Gov. Kathy Hochul seeks to plug a massive budget gap at the MTA with a tax hike on businesses, revenue from new casinos and a funding boost from New York City, her office said on Wednesday.
MTA officials still plan to hike fares by 5.5% this year to help close the gap.
The new revenue streams will be released as part of her executive budget — which state officials said will bring the transit agency another $1.3 billion annually.
The MTA desperately needs the revenue as cash streams from transit fares remain down roughly 40% from before the pandemic. The agency needs an extra $600 million to balance its books this year. The MTA faces a deficit of $1.2 billion in 2024, which is expected to grow to $1.6 billion in 2026.
"For many New Yorkers, the MTA is the lifeblood," Hochul said during her budget announcement. "And if we do not continue to invest in that, we will not be looked upon favorably by future generations."
The proposal by — which must be approved by the Legislature — would allow the MTA to avoid draconian service cuts and massive layoffs. For more than a year, MTA Chairman Janno Lieber has called for new dedicated revenue streams to balance the agency’s books.
One of those proposed revenue streams is an increase to the state’s payroll mobility tax, which currently takes 0.34% of the payroll for most employers in New York City, Long Island and parts of the Hudson Valley for the MTA. Hochul wants to raise the tax to 0.5%, which she estimates would generate $800 million a year for the transit agency.
The governor also wants to amend state law to use tax revenue from planned casinos for the MTA — and is asking Mayor Eric Adams to chip in another $500 million annually to balance the MTA’s books.
“Any new MTA revenue sources must be dedicated and lockboxed to ensure they are reliable and protected from the whims of the governor and Legislature every budget cycle,” Rachael Fauss with the good government group Reinvent Albany wrote in an email.
Nicole Gelinas, a research analyst at the Manhattan Institute, was skeptical the city would kick in the money.
"This undoes all of Hochul's insistence during the campaign that the state would pay for extra [subway] policing costs," said Gelinas, referencing a push by Hochul and Adams to deploy more cops on the subways. "Now, the state is taking that money — about $200 million a year — and then some."
The proposal to use tax revenues from planned casinos hinges on the gaming facilities actually opening.
State officials are currently taking bids on three licenses to open Las Vegas-style casinos in the downstate area. The licenses will command a $500 million fee, part of which Hochul wants to direct to the MTA, as well as up to $826 million in annual tax revenue from the casinos.
Hochul also said she sought "efficiencies" at the MTA to save the agency $400 million, sparking concern from Transport Workers Union Local 100, which represents a majority of the agency's workforce.
"We will fight any effort to balance the budget on the backs of transit workers," said TWU Local 100 President Richard Davis. "We kept the bus and subway system running through the pandemic, and that must be fully recognized."
Correction: An earlier version of this story misstated the percentage increase to the payroll mobility tax in the governor's proposal.
