending growth of 3.4 percent, making it difficult to accurately assess the state's fiscal health and spending trends.
Key Data
$1.4 Billion
— Reduction in reported State Operating Funds spending in fiscal year 2019 resulting from shifting the Metropolitan Commuter Transportation Mobility Tax off-budget.
$1.6 Billion
— Annual yield of the payroll tax.
$135 Million
— Residual revenues from the payroll tax that were remitted in fiscal year 2019.
$292 Million
— Amount in other taxes and fees collected on behalf of the Metropolitan Transportation Authority that will be shifted off-budget in fiscal year 2020.
New York City taxpayers already provide approximately 40% of the mass transit budget through the payroll mobility tax and other taxes. Rather than raising the personal income tax to fund the Metropolitan Transportation Authority, new revenue should be generated through congestion pricing or other charges for motor vehicle use.
Key Data
40%
— Portion of the mass transit budget provided by taxpayers through the payroll mobility tax and other taxes.
New York City taxpayers already contribute approximately 40% of the mass transit budget through the payroll mobility tax and other levies, making additional personal income tax increases for MTA capital spending inappropriate. Instead, funding for transit capital needs should be sourced from motorists through congestion pricing or similar charges for motor vehicle use.
Key Data
40%
— of the mass transit budget is already provided by taxpayers through the payroll mobility tax and other taxes
The MTA's February 2017 financial plan update reflects a worsening fiscal outlook due to increased labor costs and reduced state subsidies, including cuts to Payroll Mobility Tax (PMT) replacement funds. To address these challenges and avoid significant future deficits, the agency may need to implement a 1 percent annual general reserve or pursue new policy actions.
Recommendations related to Payroll Mobility Tax (PMT)
A 1 percent annual general reserve, if not needed each year, could provide $650 million over the plan period to help address revenue reductions including those from the Payroll Mobility Tax (PMT) replacement funds.
Key Data
$271 million
— Total reduction in dedicated subsidies and taxes, including Payroll Mobility Tax (PMT) replacement funds, over the financial plan.
$67 million
— Annual reduction in Payroll Mobility Tax (PMT) replacement funds in each year of the financial plan.
The Metropolitan Transportation Authority's 2017 budget relies on revenue from dedicated taxes, including the Payroll Mobility Tax, which is projected to grow by 4.5 percent. While the agency anticipates short-term surpluses, it faces long-term fiscal risks from expiring labor contracts, rising postemployment benefit liabilities, and potential declines in tax receipts.
Key Data
4.5 percent
— The Payroll Mobility Tax (PMT) is expected to increase 4.5 percent in 2017, consistent with trends in its respective base.
The Metropolitan Transportation Authority relies on the Payroll Mobility Tax as a key revenue source, which is sensitive to economic downturns and would face significant shortfalls during a recession. To mitigate these risks, the agency should adopt more cautious revenue projections, establish an explicit rainy day fund, and limit the reallocation of capital and retiree benefit funds.
Recommendations related to Payroll Mobility Tax (PMT)
The MTA should implement greater restrictions on the diversion of OPEB funding and maintain a firmer commitment to PAYGO capital allocations to reduce risks associated with reallocating these resources during a recession.
The agency should establish an explicit rainy day fund covering a larger share of total expenses before using reserves to reduce long-term liabilities.
The MTA should adopt more cautious economic and revenue assumptions to better prepare for potential downturns.
The agency should continue to increase planned efficiency gains beyond current targets to align expenditures with available revenues.
Key Data
0.34 percent
— The Payroll Mobility Tax is a 0.34 percent payroll tax on all employers in the MTA service region with a payroll expense greater than $437,500 in any calendar quarter.
$1.5 billion
— In 2010, the MTA needed $1.5 billion from the newly instituted Payroll Mobility Tax and MTA Aid Trust to balance its budget.
$1,566 million
— The MTA's financial plan projects Payroll Mobility Tax receipts to reach $1,566 million by 2019.
-12.6 percent
— In the event of an illustrative recession, the Payroll Mobility Tax revenue is projected to face a shortfall of -12.6 percent in Year 3.
0.11 percent
— Employers with payroll expenses less than $375,000 in any quarter are subject to a reduced Payroll Mobility Tax rate of 0.11 percent.
0.23 percent
— Employers with payroll expenses of $375,000 or more but less than $437,500 in any quarter are subject to a reduced Payroll Mobility Tax rate of 0.23 percent.
The Metropolitan Transportation Authority's capital plan faces a significant funding gap that should be addressed by rebalancing revenue sources rather than debating city versus state contributions. Shifting the funding model to rely more heavily on motor vehicle cross-subsidies, such as congestion pricing and a vehicle-miles-traveled tax, would provide a more sustainable path for infrastructure investment.
Recommendations related to Payroll Mobility Tax (PMT)
The organization recommends that drivers cover more than twice the current proportion of mass transit costs through motor vehicle cross-subsidies.
Over the long term, the state should implement a vehicle-miles-traveled (VMT) tax to fund transportation infrastructure.
More immediate funding should be generated through enhanced tolling policies, including East River bridge tolls and other congestion pricing mechanisms, or higher vehicle registration fees.
Key Data
$1.3 billion
— The total amount of the MTA's regional payroll tax.
73 percent
— The portion of the MTA's regional payroll tax paid by New York City employers.
$29.8 billion
— The total cost of the MTA's five-year capital plan.
48 percent
— The share of MTA transit services funding provided by fares.
40 percent
— The share of MTA transit services funding provided by tax subsidies.
12 percent
— The share of MTA transit services funding provided by motor vehicle cross-subsidies.
The MTA's 2015-2019 capital plan faces a $9.8 billion funding gap, with current debates over apportioning costs between the City and State ignoring that both rely on the same regional economic tax base. To address funding needs, leaders should move beyond the City/State divide and implement revenue sources like congestion pricing or vehicle-miles traveled fees to supplement existing fares and tax subsidies.
Recommendations related to Payroll Mobility Tax (PMT)
The Citizens Budget Commission supports more funding for the MTA from motor vehicle cross-subsidies.
In the longer term, the MTA should implement a vehicle-miles traveled fee system which could also fund transportation infrastructure state-wide.
More immediate funding for the MTA should come from East River bridge tolls and other congestion pricing mechanisms or higher vehicle registration fees.
City, State, and MTA leaders should drop the “City/State” frame of reference and develop a concrete plan to put the necessary funding in place.
The details of which projects will utilize alternative project delivery methods should be specified in the revised plan.
Key Data
$9.8 billion
— The funding gap remaining for the MTA capital plan that leaders are debating how to apportion.
$2.2 billion
— The estimated savings from efficiencies, including design-build and public-private partnerships, in the MTA capital plan.
73 percent
— The portion of the MTA’s $1.3 billion regional payroll tax paid by New York City firms.
$1.3 billion
— The total amount of the MTA’s regional payroll tax.
$580 million
— The amount New York City taxpayers fund annually in operating and capital support to the MTA.
$4.2 billion
— The estimated amount of the nearly $6 billion allocated to the MTA from state-authorized regional and statewide taxes.
The Metropolitan Transportation Authority relies on a complex mix of revenue sources, including the Payroll Mobility Tax, which is levied on wages paid by most employers within the transit region. This tax, alongside the Metropolitan Mass Transportation Operating Assistance, serves as one of the two largest non-fare revenue streams for the agency, each generating nearly $1.6 billion annually.
Key Data
$1.6 billion
— Annual revenue generated by the Payroll Mobility Tax levied on wages paid by most employers in the MTA region.
New York City taxpayers currently provide $4.5 billion annually to the MTA, a significant portion of which comes from regional taxes like the payroll mobility tax. Instead of increasing the City's direct tax contributions, the MTA should generate more revenue through user charges on motor vehicles, such as a vehicle-miles traveled tax.
Recommendations related to Payroll Mobility Tax (PMT)
There is a better way to raise the money the MTA needs: user charges on motor vehicles.
Launching a vehicle-miles traveled (VMT) tax in New York could provide a fiscal foundation for future highway and mass transit investments and put New York State in a leadership role in addressing this looming national issue.
More money can and should come from motorists.
Key Data
$5.4 billion
— State-authorized taxes comprising the MTA’s annual revenues.
$4.1 billion
— Regional taxes, including the payroll mobility tax, that contribute to the MTA’s annual revenues.
$1.3 billion
— Appropriated funds from statewide general taxes for the MTA.
74 percent
— Estimated share of regional taxes paid by residents and firms within New York City.
$3.0 billion
— Amount of regional taxes paid by New York City residents and firms.
45 percent
— Share of statewide revenue accounted for by New York City sources.
The Metropolitan Transportation Authority faces recurring deficits and inadequate capital investment, necessitating a new financing formula known as "25-50-25" to allocate costs among drivers, transit riders, and taxpayers. This approach would rely on increased transit fares, higher tolls, and congestion pricing to stabilize the system's finances and fund essential repairs without relying on excessive borrowing.
Recommendations related to Payroll Mobility Tax (PMT)
The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
Motorists’ tolls and fees should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
State and local tax subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund “catch-up” capital investments needed to bring the system to a state of good repair.
New York should adapt and implement new policies imposing fees for vehicle access to the central business district.
Key Data
$1.3 Billion
— New revenues raised by the Payroll Mobility Tax in 2010.
$2.6 Billion
— Additional annual revenue the 25-50-25 policy would provide by 2016.
$17.1 Billion
— Annual operating and financing expenditures of the MTA agencies budgeted in 2012.
$3.6 Billion
— Projected deficit for the MTA in 2016.
$39 Billion
— Projected debt outstanding for the MTA in 2015.
$16.8 Billion
— Total investment in five MTA megaprojects.
The Metropolitan Transportation Authority faces a $15 billion funding gap in its 2015-2019 capital plan, necessitating a balanced approach that relies on employer subsidies, user fares, and motorist charges. The existing payroll mobility tax already provides significant regional support, meaning little to no additional general tax subsidies are required to meet the agency's funding targets.
Recommendations related to Payroll Mobility Tax (PMT)
Little or no new funding is needed from general tax subsidies because the payroll mobility tax already provides more than 25 percent of the MTA's funding.
The MTA should adopt a '25-50-25' funding approach that ties revenue to those who benefit from public transportation, including employer subsidies, user fares, and motorist charges.
The MTA should increase motor vehicle users’ cross-subsidy to reach its 25 percent target through mechanisms like tolls, license and registration fees, and the gasoline tax.
The MTA should implement modest fare increases in 2015 and 2017 to bring fares closer to the 50 percent target.
Key Data
$1.6 billion
— Annual increase in funding from the payroll mobility tax authorized in 2009.
$15 billion
— The funding gap in the MTA's 2015-2019 capital plan that requires new revenue sources.
$32 billion
— Total investment amount required by the MTA's capital plan.
$167 to $293
— Annual increased costs for motorists under proposed vehicle-miles-traveled tax scenarios.
$2.75
— Projected single-ride subway fare by 2016.
The Metropolitan Transportation Authority has historically relied on the Payroll Mobility Tax to help mitigate annual deficits, which have fluctuated significantly since 2000. While this tax has provided over $1.3 billion in annual revenue, the agency continues to face long-term fiscal challenges that require a more equitable and balanced approach to funding and operations.
Key Data
$1.3 billion
— Annual revenue raised by the Payroll Mobility Tax, which has helped reduce MTA deficits since 2010.
The Metropolitan Transportation Authority faces significant financial instability, with projected deficits reaching $3.6 billion by 2016, necessitating a new funding strategy. The proposed "25-50-25" formula suggests that bridge and tunnel tolls should cover one-quarter of mass transit costs, riders should cover half through fares, and state and local tax subsidies—including the Payroll Mobility Tax—should cover the remaining quarter.
Recommendations related to Payroll Mobility Tax (PMT)
The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
Motorists’ tolls and fees should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
State and local tax subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund “catch-up” capital investments needed to bring the system to a state of good repair.
The MTA should stop running large deficits and lower its future debt burden by funding regular replacement needs with operating revenues rather than borrowing.
Key Data
$1.3 billion
— New revenues raised by the Payroll Mobility Tax in 2010.
$800 million
— Amount by which current tax subsidies, including the Payroll Mobility Tax, are projected to exceed the 25 percent target by 2016.
$2.6 billion
— Additional annual revenue the 25-50-25 policy would provide by 2016 without new taxes.
$3.6 billion
— Projected deficit for the MTA in 2016.
The invalidation of the payroll mobility tax threatens the Metropolitan Transportation Authority with an annual revenue loss of $1.8 billion, exacerbating an already precarious financial situation characterized by multi-billion dollar deficits. To address these fiscal challenges, the agency must pursue predictable fare increases and implement service adjustments based on actual ridership patterns rather than relying on temporary surpluses.
Recommendations related to Payroll Mobility Tax (PMT)
Everyone—commuters, MTA employees, city and suburban residents, and elected officials—must face reality and contribute in some way to a long-term solution to the MTA's fiscal problems.
Periodic, predictable fare increases along with continued belt-tightening, including a trimmed service schedule, are unavoidable elements of a sensible solution.
The MTA needs the revenue from the planned 2013 and 2015 fare hikes.
The $29.5 million going for service restorations should be better justified.
Adjustments can be made to deploy buses in accord with shifting usage patterns.
Key Data
$1.8 billion
— Annual revenue loss threatened by the invalidation of the payroll mobility tax.
$2.7 billion
— Estimated deficit in the current year based on audited financial statements.
$2.5 billion
— Annual deficits exceeded this amount from 2008 to 2011.
16%
— Minimum percentage of annual expenses represented by deficits from 2008 to 2011.
$136 million
— Combined loss to the 2013 and 2015 deficits caused by delaying planned fare hikes.
$29.5 million
— Cost of service restorations that should be better justified.
The Payroll Mobility Tax, which generated over $1.4 billion for the Metropolitan Transportation Authority in 2011, faces legal challenges that could leave a $459 million budget gap if eliminated in suburban counties. Replacing this revenue would likely require either drastic service cuts to the Long Island Rail Road and Metro-North Railroad or significant fare increases of up to 46% for commuters.
Recommendations related to Payroll Mobility Tax (PMT)
Policymakers should recognize that the Payroll Mobility Tax may be less painful than other options for funding the Metropolitan Transportation Authority.
Suburban leaders should consider that the Long Island Rail Road and the Metro-North Railroad must be paid for through some mechanism, and the current tax structure is preferable to drastic service cuts or fare hikes.
Key Data
$1.4 billion
— Total revenue raised by the Payroll Mobility Tax for the MTA in 2011.
$459 million
— Budget hole in the MTA budget in 2012 if the Payroll Mobility Tax is not collected in suburban counties.
16%
— Expenditure cuts for the Long Island Rail Road if Payroll Mobility Tax revenue is lost.
15%
— Expenditure cuts for the Metro-North Railroad if Payroll Mobility Tax revenue is lost.
46%
— Fare increase required on the Long Island Rail Road to offset lost Payroll Mobility Tax revenue.
32%
— Fare increase required on the Metro-North Railroad to offset lost Payroll Mobility Tax revenue.
The New York State budget for fiscal year 2012-13 rejected a proposal to exempt libraries, towns, and villages from the Payroll Mobility Tax, thereby preserving the Metropolitan Transportation Authority's dedicated revenue stream. This budget also implemented a modest 2 percent increase in state spending and established a new task force to coordinate capital infrastructure projects.
The 2011 tax agreement in New York includes a reduction in the payroll tax dedicated to the MTA for small businesses and certain other employers. While the MTA is promised offsets from new tax revenues to compensate for this loss, the long-term stability of mass transit services remains contingent on maintaining this political commitment.
New York State faces a significant budget gap driven by decreased tax collections and rising spending, necessitating a shift away from temporary revenue measures toward long-term structural spending adjustments. Among the revenue enhancements enacted to address past deficits is a 2009 payroll tax in the Metropolitan Transportation Authority region, which generated $1.4 billion in the current fiscal year.
Key Data
$1.4 Billion
— Revenue generated in the current fiscal year by the payroll tax imposed in 2009 in the region served by the Metropolitan Transportation Authority.
The payroll mobility tax was intended to fund long-term capital needs for the MTA, but recent negotiations have threatened to divert these funds to operating expenses. To ensure the tax serves its original purpose, legislation must restrict the use of these revenues to capital projects after the first year and condition any initial use for operating needs on at least 8% fare and toll increases.
Recommendations related to Payroll Mobility Tax (PMT)
Revenues generated by the mobility tax during the first year in which it is collected may be used to support the operating needs of the MTA, provided, however, that such revenues may only be used for this purpose if toll and fare increases of at least 8% relative to their current levels are in effect during this time.
Revenues generated by the mobility tax during the first year in which it is collected may be used to support new borrowing and direct expenses related to the MTA's capital program and the debt service associated with the MTA's current portfolio of expansion projects.
Revenues generated by the mobility tax after the first year in which it is collected shall be used exclusively to support new borrowing and direct expenses related to the MTA's capital program and the debt service associated with the MTA's current portfolio of expansion projects.
Key Data
8%
— The minimum percentage increase for tolls and fares required if mobility tax revenues are used for operating needs during the first year.
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